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Tough competition eats into hotels’ F&B revenue



NEW DELHI: The Le Meridien hotel in Delhi is staring at an about 30% fall in F&B revenue this year. The hotel’s fine-dining restaurants which attracted a steady flow of patrons with their scrumptious dishes and specialty drinks, are up against a tough adversary — the eateries nearby that are reeling out attractive promotions to woo customers who are now more open to ‘eating out’. And it does not help matters to have the critically-acclaimed Masala Library restaurant located right outside it.

“Connaught Place is full of restaurants and people are more experimental now and are eating out. Footfalls have gone down,” said Tarun Thakral, chief operating officer at Meridien.

The slip in food and beverages revenue is not just at Meridien—the downtrend is being seen in hotels across segments, as people eat out more and new fine-dining restaurants mushroom in the metros. A lesser number of guests are considering eating meals in hotels. Experts said the trend, already prevalent in markets like Europe and the US, is now gaining momentum in India.

While Meridien is trying to get its skin back in the game by getting active on social media and tying up with food delivery firms likes Zomato for advertising and promotions for its restaurants, other large players are devising strategies to shore up F&B sales.

Generally, revenue from F&B operations (including banqueting) goes up to as much as 50% for some luxury hotel chains. For upscale hotel brands, it could be about 25-30% of the business.

“There is enough evidence that F&B revenues from restaurants in hotels are declining. Hotels are feeling the heat because of very stiff competition from standalone restaurants. Over the years, the quality of standalone restaurants has considerably improved,” said Mandeep Lamba, MD, India hotels and hospitality group at Jones Lang LaSalle Property Consultants. “Standalone restaurants tend to offer much more variety and are trendy. Under the new GST regime, standalone restaurants are able to charge 5%, whereas restaurants inside hotels still charge 18%. That is acting as another differentiator.”

Competition from standalone places is leading hotel chains to refurbish existing concepts, revamp menus and tie up with online companies more aggressively.

Gaurav Mudgal, director, revenue, at Fairmont Jaipur, said it is becoming increasingly important to “brickwall” guests to have meals in hotels.

“Restaurants are opening up dramatically even in a city like Jaipur. We are on the outskirts and we have made changes like introducing kids’ menu, postponing some of our activities to late evening to incentivise guests to have dinner with us. We have done all this recently after studying the client behaviour. We need to improvise our strategies,” he said.

At the Grand Hyatt in Mumbai, efforts are on to boost traffic on hyattrestaurants.com, Hyatt’s own F&B platform. “The focus will be to deploy all special offers and value adds to guests booking directly on the platform. Over the past year, we have forayed into bringing local experiences and chef-crafted menus through promotions at our venues, which has helped us understand the guests’ needs better,” said Puneet Singh, general manager at the hotel.

An industry executive said when some global hotel brands in India launched years ago, their brand standard was to do two restaurants or more. “Today, they are more open. They have shut down the second restaurant in some hotels because they don’t get the footfalls,” he said.

Hotel chains including Marriott and Leela did not respond to emails seeking comment.

Dipak Haksar, chief executive at ITC Hotels and WelcomHotels, said chains like ITC have stood the test of time and have created well-researched dining concepts, which continue to drive brand loyalty.

Vimal Singh, managing director, South Asia, for Louvre Hotels, said F&B needs to be reworked. “We are facing huge competition. A la carte revenues are down. We will do banqueting and conferences, but we will reduce the number of restaurants in our hotels going forward,” Singh said.

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