Using Wine to Grow Revenue Per Guest

The uncertainty around the economy in 2023 will likely translate into some form of normalization of travel numbers at or slightly below those for 2022 or 2019 (as a comparative). While we’ve long suggested a transition away from RevPAR towards more holistic revenue modeling, today’s post focuses on one specific way to grow revenues per guest: sell them more wine.

This beverage has been a passion of ours for decades and we’ve applied our knowledge to develop wine strategies to hotels looking to get more F&B revenues from guests. From these assignments, other successes and lots of empty bottles, here’s the single, big takeaway for how to sell more wine: ultimately, every label is just fermented grape juice but it’s the story, specificity and sensorial activation that moves inventory.

Aside from the recession talk in the intro, why should your hotel focus on wine of all things right now? There’s no debating that staffing is a critical challenge at the moment (and by our predictions for rest of the decade), as is enhancing your technology in all manner of automations and digitalizing guest service improvements. But from the standpoint of growing TRevPAR, wine is a low-hanging fruit (pun intended) compared to other initiatives, while a great meal experience (as enhanced by wine) will halo back onto the sentiment towards the hotel stay for more satisfaction all round.

Caveat emptor: wine isn’t the silver bullet to ensure profitability, but an important element within a grander effort of maximizing guest satisfaction through heightened property utilization. To keep 2023’s topline at pace with the gangbuster that is 2022, you need to buttress every head in bed that comes your way with any add-ons and experiential offerings that increase the per-folio amount.

  • What convinces a restaurant patron to opt for the most expensive wine by the glass instead of the cheapest one?
  • How does menu presentation and server training affect a restaurant’s ability to sell the luxury bottles on the wine list?
  • How does the story behind each winery influence its pricing?
  • Is it better to stock obscure vintages and varietals or stick with the more well-known producers?
  • How does ‘anchor pricing’ impact wine sales or any beverage for that matter?
  • What tactics can you take to use wine to incentivize hotel packages?
  • What tactics can you take to boost wine-oriented arrival amenity purchases?
  • How do you evaluate your sommelier’s ability to sell wine?
  • How can you use wine to motivate servers in order to keep them around?
  • What can you do to transform each wine purchase into a memorable experience?

These are a few of the questions we attempt to answer in our latest book, “In Vino Veritas: A Guide for Hoteliers and Restaurateurs to Sell More Wine” (2022). The key word in this longwinded title is ‘more’; we assume your F&B director has all the basics covered, with this book as the tips and tricks to make your beverage revenues sing.

The principle throughout is to figure out how to increase wine sales in aggregate. If you can do that, then you can apply those lessons to any other part of your operations that will drive TRevPAR, be it spa, golf, parking, room service, gift shop, laundry or activities facilitated through neighborhood partnerships. And if nothing else, this book will deepen your knowledge of this millennia-old elixir so that every glass becomes all the more enjoyable.

BITAC Food & Beverage Panel: R, B & E/Restaurant Group – 2023 Corporate F&B Positioning

While F&B was the dominant acronym at the BITAC Food & Beverage conference, the third of three panels at the event was directed around a different one — R, B & E, or Restaurant, Bar and Events. This focus has evolved within the corporate food and beverage scope, as the three prongs have become more important to overall hotel operations.

Four F&B executives from top hospitality firms spoke on these issues on Tuesday at the Fairmont Sonoma Mission Inn & Spa in Sonoma, California. The industry panel took place at the first BITAC conference of the year.

The panelists, each of whom have backgrounds as chefs, were initially asked about the background of RBE and how to define it. Nathaniel Brethold, Corporate Director RBE for CoralTree Hospitality, said that the F&B term isn’t as robust as RBE and doesn’t fully describe the functions that executives look at. 

“The definition of the hotels are more likely than not the food and beverage that’s being offered,” Brethold said. “It’s in our DNA to make sure that our restaurants are as relevant as possible in each of the markets that we’re foreseeing. And then we don’t even see them as banquet spaces anymore, but we see them as event spaces. Because at the end of the day, normally people are celebrating something and the conference nomenclature is starting to not be as appealing to a lot of ownership groups that they were in the past.”

