Food and beverage play a significant role in the growth of investment and development in the luxury lodging space
July 24, 2023
Tad Wilkes
In most times of economic uncertainty, luxury is the first item on the chopping block. Right now, luxury lodging just may stand to pull the hotel space through, and food and beverage is a key factor.
Skift Research shared in March its expectation that strength in the luxury segment will buoy the hotel industry in the face of a potential recession, unlike in previous downturns. But investing heavily in luxury foodservice, rather than shuttering in hard times, requires smart strategy from hotels.
More exclusivity is key
In her more than four years with Four Seasons, Katherine Kies told Restaurant Hospitality that she took a "deep dive into the luxury space" before her current role as founder of Kies Hospitality Collaborative, in which she consults with hotels mainly in that exclusive space.
Kies has observed that as more hotels upgrade their offerings, the bar for true luxury goes higher, and the guests who can pay for more exclusive experiences are willing to do so, opening a world of possibilities for hotel restaurant operators.
“Part of the trend that we’ve learned is that the upper limit for spending is pretty high,” Kies said. “If people want certain things, there is a limitless appetite for treating yourself.”
Even with rampant inflation, Kies said, well-heeled guests are willing to pay even more to separate themselves from the masses.
“As you continue to drive up prices and see what the level of sensitivity is, it's amazing,” she added. “If you can offer something unique or special, the threshold [for spending] is pretty high.”
Don’t water down the experience
Exclusivity will only get hotel operators part of the way there with high-end guests; the quality also has to be on-point.
“Food and beverage is crucial in the growth of the luxury lodging space because it gives the hotel the ability to truly provide a curated and authentic experience that can be linked to their property,” Lou Trope, president of restaurant and hospitality consultants, LJ Trope & Co., said. “Not only does it give the guest a reason to stay and locals to come into the hotel, but it provides a distinct presence in the market that can continuously provide content for marketing and social media channels.”
Trope believes operators in the luxury segment must aim their food and beverage operations to be a leader in the market—not just in the hotel restaurant market but also in the independent restaurant market.
“Once the ‘what about’ conversation starts, the concept is immediately getting watered down and will not be as sharp as it should be to attract locals as well as well as hotel guests,” Trope said.
F&B as a foundational hotel element
Determining a cuisine concept is just one piece of a puzzle that today requires deft strategizing, in many cases, from the start of conceptualizing the hotel project.
“Too many times, I have seen pro formas that have been developed to meet an investment return that have nothing to do with the capabilities of the space,” Trope said. “I have been in many early meetings where the pro forma that was presented was extremely aggressive, and the space had no physical chance to make that volume to produce that amount of revenue.”
Shoehorning a successful idea from one market into a hotel in another market is seldom a turnkey winner, he added.
“During development, comprehensive market research needs to be done not only to understand the competitive space but also to understand the market dynamics,” he said. “For example, a restaurant in New York City might be able to get three turns on a Tuesday night, while in other markets they may struggle to get one and a half given the dining patterns of the area. A proper pro forma should be based on the number of seats, average check, viable turns and seasonality fluctuations of the market. If the pro forma is written primarily on capture rate from occupied rooms, they are clearly not serious about having a great food and beverage experience.”
Trope advises that concept development for luxury hotels works best when it is a collaborative process with a small group of design and F&B experts.
“Once the market research is complete, opportunities will present themselves,” he said. “A good creative team can collaborate and come up with amazing ideas and concepts that can reshape a market. The key is to hold on the integrity of the concept from ideation to operation. Once the ideas start to get watered down from too many opinions, the magic can be lost. Great concepts attract great talent and great talent can take the best idea and make it something you never imagined and that is where the magic is.”
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