Should I join forces with accomodation venues?

There is an interesting battle for market share going on between hotels, serviced apartments and AirBnB at the moment. The early indications are that both new competitors are rapidly gaining ground over the traditional four and five star hotel sector in our major cities. As this trend continues it will present some good opportunities for restaurant and catering businesses who are able to offer innovative services.

My loyalties are divided. Having worked for one of the big, well respected hotel chains much earlier in my career, I still have fond memories of a lavish environment, a hedonistic work environment and a sickening abundance of money (‘redecorate the restaurant? Sure, here’s a million . . .’). Working in these places can be a real hoot. I’m not so sure if I made a positive contribution, but I certainly had a good time.

Hotel f&b

Hotels often have problematic f&b operations

Staying in hotels etc can be a sterile and expensive process

Staying in them as a guest can be another matter. Slowly but surely over the last forty years or so the public perception of value for money has been eroding from the hotel sector. Rooms in city hotels have become more and more expensive, and at the same time they are becoming smaller and smaller as real estate prices escalate and the opulence of their public areas go right over the top. Many of the chains seem to have adopted the banking philosophy of constantly dreaming-up new and innovative ways to charge you more. The prices commonly charged for room service meals, mini bar produce or data are a good example of this.

It’s hard for hotels to compete with independent food and beverage operators

Upper level hotels often lose on their food and beverage operations and subsidise this from their accommodation revenue. That’s partly why rooms are so expensive. As our restaurant industry becomes more and more sophisticated and our standards climb to world class, it gets harder and harder for the hotels to compete in the food and beverage arena — either in operating standards or in economic efficiency. The gulf between the value you can get from the hotel’s restaurant and bars and the independent restaurant or bar around the corner is getting wider and wider all the time.

To be fair though, the big hotels have some issues to contend with that independent food and beverage businesses don’t. First, being part of large and sometimes global chains their wage costs are dictated by complex awards and agreements that they have to observe scrupulously — otherwise they become big industrial relations targets. This robs them of the flexibility you find in smaller businesses. The second issue relates to the requirements to provide 24 hour service in order to maintain their accommodation ratings. This is also expensive.

serviced apartment

Service apartments generally have their own kitchen facilities

The rise of the serviced apartment

Somewhere along the line some bright person dreamed-up the serviced apartment concept. It went something like this: ‘We’ll build a high rise building full of apartments — apartments we can sell off as strata titles if the property turns out to be a dog. We’ll put a modest, tasteful, functional foyer and reception area in the ground floor and we won’t have any food and beverage facilities. The money we save on the lavish foyer and the food and beverage outlets we can use to make the rooms much bigger and much better appointed. We’ll put kitchens and proper laundry facilities in all of them, and we’ll put a comfortable, stylish recreational area with pool and gymnasium. In fact, if it doesn’t need labour to service it we’ll put it in. We’ll operate the place on minimum staff and charge a similar amount as the hotels, but give the customers much more.’

Sub-contract services are in demand

That doesn’t mean you have to go without when you stay at these places, far from it. Here’s where the opportunities for the restaurants and caterer’s come in. The serviced apartment sector is quite comfortable making co-operative arrangements with other businesses as long as those arrangements will enhance guests’ perceptions of their stay. There are a myriad of opportunities that range from the obvious provision of ‘room service’ food and beverage to the more innovative provision of dinner parties (everything you need is there already), fridge stocking and provision of groceries. In addition, most serviced apartments have function or conference facilities that require sub-contract catering services.

Help make it more comfortable

food platter

Provision of items to make a stay more comfortable are in demand

Anyone who travels regularly will tell you it can be a lonely and isolated experience. Despite the luxurious surroundings accommodation rooms can be quite sterile. A well stocked fruit bowl and a plate of cold meat ‘leftovers’ in the fridge can make a lot of difference. Apartment kitchens are generally well appointed but lack the little things that make life pleasant — like a small selection of herbs, spices and condiments, for instance. I also think the provision of high quality cook chill or ‘heat in the bag’ meals into apartment fridges will be a welcome addition for those who’ve had a hectic 12 hour day and want to ‘veg’ on the couch and watch TV. Come to think of it, it doesn’t always have to be high quality — there are times when all of us crave comfort food.

One way or another, if you see one of these apartment complexes being built in your area, a visit to the new GM may prove well worth the time. Most of the opportunities that present themselves give you an interesting chance to utilise your kitchen facilities and staff during quiet or down times. Rather than distract you from the main game they may open up avenues for increased turnover and profit.

It’s the way of the future . . .