Guy Reinbold, VP Food and Beverage for Meyer Jabara Hotels, emphasized the importance of events on the bottom line.

“I would not ever discount the impact of events, and the impact on what that does for your group business, your group dynamics and the hotel,” Reinbold said.

Reinbold also talked about increased flexibility in how hotels utilize their space, sometimes having events in a bar or restaurant instead of a typical square meeting room.

Greg Griffie, Senior Vice President of Davidson Restaurant Group for Davidson Hospitality Group, said new hotels have a “third space” built in for event flexibility.

“It’s that usable indoor (or) outdoor space that, whether the restaurant has it, or it’s off your event space, we’re doing it in all of our new builds,” Griffie said.

Brian Contreras, Associate Vice President of Integration Coordination and Corporate Director of Culinary Experiences for Miraval Resorts, said he needs to have input on the design side to make sure hotel and restaurant spaces are efficiently laid out. 

“You have to have some level of input, especially from an ops perspective, specifically for F&B because it’s revenue per square foot (at the) end of the day, right?” Contreras said. “How can you look an owner in the face and say that we’re really leveraging their asset by designing it in a way that only serves the 500-600 rooms that may be above your head.”

Speaking more to design evolution, Brethold said that now bars will often be more incorporated into the lobby area to greet guests with a fun ambience right when they arrive.

“Because who wants to go into a hotel, especially with boutique hotels, and not have energy or liveliness happening in there?” he said. “Gone are those days unless it’s a convention hotel.”

Finally, Contreras wrapped up the 25-minute panel by talking about the importance of researching the local market when coming up with RBE concepts.

“I mean, if you don’t take a look at what’s going on locally, you’re shooting yourself in the foot and wasting a bunch of money that’s not yours,” he said. “Find the niche, be intentional about the concept. Be genuine, be authentic, and activate it. Don’t try to be everything to everybody because you’re just going to be nothing to yourself and the staff.”

BITAC Food & Beverage Panel: New Concepts in F&B to Bring People Back and Attract Millennials and Gen Z

As the pandemic approaches the end of its third full year, hotel restaurant operators are seeing more and more people return to in-person dining. Additionally, these operators are looking for ways to attract younger diners.

Four F&B executives from top hospitality firms spoke on these issues at the BITAC Food & Beverage conference on Tuesday at the Fairmont Sonoma Mission Inn & Spa in Sonoma, California. The panel was the second of three industry panels at the conference — the first BITAC conference of the year.

The panel opened with Richard Garcia, SVP Food & Beverage for Remington Hotels, speaking on F&B trends he’s tracking. He said many Gen Z and millennials want to get out into the communities that they travel to instead of staying inside the hotel.

“There is so much more to the hotel stay that has to happen before they get to F&B,” Garcia said.

Dean Wendel, Vice President of Food and Beverage for Concord Hospitality, added that technology is crucial to bringing in these demographics to F&B experiences. 

“I think if we want to capture them and get them into our spaces, we have to play in that world, Wendel said. “We’ve got to play in that space. And it’s Instagram, now TikTok is the big thing right now. So if we’re going to attract them and be relevant to these next generations, then that’s where we have to be.”

The conversation shifted to customers who have not come back to restaurant experiences post-pandemic. Garcia said he feels this has less to do with COVID-19 factors and more to do with changes the industry has made to cut costs and boost revenue. 

“They’re not coming back because we’ve taken away a lot of what people are used to, but yet we still want to continue to take more money out of their pocket,” he said. “I think that what you have done in your restaurant is really dictating why they’re not coming back. And, have you taken away labor? Have you reduced your menu? Have you lost quality? I mean, there’s a lot to look at.”

Next, panelists talked about the increase in delivery and pickup options that restaurants have been providing. Tom Stafford, Vice President of Food & Beverage for Commonwealth Hotels, Inc., said the latter has exploded in popularity, as many customers want to order their food ahead of time and then have a quick pickup interaction.

Amanda McFarland, Vice President of Food & Beverage for MAKEREADY, LLC, echoed that the ways people want to receive their meals have changed. She also added that in-room dining is “back with a vengeance.”

