Are the glory days of hotel fine dining over?

Grand hotels and fine dining were once inseparable bedfellows. However, in the past few decades, in-hotel dining and room service revenues have been squeezed dramatically by changing tastes, technology-driven alternatives, and the ease of purchasing.

JLL’s Joseph Sim and I explore whether hotel owners and managers can reclaim market share and rebuild customer loyalty in this evolving environment.

It may be a depressing sight for hoteliers who’ve come up through the F&B ranks to see guests coming down to reception and receiving dinner or even breakfast in a brown paper bag from a food delivery driver. The theatre of wheeling in the food trolley and delivering room service dishes under silver cloches and Champagne in chilled ice buckets might still be seen in Hollywood films, but increasingly rarely in real life.

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The question is whether hotels have lost the F&B war and should abandon the field in favour of specialising in rooms, conferences, and functions.

The answer is, as expected, a lot more nuanced than a simple yes or no. ‘Traditional’ F&B needs serious review and innovation to keep up with hotel consumers’ changing demands and to protect hotels from further revenue leakage. But this is not an entirely new phenomenon.

Back in 2018, an executive chef in Atlanta wrote an article asking, “Have Millennials Killed Room Service? And Is That a Good Thing?”

Of course, he wasn’t going to do himself out of a job by admitting defeat, but in the six years since his prophetic question, the F&B environment has become even more challenging for hotels.

Many hotels have tried revitalising their F&B, but it requires a considerable investment in design and resources. Casino hotels often employ star chefs to run high-profile restaurants, but this is usually more about taking the focus off their principal business—gaming—than returning to the glory days when hotel dining was a real status symbol.

These days, 5-star hotels rarely offer ‘fine dining’, and their restaurants come with restricted operating hours, more casual menus, and limited, relatively unimaginative, room service options.

Not surprisingly, hotel guests are baulking at paying $40 – $55 for buffet breakfasts, especially if they are travelling on their own expense account or have a daily per diem for food expenses that can be pocketed by opting for a fast-food option and coffee.

The issue for CBD hotels is that regular patronage from non-guests working in the city has also been decimated by the work-from-home trend that stubbornly refuses to ‘return to office’, especially in Melbourne, where CBD offices are recording less than 50 percent occupancies on Fridays and barely over 60 percent on other days.

One solution for hotel owners looking to solve the hotel F&B conundrum has been to call in hospitality experts to reimagine hotel dining.

Sydney’s oldest 5-star hotel, Sofitel Wentworth Sydney, contracted House Made Hospitality to deliver four new hospitality concepts for the $60 million renovation of the lobby and level 5 courtyard area. Utilising the horseshoe courtyard area had been placed in the “too hard” basket for over 50 years, but with a fresh vision and considerable investment, the attractive inside/outside space was recently launched as the French-Vietnamese fusion restaurant, Delta Rue.

Hotel restaurants can be far more than potential profit lines on the PNL—they can help define a hotel’s character and attract publicity that benefits rooms. Felix at The Peninsula in Hong Kong, Dinner by Heston Blumenthal at London’s Mandarin Oriental Hotel, and Alain Ducasse’s three restaurants in Monaco, Paris, and London all help define the hotels in which they operate and probably add significantly to the room rates that can be commanded.

Opening a new brand by focusing on a signature restaurant was a tactic used by Ace Hotels for the launch of their first hotel in Australia. Celebrity chef Mitch Orr was employed to headline the rooftop Kiln restaurant, giving the Surry Hills hotel identity and street cred.

He has recently left for St Kilda’s The Prince Hotel, whose owners are hoping he will revive the hotel’s glory days when its fine diner Circa attracted guests to the seaside venue.

However, today, hotel owners and managers are less likely to be swayed by celebrity, focusing instead on whether an F&B specialist consultancy can deliver results at a reasonable rate and work within the rigid structures of a hotel environment. There are some hotel owners who believe that hotel space is best allocated to rooms to maximise revenue generation, but as legendary Good Food critic< Terry Durack, pointed out following the launch of the innovative Sydney Common as the Sheraton Grand, maybe the priorities need a rethink.

