• Team ProMiller

Is the weighing scale of Hotel Revenue tilting towards F&B?

Updated: Dec 11, 2019

Isn't Food Quality the deciding factor while choosing a hotel today?

Well, it is for most of us since the Room Quality is well standardized and taken care of, by almost all the hotels today. The shifted focus from Room to Food & Beverage can also be seen on the Revenue mix of hotels in India. This trend has been buttressed by a recent Times Of India article, which clearly shows the number tilting towards F&B revenue in comparison to Room Revenue. Many Five-star hotels are also employing F&B-based strategies to attract guests, like Vegan Cafes, Calorie-based food selection and many more creative practices.

The shift in given data shows an increase from 37% to 43%, in favor of F&B revenue share. When we analyze it closely, the increase can be attributed to a mix of various reasons- for example, the significant decrease in Room Revenue owing to the dip in ARRs through past years. The Average Room Rate (ARR) has decreased in past 10 years, due to a shift in demand-supply dynamics of Hotel Industry since the supply has increased drastically in comparison to increased demand. Another probable reason to attribute the increase of F&B share might be the inflation in food selling price, which has evidently risen in last 10 years without doubt.

Nonetheless, irrespective of the underlying reason of this shift- the result remains the same. F&B revenue today comprises of almost as much as the Room revenue and this trend needs to be acknowledged for strategic decisions which affect Hotel Revenue. Evidently, it is time to step-up the game and focus on F&B-based strategies in addition to Room Sales in order to improve the overall hotel revenue.

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