In today’s competitive hospitality landscape, food and beverage (F&B) is no longer a secondary element of the guest experience—it's central to driving revenue and increasing asset value. At the Future Hospitality Summit in Dubai, a panel moderated by Jennifer Pettinger-Haines, Partner at Think Hospitality, discussed how hotel owners can leverage third-party F&B agreements to enhance their properties’ bottom line.
The panelists—Sam Bakhshandehpour, Global CEO of José Andrés Group; Anil Bhardwaj, Director at The Arenco Group; and Rizwan Kassim, Founder & Managing Partner of RIKAS Hospitality Group—shared invaluable insights on how the right F&B strategy can boost hotel asset value, with real-world examples and strategies for success.
Why F&B Matters to Hotel Asset Value
Food and beverage can contribute significantly to a hotel’s overall asset value. Hala Matar Chami from HVS notes that F&B revenue can account for 15% to 30% of a hotel’s value, and in cases where F&B offerings are particularly strong, it can rise to as high as 50%. This highlights the need for hotel owners to get the F&B element right in order to realise the full potential of their properties.
However, as the panel made clear, simply entering into a third-party F&B agreement isn’t a guarantee of success. The key to boosting asset value through F&B lies in aligning the interests of hotel ownership, operators, and third-party F&B specialists to create a unique and profitable dining experience for guests.
Insights from Industry Experts
1. Alignment between Operators and Owners
Rizwan Kassim stressed that for F&B to be successful, there must be alignment between the hotel owner, operator, and third-party F&B provider. He highlighted that the operator must be willing to accept new ideas and adjustments to ensure that F&B offerings complement the overall guest experience. Having flexibility in the agreement—whether it’s with design, suppliers, or operational structure—is crucial. His approach at RIKAS Hospitality involves integrating with hotel operators while retaining an independent mindset to ensure success.
2. Design and Guest Journey Integration
Sam Bakhshandehpour echoed similar sentiments, saying that integrating F&B offerings into the hotel’s overall design and guest journey is key. He pointed out that F&B should not be seen as a standalone entity within a hotel but as a part of a holistic guest experience. By providing a variety of outlets with distinct identities, hotels can create a true destination. Moreover, he stressed that having a well-thought-out design and mapping the guest journey from check-in to dining enhances both the guest experience and the property’s value.
3. Importance of Local Expertise and Data-Driven Decisions
Anil Bhardwaj shared insights from his role at The Arenco Group, which operates over 100 F&B outlets across Dubai. He noted that many third-party agreements often fall short because they don’t have the right incentives or performance clauses in place. Anil emphasised that owners should demand that third-party operators have “skin in the game” and that performance clauses should be included to ensure that operators are meeting agreed-upon targets. This way, operators are invested in the success of the outlet, rather than just collecting a fee.
4. The Power of F&B to Drive Room Rates
Sam Bakhshandehpour also discussed how F&B can be leveraged to drive up room rates. In his example from the Ritz-Carlton, New York, he showed how an integrated F&B offering, with locally-focused restaurants, can create a unique neighbourhood destination. This drives foot traffic to the hotel and contributes to a higher room rate. By designing F&B spaces that attract locals and tourists alike, owners can ensure that they’re maximising both F&B revenue and room revenue.
Key Elements for Effective F&B Agreements
From the panel discussion, several key takeaways emerged for hotel owners looking to establish effective third-party F&B agreements:
Flexibility in Agreements: Operators and owners need flexibility in terms of design, suppliers, and concept evolution to keep offerings fresh and relevant.
Performance Clauses: Agreements should include performance clauses to ensure operators are held accountable and meet revenue expectations.
Local Market Understanding: Understanding the local market and its preferences is essential for success. Partnerships with local F&B experts can provide valuable insights.
Integration with Hotel Operations: F&B should be integrated into the overall hotel experience, from design to guest journey, ensuring maximum efficiency and profitability.
The Future of F&B in Hotels
As the hospitality landscape continues to evolve, hotel owners and operators are increasingly recognising the power of F&B to drive profitability and enhance guest experiences. By focusing on the right agreements, designing for efficiency, and ensuring alignment between operators and ownership, hotels can maximise the potential of their F&B offerings.
In conclusion, the panel underscored that third-party F&B agreements can significantly enhance a hotel’s asset value. However, success relies on a collaborative approach, careful planning, and a clear focus on both operational excellence and guest experience. As the industry continues to evolve, hotels that embrace this model will be well-positioned to reap the rewards of a truly integrated F&B strategy.
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