Hotel food-and-beverage operations have been increasingly profitable in recent years. However, successful hotel F&B operations can be difficult to replicate due to market-to-market differences, site differences and differences in guest preferences, among others.
STR Analytics looked for what similarities may exist by examining the most successful F&B operations. To do this, we used HOST data for the top performing F&B operations, in terms of F&B profit margin. First, we examined all the full-service hotels that reported 2014 data. We mapped F&B revenues (ratio-to-sales) and F&B department profit for all of these hotels below
By simply adding a trend line, it is easy to see that larger F&B operations are more profitable. In general, we see that hotels that have a greater percentage of revenues come from the F&B department also generate higher profit margins within the F&B department.
The largest of F&B operations approach 50% of total revenues for the hotel. The chart also illustrates that F&B profitability seems to peak at 45%. Only a small percentage of hotels were able to achieve higher F&B profitability than 45%.
Most profitable F&B operations
After examining all full-service hotels, we wanted to examine the top F&B operations. We pulled custom HOST reports for the top 10% of hotels in terms of F&B profit margin.We compared these hotels to the other 90% of full-service hotels below.
The top 10% of F&B operations are largely group-focused hotels with a significant amount of meeting space, and sizable banquet and catering operations. The majority were also larger in room count and upper upscale in class. Interestingly, in comparing the two sets, the top F&B hotels actually had lower average room rates.
In examining F&B expenses, we found that the top F&B operations have lower margins for all the detailed F&B expense categories. However, if we look at the actual expenses in dollars per available room, we see that the most profitable F&B operations actually spent more on the cost of food per available room, as well as per occupied roomnight.
F&B revenue and profit trends
In recent years, F&B revenues and profits have increased significantly. Data from a five-year custom HOST report illustrates the trend in revenues below.