Hotel food-and-beverage (F&B) services are a vital part of a business’ success and contributes significantly to the profits in the hospitality industry. However, COVID-19 and its ripple effect of halting travel, lowering occupancy rates, reducing staff and limiting operations, is forcing hoteliers to explore ways to keep restaurants, bars and other foodservice offerings running and profitable.
Many hotels that remained open throughout the pandemic pivoted their F&B services to include online ordering/delivery, grab-and-go programs and contactless room service. This shift affected full-service hotels the most, as they typically run on-site restaurants in addition to banquet and catering operations.
InterContinental Toronto Centre, owned by IHG, is one property of many to experience dramatic revenue loss.
“Hotel food-and-beverage departments, such as our Azure Restaurant & Bar, have been some of the hardest-hit segments. We rely heavily on in-house guests and office workers in the surrounding area,” says Ernesto Castillo, director of F&B at InterContinental Toronto Centre. “The lack of demand resulted in laying off most of our staff — from cooks, servers and managers, to supporting staff in purchasing, laundry and stewarding.”
In response, InterContinental Toronto Centre adjusted its F&B services to provide guests with convenient options that appeal to changing consumer habits.
“From the beginning [of the pandemic], we made the decision to keep our room service running, albeit with scaled down menus and reduced hours. We also created a grab-and-go program, making pre-packaged meals available at the front desk as a self-serve option,” says Castillo. “Our honour bars also saw an increase in usage early on in the pandemic — revenues surpassed pre-COVID-19 levels.”
However, online food-delivery services are a major competitor, so InterContinental Toronto Centre paired room service and honour-bar offerings with guestrooms and other amenities in the hotel to retain a competitive edge. The hospitality-and-tourism industry started witnessing the rise of takeout and online delivery services long before the pandemic, which pose a threat to on-site restaurants, bars and lounges.
For a while, modified hotel F&B services were the most convenient option for guests, especially when government restrictions ordered restaurants to close, forcing some to close indefinitely. As the provincial lockdown and physical-distancing measures began in mid-March and continued in April, overall foodservice sales dropped to $2.4 billion in April, according to Restaurants Canada. This marked the lowest monthly sales figure in over two decades.
Fortunately, the COVID-19 vaccine rollout offers hope for a return to normalcy, but there’s still a shadow concern for hotel F&B services. Some hoteliers might be questioning whether or not these services will continue to be profitable in the future. Eventually, hotel restaurants, bars and lounges will re-open for indoor dining with limited capacity to ensure proper social-distancing measures, but hoteliers will have to be certain of attracting enough diners to make it worth their while.
Moreover, the shift to virtual business meetings, conferences and events is likely to continue after the pandemic. This, combined with restrictions on large gatherings, makes it challenging to envision the re-opening of banquets and other social events at hotels.
South of the Border
In 2019, Atlanta, Ga.-based Davidson Hospitality Group announced it was branching out with its F&B services, with the goal of developing elaborate concepts that would garner the attention of both travellers and local residents.
Comprised of 61 hotels and resorts, with more than 150 restaurants, bars and lounges across the U.S., Davidson Hospitality Group identified some key elements hoteliers need to consider when it comes to on-site dining. First, on-site foodservices can’t solely rely on hotel guests. Although restaurant, bars and lounges occupy space on hotel property, they need to be considered as a stand-alone operation. Second, the foodservice branding and marketing strategy needs to be separate from the hotel. Finally, the restaurant, bar or lounge needs a completely different design than the rest of the hotel. Implementing these strategies now can help support COVID-19 recovery in Canada if more leaders adopt this customer-first way of thinking. The pandemic shines light on the value of this strategy for Canadian hotels and their re-opening plans.
One Canadian hotelier has already adopted this strategy. Mandy Farmer, president and CEO of Accent Inns recently opened her first restaurant, Roar, at her newest hotel property, Hotel Zed, in Tofino, B.C. In comparison to Farmer’s other properties, Hotel Zed is far from ordinary.
In essence, Hotel Zed is a colour playground for both children and adults and features a range of unordinary amenities, including rotary dial phones, an indoor bike path, outdoor surf showers and a secret arcade. Roar’s interior expresses similar creative design.
“I’ve built my dream property in Tofino. I wanted to design a place that’s really funky and inspiring yet approachable and comfortable,” says Farmer. “I think that first and foremost, people want a place where they instantly feel at home. I often think that if you can create the restaurant where all the locals are going then you’ve got a successful restaurant.”
Hotel Zed, and its on-site restaurant Roars, serves as a prime example of what’s possible for the future of hotel F&B operations. By executing the right strategy, hoteliers can re-open properties on firm ground and separate themselves from competitors.
“We’ve been looking at this from a customer standpoint and not a revenue standpoint. I think people are going to choose my hotel over my competitor’s hotel because of the restaurant. Occupancy will increase because now we’re providing so many amazing services to our guests,” says Farmer. “Now, I’ve got an amazing canvas of a restaurant to explore.”
Written by Nicole Di Tomasso