“If people are ordering GrubHub, why not give them a full-service in room dining experience?” McFarland said. “And I think that’s a really important piece … returning services to your guests. People want that service. And, you know, you can let them order DoorDash in your hotel, or you can create an experience for them.”

She also spoke about the interactive experiences that younger diners are interested in such as classes on cocktails and latte art. 

“People want to learn, and I think that this generation is really curious,” she said. “They have questions, and they want to understand more.”

With high-quality cameras in smartphones being the norm, dining has become more of an entertainment experience for Gen Z and millennial diners to document, Wendel said. 

“I think it’s interactive, they want to try a lot of different things,” he said. “So they’ll go with a group, and they’ll order four or five things and try them all. And they’re taking their pictures, they’re posting, they really want to be entertained.”

McFarland said it’s important for operators to build these experiences into their menus, generating “wow factors” for diners. She also mentioned the proliferation of non-alcoholic drink packages. 

Looking toward the future of F&B heading into 2023, the panelists said they foresee a plant-based and beverage-forward environment.

“We’re focusing on food kind of taking a backseat,” Stafford said. “A lot of the stuff we’re doing in the kitchen is much smaller.”

Garcia said, internally, operators are going to be squeezed by owners to do a lot more with less. Externally, he sees wellness continuing to be a major trend, but stresses that balanced menus are key.

“I think that’s what’s really important is you still have to have a really good menu mix of indulgent items, because I’ll be frank, as much as we talk about wellness, look at your product mixes and tell me what number 1, 2, 3 and 4 are, and none of them are in the wellness category,” he said. “So I think you still have to have that and have that balance.”

BITAC Food & Beverage Panel: How to Better Manage F&B Amidst Today’s Labor & Supply Chain Shortages

As the new year begins, hotel executives have labor and supply chain issues on the front of their mind. Shortages in kitchen labor and across the supply chain have impacted operators around the globe in recent years.

Four F&B executives from top hospitality firms spoke on these issues at the BITAC Food & Beverage conference on Monday at the Fairmont Sonoma Mission Inn & Spa in Sonoma, California. The panel was the first of three industry panels at the conference — the first BITAC conference of the year.

Speaking in front of a sold-out audience, the panelists gave their perspectives on these important topics during the 25-minute session. Elie Khoury, EVP of Operations at Aimbridge Hospitality, was asked about how supply chain shortages are impacting hotels today. Khoury said that, post-pandemic, he and his team have realized that collaboration is key across all links of the supply chain.

“I think because of the labor shortages throughout the industry, whether on the supplier or manufacturer or industry, it kind of taught us that we have to be much more collaborative, and kind of discuss the approach from the sourcing to the distribution to the hotels to the full restaurant operations,” Khoury said. “So I think if we don’t do that, we’re always going to continue to struggle.”

Roger Taylor, VP of Procurement for TPG Hotels & Resorts, echoed the sentiment of collaboration, adding that employees must feel genuine care from employers to be motivated to stay in a job long-term.

“It is critical that you take care of your employees better than anybody else does,” Taylor said. “You really got to show them love and kindness because the whole evolution of the hospitality business has changed.”

As supply chains get disrupted, hotel restaurant staff need to be “creative with less,” Khoury said, shrinking their menus while still offering a wide variety of tastes.

David Morgan, Vice President of Food & Beverage at Sonesta Collection, said the collective shrinking of menus can actually help restaurants better meet the needs of consumers. 

“I think the world changed,” Morgan said. “I think people’s appetites have changed and desires have changed. And it’s okay now to have 10 things, but just make sure the 10 things are great, that they make sense, and we can focus on them. And I think that’s a good thing for all of us.”

Another shift in consumer tastes comes on the latter side of F&B; many travelers today want healthier alternatives to alcohol, Taylor said. 

“There’s a lot less people drinking, and so the mocktails, attractively prepared and everything like that, are becoming more important to today’s consumer in that suburban hotel setting,” Taylor said. “And they’ll pay for a non-alcoholic beverage.”

