Exclusive Feature: In the past hoteliers have failed to realise their full revenue potential through food and beverage (F&B) operations due to the complex nature of running in-room dining, restaurants, catering and meetings/events activities simultaneously.
Which is alarming, considering that F&B can account for up to 50% of some hotels’ revenue. But the fact remains that at too many properties, F&B is a largely un-forecasted field, meaning too many hotels are missing out on opportunities to improve workforce planning, save costs, and drive incremental profit.
To better maximise revenue opportunities from F&B operations, hoteliers need to undertake a holistic approach and fold forecasting and revenue strategies into F&B areas.
As travel again reopens for many people across the APAC region, hotels must produce accurate and consistent F&B forecasts to maximise revenue opportunities and speed their own economic recovery from COVID-19.
Why F&B has often been un-forecasted
Until now, forecasting F&B has been an imprecise process lacking the correct technology for proper analysis for a variety of reasons:
Too Many Channels – Methods of calculation can vary for channel of revenue, and with F&B, revenue comes in many forms: catering, room-service, mini bars, restaurants, and more.
An Excess of Data – The culmination of these channels in F&B can generate up to ten times more data than rooms. This information can be overwhelming to process and understand manually, causing inaccurate decisions.
Distribution – Those outlets open to the public must deal with the challenges of distinguishing residential (guest) from non-residential (non-guest) revenue. In addition, some F&B services, such as breakfast, are often packaged with rooms or meetings services, making it more challenging to allocate revenue. The same goes for costs, which are often shared among departments.
Variable vs. Fixed Costs – F&B services tend to be heavy on variable costs such as labor and others, making it harder (and extremely important) to forecast when compared to fixed costs.
Responsibilities – Accountabilities for F&B forecasting are often either dispersed among departments and positions or stockpiled by one individual with little input from other stakeholders. This has the potential to produce incomplete or inaccurate data and lack of accountability.
KPIs – Key performance indicators (KPIs) in F&B are more varied and complex than room KPIs. For example, a popular KPI is RevPASH, or revenue per available seat hour, which accounts for revenue, time and capacity but not costs. It’s a complicated set of factors.
However, as travel opens and demand for F&B increases with occupancy and events, there is a need to shift toward a holistic approach to forecasting and budgeting to generate greater F&B profitability.
Maximise F&B revenue opportunities
The current methods of forecasting F&B used by most hotels can vary results by up to 10%, making the risk of poor planning and imprecise analysis particularly dangerous to hotel revenue. The science of revenue management can help with decisions driven by data, technology, and proven methods—rather than by guesstimates.
By applying revenue science to F&B forecasting, for instance, hotels can improve planning and menu engineering, optimise pricing and revenue and streamline the forecasting process.
The results of a total revenue forecasting approach can help produce more revenue. This is achieved by analysing F&B and ancillary revenues, which ensures hotels are engaging in a holistic approach to revenue management that uses the entirety of their revenue generating business assets (not just guest rooms) to inform business decisions.
A more in-depth approach to business forecasting across F&B and other areas of a hotel can lead to improved portfolio performance, as total revenue forecasting makes it easier for managers to sell a true picture of business operations and opportunities to investors and owners, allowing for a growth in portfolio.
This approach can also better optimise hotel assets more generally, given total revenue forecasting helps maximise all spaces within a hotel, ensuring no restaurant patron or mini-bar enthusiast goes unaccounted for.
Reduce F&B wastage and operational costs
Maximising the guest experience while minimising operational costs, including labour costs, should be the aim of any hotelier. Accurate demand forecasting provided by an RMS can greatly enhance a hotel’s labour scheduling of F&B operations. Through integrating forecasts across a hotel’s operations, F&B managers can use the forecast to inform their staffing decisions and account for periods of higher or lower demand.
As the number of guests a hotel carries can directly influence catering, kitchen and room service needs; forecasting data can help set staff rosters accurately in the future.
Another factor to consider is wastage from F&B departments, especially when it comes to those items with an expiration date. Knowing when there will be periods of high and low demand, as well as from which segments will be the key consumers of these perishable items, will help hoteliers ensure they order the products at the right time and avoid costly spoilage.
Forecast for success
In order to maximise revenue opportunities and save operational costs in 2022, hoteliers across the APAC region need to apply the latest forecasting approaches to their F&B operations. Now is the time hoteliers need to ask themselves: are we maximising opportunities from F&B, or are we leaving money on the table by not forecasting properly for this potentially highly profitable business area?
Tracy Dong is the Principal Industry Consultant at IDeaS
For more information on how your hotel can improve its F&B forecasting in 2022, please visit: www.ideas.com