On a cold and frosty Thursday morning myself and fellow ‘bean’ Gemma made our way to the M by Montcalm hotel in Shoreditch to hear the latest insight on the UK hotel market from MCA. As the leading foodservice agency, representing a number of clients for whom the hotel sector is a key market focus, we were there ready to take it all in. Simon Stenning and his team took it in turns to run us through every aspect of the report including quantitative market data, consumer insight and even decision maker opinion, but here are our top ten take-outs…
Across The Eating Out Market
1) There’s good news across the eating out market, as when compared to 2015 Q3 figures, spend is up 9%, giving an average cost per meal of £7.55. Frequency is also up 6% to 16.5pp whilst the majority of consumers intend to keep on as they are, even after the Brexit vote. On the downside, participation is slightly down 0.7pp but is still very high at 93.1%.
2) A good experience and a nice environment are two key drivers for consumers, who are looking to be ‘wowed and woo-ed’, so the pressure is on with regard to décor, service and ambiance.
3) There is growth across all day parts but the biggest increase is from breakfast, showing the highest ever frequency up 12% YOY, with spend rising to £5pp and representing 15.5% of eating out occasions (although this has shown signs of flattering off post-Brexit). This is being driven mainly by 25-34 year olds who are choosing to breakfast at coffee shops. Brunch is also on the rise with 10% of meals now described as brunch representing 600mil visits per year! (Mainly, we suspect, down to the influence of Lucy, our resident brunch connoisseur!)
4) The hotel market as a whole (including non F&B) is worth £40.3bn, across 42,249 outlets (of all kinds of accommodation from leisure parks to B&B’s, budget hotels to luxury) and has shown strong growth since 2011, up nearly 15% driven by a rise in occupancy rates, increasing domestic and tourist spend and by the improving economy. London, as ever, is a bubble with one in three new hotel rooms opening in the capital where room rates are considerably higher.
5) The growth in the market is polarised with the majority coming from budget hotels (notably Premier Inn and Travel Lodge) and the boutique end of the market which is growing as well, with guest houses in decline and the squeezed middle of two and three star sites shrinking. This may well be influencing the decline in Food & Beverage (F&B) as a share of TrevPAR (total revenue per available room) has steadily declined for the last 15 years and now accounts for only 17% in London (where food concept competition is fierce) and 30% in the regions. However, as the future holds possible weakening around London occupancy rates and rising property costs as well as the prospect of less business travellers post Brexit, hoteliers may need to up their F&B game in order to help bring in additional revenue. Indeed the importance of F&B in the hotel sector is expected to increase over the next three years, outpacing growth in the wider eating out market, so there will be opportunities for suppliers who can help them deliver high quality and good value for money F&B solutions aligned to consumer drivers and trends.
6) Helping to drive F&B in hotels are special occasions, daytime occasions; like afternoon tea and pre-theatre menus; along with events such as wine tasting and celeb chef dinners. Trends that hotels are exploiting include burgers, adventurous cuisines, healthy and free-from menus, artisan coffee, food on the go and premium cocktails and spirits. Hotels also offer a diverse range of F&B offers, from branded restaurants, non-standard restaurants and fine dining, with solutions including both in-house and contracted out. Many are raising the standard of their F&B such as Travel Lodge’s breakfast offer, Lavazza link-up and grab and go boxes, Moxy at Marriot 24-hour convenient vended solution, Holiday Inn Brighton’s Stock Burger Co stand-alone site and some Best Western sites even use produce from their own kitchen gardens. Whilst others like Ham Yard have diversified with bowling and screening rooms and Ace Hotel has a nightclub, all day menu, coffee shop and fresh juice.
7) Hotels can also look to partner with restaurant groups which can work well, examples include: Hilton partnering with Aubaine and Jamie’s, Marriotts Regents Park with Carluccio’s, Gusto and the Alchemist to open in The Grand Hotel Birmingham and Belo at the Crown Plaza Bloomsbury.
8) As far as the consumer profile of hotel guests, unsurprisingly they tend to be older than the average eating out consumer, more affluent and tend to be driven by special occasions. Predictably hotels have a low participation level at 51% and are the least frequently visited. With regard to day parts unsurprisingly hotels over-index against breakfast (the full English breakfast being the most popular dish in hotels) and dinner and although hotels have a small share of the overall eating our market they command a very high average spend, second only to fine dining. This should mean that they provide a quality food offer, however that doesn’t seem to be the case with consumers rating them highly for experience and environment but not for food quality or value for money the only exception being budget hotels where there is a much improved perception of quality and value for money in line with recent improvements made by the big players.
9) Interestingly coffee and wine is key to hotel F&B and if hotels are looking to attract lunch custom they need to make sure there are plenty of fish options.
10) The MCA also went out to hoteliers to get their opinion on current trends and challenges, of which there are many. Firstly the trends…they include: afternoon tea, cocktails, experiences & events, free-from menus, grab and go, informal dining and street food. While the challenges include political uncertainty affecting business confidence and trading volumes, cost pressures, competition and the rise of the online travel agents and their increasing commission levels. However, there are opportunities on the horizon as the current exchange rate levels may lead to a boost in staycations and tourism, whilst overall consumers are looking for the atmosphere and ambiance hotels can offer, plus hotels have the space to be flexible and offer things like pop-ups, experiences, branded concessions to help attract non-residents as well as residents.
All in all the morning was very informative and offered a strong insight into this diverse sector. With so many kinds of ‘accommodation’ and F&B solutions it seems as long as operators keep the consumer at the heart of what they offer and deliver on quality, value for money and experience, then the future for F&B in hotels looks promising.