As time ran short during the panel, panelists were asked to gaze into their metaphorical crystal balls and talk about their predictions for F&B labor and supply chain shortages in 2023. Brian Sterner, VP of F&B Operations at Delaware North, said he thinks the “mocktail movement” is going to take hold this year. 

“That sober-curious movement will take off, beverage menus are going to continue to expand and almost take more real estate on an overall menu than than food itself,” Sterner said. 

Morgan and Khoury said that F&B operators need to embrace emerging technologies in the field. Whether it’s the expansion of QR code usage or the adoption of robots for serving and hosting, technology can be a powerful tool used to solve labor and supply chain problems. 

“Technology is going to shift the way we look at our industry in such an incredible way,” Morgan said. “I don’t think many of us even understand. I mean, yeah, there’ll be robots in the kitchen. [But] I think there’ll be efficiencies in that that we haven’t even thought about. I’m kind of excited about what technology is going to do and how it’s going to positively impact our business.”

Thinking in Terms of Biohacking Foods for Your Hotel

Superfoods have been all the rage for the past decade and chefs have obliged by putting them on the menu. Think blueberries, kale and broccoli, while those in the non-plant-based camp consider pasture eggs to be a superfood. Any way you put, diets are changing and hotels have to keep up, both in terms of chef-driven restaurant concepts to drive the allure of the hotel (and hopefully with a positive halo back on to rate growth) and appeasing those guests who are opting for a healthier lifestyle.

Enter the term ‘biohacker’ which goes a step beyond superfoods in terms of signifying people who are looking to ‘hack’ their biological machinery in order to optimize performance, whether that performance is cognition, mood, memory, intelligence, athleticism, body fat percentage, skin elasticity, hair growth or holistic longevity.

As the fuel for this machinery, food is obviously a big part of this, whereby biohackers largely aim to optimize each meal by adding morsels of other ingredients that can act as flavor enhancers but also have antioxidant, hormone modulating, nootropic or adaptogenic properties.

With the trend and terminology covered, how does a hotel or F&B operation go about making any money from all this? It’s not exactly a straight-line projection, but from our consultancy work we start by applying the adage, “You can only manage what you measure.”

In other words, any new ingredient you put on the menu can be underpinned by strong inventory management and digitally agile marketing support. Let’s begin by identifying ten great biohacking foods (to also inspire you for your own eating purposes) then go into how to track their adoption by patrons (or lack thereof).

1. Garlic (contains sulfurous thiols that are antimicrobial, although not the best for the breath)

2. Turmeric (plenty of documentation on its anticancer effects)

3. Apple cider vinegar (blunts insulin response following carbohydrate intake)

4. Capers (highest in quercetin, a longevity antioxidant also found in onions and fruits)

5. Parsley (contains PQQ and apigenin which promote energy restoration in the cells)

6. Cilantro (a powerful chelator that removes heavy metals; tastes like soap for some people)

7. Brazil nuts (very high in selenium which is important for mercury chelation)

8. Spirulina (contains the anticancer molecule phycocyanin and helps chelate aluminum)

9. Marine collagen (vegan form of bovine collagen; over 30% of our bodily protein is collagen)

10. Edible flowers (providing a whole color wheel of antioxidants and other beneficial compounds)

Now let’s outline some ways to incorporate these items onto the menu:

• Most breakfasts contain a yoghurt bowl with some combination of fruit, nuts and seeds, where a dollop of chopped Brazil nuts or spirulina can be a two-dollar extra

• At the smoothie bar, spirulina and marine collagen are already proven add-ons often priced at three or four dollars more per scoop

• Collagen, vegan or animal-derived, is now often sold under the buzzy ‘bone broth soup’ which can be great for winter menus

• As practically the only two salty fruits, capers and olives would make for a nice appetizer

• With people looking for alcohol alternatives, turmeric has been a mainstay when sold as ‘golden milk’ (nut milk, turmeric, cinnamon, ginger, black pepper and honey all boiled together)

• Likewise for dieters and as a digestif, apple cider vinegar, lemon juice, garlic, ginger, honey and sparkling water combine well into a restorative tonic

• For parsley, cilantro and edible flowers, these can all be sold as individual add-ons to a salad or main or combined as a ‘fresh herbs and flowers’ addition

From these ideas, you can see that nothing here is breaking the bank and nothing here is going to add seven figures to the bottom line either.

