Thanks to favorable margins and exciting new strategies, hotel F&B offers a strong means of growing revenue from group bookings. In this post, we’ll break down smart ways hotels can optimize their F&B offerings to see gains in the year ahead.
For hotels, there are really two main ways to grow revenue from group bookings.
- Increase group sales by booking more events.
- Increase revenue per booking.
Banking on number one is great if you have the team, but for properties that are already struggling to provide the supply for demand — or larger hotels with disproportionate and ever-growing group acquisition costs — efforts here might not yield significant returns. It’s also a less viable option for properties in the 42 out of 60 CBRE-tracked markets where supply growth is predicted to outpace the already high national average.
For properties like these, the most impactful way to grow group revenue is through optimization. But with so many moving pieces involved in booking and executing events, where should hotels be directing their focus to see the greatest rewards from their efforts? While some larger chains are trying to accomplish this by cutting commissions to third-party planners, not every chain or property wants to follow suit (or even can in some cases).
Luckily, there’s a solution that almost all group hotels can benefit from — regardless of their respective acquisition costs or room counts.
Group F&B statistics tell the story.
For properties that keep operations in-house, F&B typically represents 25% of total revenue — a portion that continues to grow year over year. Group F&B (A/V, room rental, banquet F&B) represents just under 50% of that F&B revenue across the industry, but is a larger driver at upscale and luxury properties. In fact, in 2017 catering and banquet sales accounted for:
- 57% of F&B revenue at luxury hotels
- 59% of F&B revenue at upper-upscale properties
- 58% of F&B revenue at upscale hotels
That number is expected to climb, as 61% of hotel GMs and F&B Directors plan net growth in catering by the end of the year. Why? In large part it’s the margins. Between 2010 and 2016, CBRE reports that F&B profit margin increased from 24.9% to 29.5%.
