Hotel operators have a problem. F & B has long been an important component of hospitality, but while customer preferences have evolved, hotels largely haven’t, and as a consequence those customers are heading for independent restaurants in droves, leaving hoteliers to count their losses. At SEAHIS 2017, a breakout panel of industry experts came together to explain how the independent restaurant sector has been going from strength to strength, and to show how hotel operators can revive their fortunes and tap into the soaring demand for dining experiences.
Rohit Sachdev, Managing Director of Soho Hospitality, said one reason for the success of restaurants such as Bangkok-based After You, a small chain of dessert specialists with annual revenues in excess of half a billion baht, is the fact that consumers are dining out more than ever before. The Chinese middle classes are dining out on average 60 times per month, followed closely by the Thais at 45 times. This enormous spending power of the middle class then attracts yet more young entrepreneurs to enter the market.
But how do those independent restaurants become successful? Rohit believed that dining is now being perceived in a different way. “The middle class consumers are changing the way we look at dining because these are not consumers who go to see or be seen, they are looking for a restaurant to feel good, they want emotional connectivity, and they also want value for money,” he explained.
Hotels, in contrast, have rather taken their eye off the ball. While restaurateurs have been attending to customer trends and needs, the big hotel operators have instead been busy signing management contracts. Independent restaurant owners serve their customers with passion and dedication, creating lasting memories which hoteliers have simply failed to match. Hotel operators have dedicated their efforts to securing new contracts by improving their sales and marketing teams under hundreds of distinct hotel concepts, while still working with the same old F & B team. The mentality for big operators is to look at the big picture – but what about the individuality and attention that consumers want? What about the dedication to those small details that truly get the customers excited?
One possible solution has been tried by WHARF Hotels under President Jennifer Cronin, who has hired independent contractors to run her hotel restaurants. “We are looking for future rock-star chefs, who are not necessarily in the machinery of the big companies,” she said. All of her General Managers are now being tracked on the return per square foot for the restaurants as the company seeks a new mindset and mentality, and is willing to take the risk of introducing new ideas instead of continuing with the traditional all-day dining restaurants.
For small hotels, the all-day dining concept can be something of an eyesore. An empty restaurant looks neither friendly nor inviting, so Rohit suggested that the main dining area which is used for breakfast should turn into something else in the afternoon. In Rohit’s case, his own hotel has been transformed into an Indian themed restaurant which has attracted very favorable online ratings. However, an upswing in hotel guest satisfaction has also been observed, with guests rating the breakfast experience much more highly in the new restaurant surroundings, even though the breakfast itself was unchanged.
Furthermore, as an independent restaurant owner Rohit said he would never hire a chef with a background of working only at five-star hotels, because in that situation, no matter what happens to the business, the chef will never go unemployed. It is better to hire a person who is wholly committed to the job. A solution for hotels is therefore to change the incentive system for both the restaurant managers and the chefs so that their individual success is tied to the success of the restaurant.
Changing strategies in order to change customer perceptions is an approach which also found support from Nigel Harris, Executive Vice President of Onyx Hospitality Group. “As operators, we have to be a lot more reactive,” he stated, before adding that there is also another psychological barrier for hotel restaurants to overcome in order to compete with the independent owners. Most people view hotel restaurants as expensive, so Nigel’s strategy is to divorce the restaurant from the hotel itself. By having restaurants directly facing the street, with signage displaying no relationship to the actual hotel, they have become much more accessible and are no longer perceived as costly. Meanwhile, hotels with more than two restaurants are becoming far less common as owners have realized that the space can be used far more profitably as meeting rooms.
This growing realization that the traditional approach to hotel F & B is outdated, combined with an increasing tendency to follow customer trends through social media and employ revenue management technology to analyze every aspect of a hotel’s operations, is set to change the landscape significantly. If hotel operators wish to compete with independent restaurants, they need to look closely at what those restaurants are doing, and learn the secrets of their success.