Instead, adding healthy foods is about deepening your KYC (know your customer), so that you have more data on the percentage of guests who fit within the ‘healthy eater’ profile and may thus be more inclined to want some other form of wellness programming – spa enhancements, in-room fitness, onsite yoga classes or paid-for biohacking onsite machinery like a hyperbaric oxygen chamber.

Let’s focus on the singular example of offering a handful of Brazil nuts as a $2.50 extra to the yoghurt bowl (with the assumption that this is well-typeset in both the physical and digital menus so that it’s visible). Restaurant guest purchases of this add-on will be recorded within the POS; from there you can do a basic before-and-after comparison to determine whether the availability of Brazil nuts was purchased in a significant amount and also if this addition increased total sales of the yoghurt bowl.

Connecting your POS to the guest profile data in your PMS (whether it’s a two-way integration or piping the data into a third entity like a CRM) allows for even more end-to-end feedback and analysis. If you know an overnight hotel guest purchased the Brazil nuts addition, you could set up an automated workflow within your post-stay survey platform to specifically ask about whether they would pay for other health-minded products during their trip as well as what their preferred products would be.

In this sense, the minutia can inform a greater whole. The two of us are very bullish on wellness for hotels, but this takes on numerous different forms depending on the brand. To discover what’s best for your organization, you have to test and you have to measure, and the additional of a few biohacking foods can help you do just that.

Using Labor Data to Minimize Costs and Turnover

While the pent-up demand from 2022’s travel recovery has now normalized, hotels are still mired by inflationary wages and high turnover. This presents a sweeping, existential issue for the industry on multiple fronts, with labor issues at the forefront of discussion heading into this year’s ALIS (American Lodging Investment Summit), happening January 23-25 in Los Angeles.

For owners and investors, increasing labor costs mean less going to the bottom line which can disincentivize capex and product innovation. For operations, staying within budget can mean cutting corners elsewhere, ultimately impacting service standards. All this can lead to a self-reinforcing spiral if we don’t address it head on.

To get a bit more granular on the problem in order to then help hospitality organizations find near-term solutions, we interviewed Adam Glickman, VP of Brand Strategy at Actabl. Hotel Effectiveness is one of Actabl’s solutions; it uses an unparalleled network of labor-related data feeds accrued from over 6,000 US-based properties to then offer benchmarked recommendations to individual hotels and groups.

To kick off this conversation, Glickman showed us two mic-drop statistics. As of December 2022, service fulfillment on guest expectations has reached 97% of 2019 levels, but the average CPOR (cost per occupied room) across all hotel categories has hemorrhaged to over 15% above the 2019 index. Then on the turnover front, the shocker is that over 50% of general managers have changed jobs in the past two years.

While turnover has always been very high in our industry amongst hourly employees, the current rate of leadership turnover is unprecedented. With high churn both at the hourly wage and salaried levels, hotels are now confronted by huge cost overruns right at a time when rates and occupancies are primed to stagnate, all the while on-property leadership is also lacking to navigate these uncertain waters.

Reducing Replacement Costs for Profit Preservation

This past summer was all about recovering from the pandemic through yielding in order to maximize topline revenues. The next few business cycles, however, will be centered around defending bottom-line profits while still upholding or surpassing current service expectations. In the face of rising wages, we’re huge advocates of automation so that hotels can make labor as efficient as possible, thereby improving service delivery and restraining overtime requirements.

But there’s another crucial question in here that we’ve asked CFOs and other C-level executives when on consulting assignments, and it’s one where we see Hotel Effectiveness offering an integral answer. Have you (the owner or operator) ever calculated the true cost of turnover?

In this quest for profit preservation, the pain point that hoteliers see is the blooming cost of associate wages. What they don’t see is the replacement cost which has also dramatically increased in today’s supply-sensitive labor market. Generally speaking, this includes:

  1. Inability to clean rooms and make them available for resale
  2. Interruptions or full cessations of specific services impacting guest satisfaction
  3. Interruptions or full cessations of amenities impacting ancillary revenues
  4. Human resources time spent in recruitment and screening of new hires
  5. Paid onboarding time and sign-on incentives for new hires
  6. Training time of new hires by veteran team members

When fully tabulated, you’ll find that, for the vast majority of cases, the total replacement cost is substantially higher. Therefore, while on the surface a wage bump may be agonizing, it’s actually the better move to avoid the torment of employee churn.