“The thing that hotel restaurants have that normal restaurants don’t have, is space,” said Durack.

“Sydney Common stretches across the first floor of the Sheraton Grand, from the open-plan dining rooms to a raised circular Champagne Bar and a flash private room for 16. They could turn it into 40 different rooms and make more money per night in accommodation than they would in hospitality. But then, would everyone come to stay if there wasn’t a drawcard restaurant?”

And that’s the fundamental question for hoteliers. Can the reputation of an in-house restaurant give a hotel a competitive advantage in enhancing guest experience when it comes to accommodation?

That was the thought behind the inclusion of the fancy Bar Lettera in an otherwise straightforward Citadines hotel project in the business hub of North Sydney. There are plenty of mid-market apartment-style properties in the destination, but the trendy Bar Lettera makes the Citadines stand out against the competition.

Full-service hotels, even midscale hotels, will always need to provide some F&B, and there are ways they can make their offer more attractive without investing in massive design upgrades and expensive chef hiring.

For instance, there is a trend to rooftop bars across Australia, and hotels in cities generally have a height advantage, especially in a place like the Sunshine Coast, where they also have spectacular water views just waiting to be monetised. Holiday Inn Express Sunshine Coast operates little more than a breakfast venue during the day but has just opened its rooftop pool area on weekends for sunset drinks to the public.

If a hotel wants to continue offering full buffet breakfasts and charging $40 plus, it needs to be special. Most simply aren’t. If the hotel is doing a roaring trade with leisure couples on weekends, it can be marketed more as an indulgent brunch, which can also be opened to locals. 

Most breakfast buffets haven’t changed in decades, which is why their take-up (unless offered as a discounted inducement or a package inclusion to accommodation) is low. However, Grab & Go alternatives for breakfast—especially when barista coffee is included—can help plug some of the fast-flowing breakfast revenue leakage.

Reception areas and lobbies can be converted into casual areas with limited F&B offerings such as coffee, wraps, muffins, wine, and beer, which can encourage hotel guests to stay in-house for a meeting or some downtime rather than seeking F&B elsewhere. CitizenM was a pacesetter in this area over a decade ago, transforming unproductive spaces into revenue sources. 

Most hotels have given up on room service, and those still relying on serving the ubiquitous club sandwich may need to review their options. With all tastes and cuisines available for delivery around the clock, it makes sense for hotels to contract with local providers and deliver a fast, efficient service while taking a clip of the ticket along the way. Digital menus from nearby restaurants or food providers should be easy to access and secure to deliver. This would suggest that hotels should actively work with local providers and effectively incorporate their supply as a hotel service.

If brand guidelines require the provision of in-house room service, providing a healthier menu focusing particularly on all travellers can attract loyal accommodation bookers.

A good gym and light, healthy dinner choices are attractive for many business travellers who are happy to dine in-house at the restaurant or in their room if the product and environment are right.

For any hotel with dining venues, their F&B program is a prime opportunity to give guests a taste (literally) of a destination. While the corporate accountant may want to push the procurement deals that deliver lower-cost, higher-yielding products, guests are much more discerning. Championing ‘local’ might not be as attractive to the bottom line, but a local wine, craft beer or chocolates in the mini bar or a curated farm-to-plate menu at the restaurant can persuade guests to spend on in-house F&B. 

Even for hotels not interested in operating a signature, fine-dining restaurant, upgrading F&B can be highly beneficial for meetings and events business. Exceptional catering for conferences and events is rare, but if a hotel can deliver dining that exceeds expectations, it can encourage conference organisers to give preference to the hotel for future events, thereby boosting room revenue and yield. 

The glory days of hotel fine dining are likely to be gone, but hotels still need to pay attention to the importance of F&B in driving loyalty and ongoing hotel revenue. Whether through innovative in-house initiatives or by providing a variety of external F&B offerings delivered through innovative technology tailored to guests’ preferences, hotels can use F&B to increase spending and positively impact the guest experience.