Indian hotels increasingly bank on F&B to contribute almost 50% of their revenue inflows
Food & Beverage (F&B) statistics from luxury hotels across India have a rather crucial story to tell. A story of change and transformation, led by savvy hoteliers who have warmed up to the idea that F&B has emerged as a viable profit center across hotel segments.
In most hotels, well-planned and experimental F&B operations earn revenues that equal earnings from room rates. A recent HVS-FHRAI report reveals that revenue from F&Bâwhich includes banquets and restaurantsârose to 42.6% in recent years, against 36.6% 10 years ago, while room revenues declined to 50.9% from 57.2% for the same period. Much of this growth has come from banqueting and events, powered by MICE and extravagant weddings. Equally important contributors to F&B-driven revenues are conceptually-strong restaurants and well thought out all-day dining spaces and coffee shops that have undergone a transformation in offerings and design, in keeping with the emergence of experiential dining as a major force.
Is it any wonder, then, that behemoth hospitality chains such as IHCL, Marriott International, The Oberoi Group, The Leela Group, Accor, Hyatt and Hilton are focusing on F&B operations to boost revenues and drive profits. The leviathan IHCL group has experienced a substantial growth in revenues from F&B across all segments. IHCL banks on its innovative F&B offerings to contribute a large part of its revenues, which stands at 40% of our revenue globally and 47% in India. The India earnings from F&B amounts to INR 4500 crores.
IHCL has an unparalleled experience of hosting grand occasions, formal gatherings, conferences meetings and incentives, perfected to the tee over the last century of its existence. âAt the Taj Hotels, there is a strong emphasis on culinary experiences. The focus on dining concepts and restaurants has helped create hotels as destinations in themselves,â says Rohit Khosla, Executive Vice President â Operations, North & West India. âFrom catering for King George Vâs Delhi Darbar in 1911 to host ng the Commonwealth Summit in 1984 and several World Economic Forum meetings, as well as BRICS and ASEAN Conclaves, we have created experiences for heads of states, corporate chieftains and various leaders.â
At ITC Hotels, given its long legacy of very strong culinary brands, the ratio between room revenues and F&B is equally divided into 50:50, says Anil Chadha, VP-South, ITC Hotels. Rohit Gambhir, Executive Chef, The Oberoi, New Delhi claims that their diverse F&B offerings are popular with residents and non-resident guests, many of whom have had an association that goes back generations, bringing in more than 55% of the hotelâs total revenue.â While at The Oberoi Group, room revenues continue to make a larger contribution when compared to F&B, the latter is growing at a healthy pace. Ziya, the path-breaking concept restaurant by Michelin-starred chef Vineet Bhatia, has seen a 12% growth year-on-year.
At the mammoth Marriott International, F&B operations contributes 40-45% to the overall revenue. Chef Himanshu Taneja â Culinary Director, India, says, âStrong F&B concepts have helped us create strong brands. Japanese restaurant, Yukka, at St. Regis is a big profit centre. We have created great wedding destinations, where F&B plays a big part.â
At The Leela Palace, New Delhi, its global dining brandsâMEGU and Le Cirque, its iconic Indian restaurant, Jamavar and an all-day dining restaurant, Qube, attract high footfalls from local diners and in-house guests looking for interesting dining experiences. âF&B is an integral growth driver for us,â says Louis Sailer, General Manager, The Leela Palace New Delhi.
F&B generates 30 to 35% revenues at the AccorHotels. Jean-Michel CassĂ©, Chief Operating Officer â India and South Asia, says, âOur strategy is to serve relevant, delicious and authentic food through multiple offerings across different properties and brandsâbe it breakfast buffets, sit down-dinners,Â Ă la carte or curated meals.”
Most other hotels show equally impressive F&B revenue inflows, across different segments, from markets as diverse as Tier I and Tier II. Chef Prasad Metrani, Executive Chef, Fairmont Jaipur, says, âThe Year-on-Year increase has been incredibleâthe restaurant covers have increased 65.5% over 2017 and an incredible 45% over budget figure. The banquet covers have gone up 36% over 2017, as expected.â At Mayfair Hotels, “F&B contributes 50% of the total revenue, with corporate hotels in Bhubaneswar and Rourkela accounting for 60% revenues,” says Executive Director Souvagya Mohapatra. At Sofitel BKC, Mumbai the room to F&B revenue stands at 51:49, against 70:30 it was a couple of years ago. At Bengaluru Marriott Whitefield, 30% of the revenue is being brought in by the restaurants and curated dining and 20% by banquets, says Jatish Ghai, F&B Manager. F&B operations have contributed a significant share of about 30% at Hilton Bangalore Embassy GolfLinks. Sheraton Grand Whitefield, Bengaluru, known for its convention centre and as a major MICE destination, banquets contribute about 30% to the revenue.
Grand Hyatt Mumbai has rooms-to-F&B REV share at around 60:40%; at The Westin Mumbai Garden City, a growth of 10.1% over last year has helped the hotel achieve 23% of revenue streams; at luxury major Sofitel Mumbai BKC, F&B now contributes 46% to the revenue. Rahul Bhagat, F&B Director, Conrad Pune, contends, âFrom ensuring room to restaurant ratio, to adding volumes to our weekend staycation programmes, the revenue structure of the hotel is designed to ensure that the F&B department is focused on driving volumes and business.â
Contemporary restaurants, in fact, serve as perfect platforms to showcase a hotelsâ other offeringsâthe more vibrant they are, the more likely is a guest to come back. Chef Sharad Dewan, Regional Director, Food Production, The Park Kolkata and Flurys says, âEach of our hotels have a different F&B concept. While In some the restaurants may be more popular, in others it could be the bars, while in some, the banquets. Each of these outlets has a different ethos, feel and clientele.â At Sheraton Hyderabad Hotel Gachibowli, where F&B accounts 70% of the revenues, the focus is on guest engagement, impeccable services and sumptuous food,â says Executive Chef Sidharth Bhardwaj. With increased focus on F&B, the personnel working in this crucial department chase major goals, in a bid to offer differential guest experiences.