To this end, Hotel Effectiveness offers region-specific wage benchmarks so that any property can stay competitive. And often this arms race for some markets can come down to as small as an extra 25 cents or 50 cents above index.

With so much cultural narrative right now around a ‘living wage’ and the ‘high cost of living’, what the two of us have seen is that housekeepers or front desk agents working at different properties in a city or area all talk to one another through backchannels like WhatsApp group chats. They have come to realize their power in a labor-constrained landscape and are willing to leave an employer without warning for the competitor next door if the wage offer is only marginally better. In this environment, profit preservation is directly related to employee retention, thus requiring vigilant monitoring of benchmarked wages.

Smart Labor Management to Aid Decision Making

When discussing associate replacement costs, nothing hits harder than losing a room attendant where the result is an inability to maximize occupancy. Despite all your efforts to retain your housekeeping team – whether wage-related or otherwise – the bitter pill is that there isn’t a wide pool of candidates who want to clean rooms. Why exactly this is comes down to a variety of factors beyond any single property’s control, so for the here and now it’s about making the best with what you have.

During the product demo, Glickman showed us the platform’s real-time daily housekeeping room cleaning forecasting tools, so that hotels can determine the best days to clean rooms utilizing the labor available to them. While this just-in-time daily approach to cleaning rooms is aimed at maximizing occupancy by minimizing out of order rooms, it also works to lower overtime allocations and optimize how contract labor is used.

Next came a detailed CPOR comparison of stayover cleans versus check-out cleans as only Hotel Effectiveness could generate from its proprietary data feeds. For many midscale and upscale brands, the going assumption is that cleaning the room only at check-out minimizes the total number of cleans and thus saves labor hours per stay.

Counterintuitively, a reduction in stayover cleans can lead to a sizably higher burden post-departure due to the check-out rooms requiring significantly more cleaning time. This then creates the problem of drastically more minutes needed to turn a check-out room, leading to knock-on effects like overtime, lower morale or dirty rooms that can’t be sold.

Smart labor management tools become a must have, not a nice to have, to optimize operations costs. In the case of Hotel Effectiveness, much of this is delivered to the harried executive via a dashboard, and to the on-property operations leaders though a simple ‘five-minute labor check-in’ dashboard that immediately compares labor forecasts to actuals with clear projections of overtime usage.

Moreover, with the formation of Actabl this past summer – the new parent company that brings together Hotel Effectiveness with the business intelligence platform ProfitSword – these forecasts can be used in conjunction with other business planning tools at the fingertips of corporate or regional executives.

Manager-Level Problems You Don’t See

Just as it’s easy to focus on rising wages instead of employee replacement costs because the former is easier to quantify, the same can be said about how ‘The Great Resignation’ has drained the leadership in key on-premises manager roles. In our opinion, this actually represents an even bigger problem than inflationary wages at the associate level because such job vacancies can delay or outright halt any number of tasks that require signing authority.

Akin to the previously posed question, have you ever evaluated the true replacement cost of losing a general manager in terms of recruitment, onboarding, possible salary increases for the new hire, loss of knowledge and postponed innovation?

With so many situations nowadays that all gain from fast decision making, a vacancy at the top can ricochet through every department. To fight turnover at this level, Hotel Effectiveness offers regional and national benchmarks so that you can ensure your compensation remains fair.

As well, having data segmented by role and by hotel category can tell you when some positions are experiencing especially high churn so that you know where to devote extra attention to avert a management disruption, as well as identify places where corporate teams need to further support their GMs in the field.

So, to close by emphasizing a main point, the key to profit preservation for 2023 is keeping your teams intact. But defending against the damage from turnover isn’t something that can be done solely through goodwill. In a world of competitive wages and managerial pay-scales, you need data to know exactly where you stand.