Chunhao (Victor) Wei recently wrote in HotelManagement.Net about the necessity for upscale developers to re-evaluate their F&B operations. According to him, hotels no longer serve as only a place to sleep for many American consumers. Instead, hotels are becoming a destination for them to unwind and relax.
To uphold brand standards, hotel developers have prioritized adding amenities that will increase occupancy and room rates (pools, fitness centers) and have invested little into their food and beverage amenities. However, Wei believes that some developers have chosen not to incorporate this in their projects because most US brands do not require that upmarket hotels have sizable F&B services.
Hans van der Reijden, CEO of Ithaka Hospitality Partners, claims that because many hospitality development businesses lack F&B specialists, upmarket hotels frequently make conservative investments in F&B services.
According to Wei, however, such amenities have become essential when consumers choose where to stay. A recent study by Sung Gyun Mun from The Hong Kong Polytechnic University found that high-end F&B services will increase room revenue at upmarket hotels. The study also found that upscale properties benefit more than luxury and upper-upscale hotels. The research was based on operational data from 389 New York and California hotels over ten years.
F&B amenities have become essential to upscale hotels in the current competitive environment because no market in the United States is a supplier market (i.e., the demand exceeds the supply).
Even while having adequate services for F&B isn’t always a competitive advantage, not having enough will hurt. Consumers can now easily compare hotels of the same caliber within a region thanks to search sites like Expedia and Google Maps, which have expanded the transparency of hotel information. Marriott International and Hilton loyalty members often have more than one brand in the same class and market from which to choose.
Before making a choice, buyers can visualize and anticipate their experience using online information like price, reviews, ratings, and photos. However, Wei’s research shows that when a consumer chooses where to stay, images and atmosphere are the most crucial factors when booking an upmarket hotel online. In other words, it is far more important than discounts, ratings, and brand awareness. Moreover, his research shows that eye-catching images and ambience raise buyers’ pricing and rating tolerances while lowering brand impacts.
The research also indicates that customers rarely check room layout photographs on hotel booking pages. However, images of outdoor amenities (such as rooftop bars, pool bars, and outdoor dining) had the highest impact. These are followed by images of inside amenities, images of the surrounding environment, and images of the hotel employees.
The findings demonstrate the importance of photographs of F&B amenities, such as bar operations, rooftop lounges, authentic local cuisine from imaginative restaurants, and state-of-the-art kitchens, in attracting customers. Furthermore, F&B customers are frequently more likely to provide online reviews than customers who simply book rooms.
With the growing popularity of hotel amenities, hotel developers should now consider investing in innovative F&B services at upscale hotels as an essential marketing tool to attract guests.
The upmarket Hyatt Place in Athens, Georgia, is one example. It profited from the addition of a rooftop F&B outlet with a separate elevator for direct access and a full-service bar in the lobby with indoor and outdoor seating.
Another example is the Hotel Reverb by Revert in downtown Atlanta, which has added a lobby bar, an indoor-outdoor rooftop bar, and multifunctional rooms for private parties.
Wei concedes that it is challenging to propose that a developer invest more money than the brand requires, given the record-high cost of construction and the rising cost of living.
Paul Breslin, managing director of Horwath HTL Atlanta, said: “It is a case-by-case decision, not automatic; work with your hotel consultant and design team to find the best solution for your project. Choose wisely, as the ideal scenario is to find synergy and use what would be unusable space for additional revenue generation and added amenities. But don’t do it if you believe it will not give you a return on investment. Keep your ego out of the equation.”
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