I have been thinking a LOT lately about the state of hotel restaurants and their potential for an”ice age” era coming up- and soon! Our industry is certainly brought with its unique set of obstacles and challenges and hotels have been finding it increasingly hard to have RevPar improvements keep up with rising costs, especially those in labor.
Its really a losing battle. Wages, social, and welfare costs are going up faster than we can keep up, and this phenomenon is something our industry has sort of buried its head in the sand about. We keep trying to cut costs and services in order to keep pace and still generate hoped-for GOP. You cannot cost-cut your way to profitability. You can only cost-cut your way to less guests frequency and lower satisfaction scores.
The hotel restaurant has gone the way of the dinosaur. We see now empty rooms at lunch and dinner with the sole diner who has no where else to go. Soon, I am willing to bet, the Hilton’s, Marriott’s and Sheraton’s of the world will cease spinning their wheels and limit their offerings to breakfast and a bar with a nibbles menu and that’s it. The full-service, full-time restaurant is going to be like what internet access fees used to be(and are now mostly free) and, honestly, breakfast might be included in the room rate down the road, as well. I mean a LOT of frequency program guests eat breakfast for free anyway.
In most urban locations, it is simply not cost effective to have additional services like in-room dining, mini-bar, and keeping a restaurant open for lunch and dinner (there are exceptions, however). The customer, however, does not understand why breakfast in NYC is around $50 per person (Including tax and tip), they just know its high and, yes, egregious.
I see no end in sight to these rising costs, and with all the obstacles in driving revenue to our hotels like the threat of terrorism, zika virus, and a whole host of other issues, we have got to find new ways to at least keep pace from a profitability perspective and, unfortunately, that equates to having less people around to service your Guests.