The Hotel Restaurant in the Hotel Guest Experience Equation | The Current and Future State of Hotel F&B

The Hotel Restaurant in the Hotel Guest Experience Equation | The Current and Future State of Hotel F&B

Posted | Updated by Insights team:
Dr. Evangelo Damigos; PhD | Head of Digital Futures Research Desk
  • Travel
  • Economic Growth
  • Competitive Differentiation

Publication | Update: Sep 2020

A newly released Magid Forecast Tracker found the ongoing impact of the COVID-19 pandemic will lead to a 29% decline in annual hotel occupancy over the next 12 months, resulting in a projected revenue loss for the industry of about $ 75 billion in room revenue alone.

According to Dr. Rick Garlick, that creates even more urgency to button up other parts of the business – like food and beverage. In this environment, hoteliers are focused on business strategy. Some of those strategies are a ‘back to the basics’ approach: popular formats, ingredients and partnerships. Other strategies involve reinforcing momentum toward modernization in terms of technology or consumer behaviors.

More than half (56%) of consumers in a recent Magid study said they strongly or somewhat agreed with the statement that coronavirus is easily spread in restaurants. While this number is down from a previous wave of the study (65%), it is likely this number will fluctuate based on the epidemiology of COVID-19. Hotels fare about the same as restaurants, with 55% believing COVID-19 is easily spread within their facilities, down from 66% in the previous wave. Health and safety measures will be on the forefront of consumers’ minds for a long time to come, and hotel restaurants will likely bear the biggest burden given their exposure to skeptical attitudes on both fronts of their business.

While hotel occupancy forecasts are still challenged, the home-sharing business is doing relatively well considering the circumstances. Airbnb was recently valued at B and plans to file for IPO in August. The Magid Forecast Tracker shows higher levels of comfort and trust in private vacation rentals compared to hotels, largely due to the fact that guests don’t have to interact with others outside their immediate family or traveling party. Though vacation rentals are currently forecasted to be down 64% for the last part of the summer, they are expected to return to normal in 12 months.

The fact that vacation rentals generally do not offer on-site food and beverage services suggest this may be becoming a much less important component of the hotel guest experience. After all, more people have gotten used to cooking at home and foregoing restaurants during the lockdowns.

The Magid study examined consumers’ willingness to pay for additional health and safety measures. Twenty percent of diners indicated a willingness to pay a premium for a private dining option. While the study does not suggest how much a private dining option would be worth to consumers, there is potential to make up for some of the lost revenue brought on by capacity restrictions, which are currently still in place in most states. This is certainly an area worth exploring further, particularly at upscale and luxury properties.

Customers resisted the idea of paying more for other health and safety protocols, suggesting that, for the short term at least, there is a new expectation for doing business that may reduce the revenue potential of the traditional hotel restaurant concept. Public areas are also highly suspect as many see bars, restaurants and lobbies as a breeding ground for COVID-19. The cost of maintaining room service was already cost-challenging for many hotels prior to the pandemic. Given all these challenges, what is the path to successful growth for hotel food and beverage service?

To make a food and beverage offering successful in the foreseeable hotel environment, there will have to be a greater benefit than satisfying hunger pangs in a convenient manner. One of the building blocks for brand engagement is identification with those who share an experience, even if it is aspirational. Being a part of something unique, popular, or buzz-worthy creates an intangible benefit. In Minnesota and Dallas, Omni is partnering with local dining scene royalty to serve their NFL-team adjacent properties. In Minneapolis, the hotel is part of a multiphase mixed-use project in development.

Beyond creating an emotional benefit for diners, there is an opportunity for hotels to serve fare that appeals to a specific target demographic. A charcuterie board sans meat? That’s just one of the new specialties being served up at a new Dallas hotel being operated by Kimpton Hotels & Restaurants. Veg-forward is just one of many culinary and cocktail trends highlighted in Kimpton’s 2020 trend forecast which is crafted with the help of Kimpton’s own chefs and bartenders. A few others worth mentioning here include alternative diets (think keto and gluten-free), sweet-on-sour (vinegar-focused items like kimchi), Levantine cuisine (the new Mediterranean diet?) and spritz culture which seems destined to have staying power despite the debate sparked by last year’s infamous New York Times critique.

One trend not mentioned in the Kimpton report is restaurants using sustainable ingredients. Sustainability appears to be a growing trend whether simply referencing ingredients or extending into sustainable construction and design. While sustainable restaurants have always had a following, they seem to be growing, along with a more socially and health-conscious generation of younger travelers.


Smart hoteliers are actively streamlining operations and improving efficiency in their restaurants through technology. Linking food and beverage activity with guest profiles, allowing for app-based transactions and online reservations systems are just some of ways hotel restaurants can and should be incorporating digital tools. Many of these technology shifts predate the pandemic but warrant attention nonetheless – many even more so in our socially distant environment. Personalized contactless delivery is being designed and developed as a growing trend. However, it is yet to be seen whether technology can ever displace the friendly server who offers personalized menu suggestions and recognizes special occasions.

The Rise of the Ghost Kitchen

Last, but certainly not least: the biggest restaurant trend in 2020 is the move toward ghost kitchens. Smart hoteliers are likely considering extending existing fine dining properties into daytime ghost kitchens. These highly efficient culinary endeavors capitalize on food delivery trends that can be extended beyond the hotel property while avoiding any further strain parking as there is no front-of-house.

“We get to the restaurant every day around 11 am for prep and don’t open until 5 pm anyway. We’ve had a lot of time on our hands these past few months [and] figured this was the perfect time to roll it out,” says Houston-based chef-owner Ryan Lachaine who recently launched a specialty sandwich ghost kitchen out of his acclaimed Riel restaurant.

The ghost kitchen allows restaurants to compete in the high-demand delivery food business which has done well alongside drive-thru business in the pandemic. Furthermore, the potentially long-lasting contraction in corporate travel may mean less fine dining and more fast casual and trendy operations that cater to leisure travel more so than business travel. Ghost kitchens should allow hotel restaurant operations to capitalize on both using existing infrastructure. This innovation allows hoteliers to execute concept testing without completely reinventing their food and beverage operations.

The New Normal

While the food and beverage experience has always been a crucial aspect of the overall hotel guest experience, the new era in which we find ourselves has caused us to rethink everything. The hotel restaurant has to strike a balance between being functional enough to warrant the diner’s participation, yet experiential enough to make the diner prioritize the hotel restaurant over other options. This requires a great deal of consumer exploration as old models are likely no longer sufficient to keep hotel restaurants profitable – at least until things return to some kind of new normal.

This commentary piece originally appeared on Hotel Executive.

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The degree of necessity. Luxury products and habit forming ones, typically have a higher elasticity.
Proportion of the budget consumed by the item. Products that consume a large portion of the consumer’s budget tend to have greater elasticity.
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