The hotel sector represents a food and drink sales opportunity valued at pound;1.8bn in 2005. But it often does not get the attention its size warrants.
There are six reasons why this is so.
The first reason is that within the more than 51,500 outlets in this sector there is a gamut of outlets ranging from five star hotels to small-scale bed and breakfast establishments that are only open for part of the year. Clearly their needs vary and it is difficult to identify specific types of business from the list of potential characteristics such as group owned, independent, internationally owned, family owned, tourist oriented or business oriented, offering facilities such as conferences, health club and the like.
The second reason is that hotels vary enormously in size; more than 32,800 have fewer than 10 rooms. On the other hand, the 7% of establishments with more than 50 rooms – 780 hotels – account for 47% of food and drink purchases. The balance is tipped in favour of the largest outlets to a degree that is not found in any other sector of the foodservice market.
Third, within the larger hotels at least, there is a wide range of places where food is served such as restaurant, breakfast bar, coffee shop, health club, in-room service, conferences functions and the bar.
Each of these areas requires a different offer. For instance a large scale conference is planned weeks or months ahead and requires a complex array of food and beverages served at different times – and sometimes in different locations – throughout the day. On the other hand, a late night arrival requires an unplanned snack delivered to the room. Catering for these differences is difficult enough for the hotel management – and the difficulty of understanding how to help solve them are compounded for the supplier.
A fourth reason is breakfast. Hotels are unlike most foodservice sectors – except for selected sectors like boarding schools, hospitals and prisons – in their reliance on breakfast which accounts for 53% of all meals served by hotels. This means that opportunities are correspondingly greater in this sector than most others for products like orange juice, speciality breads, bacon and breakfast cereals.
The fifth reason is the range of channels through which hotels get their food (and drink) supplies. For food the overall emphasis is on delivered wholesale. This channel accounts for 62% of food supplies. But for hotels with more than 50 rooms this rises to 72%. On the other hand, guest houses and bed and breakfast establishments only get 46% of their food from delivered wholesalers but a further 39% from cash and carries.
The sixth and final reason why suppliers find the sector difficult is that hotels have shown disappointing growth prospects over the last few years – in fact their combined food and drink sales declined in 2001 and the following year. This performance was driven by two factors – one long term the other much shorter.
The long term factor is the decline in small scale establishments which have not been able to keep up with growing demand for quality and service. The longer term issue is the factors that have been discouraging business and tourist visitors from overseas – factors such as 9/11, BSE and SARS have all played their part. The good news is that the industry is climbing out of the recessions induced by these factors – although sensible companies will always plan for the possibility that some further disaster will strike the sector.
What does all this mean for the supplier? The first conclusion is that the hotel sector is worth looking at by virtue of its size and the range of potential customers. But this potential range, by reason of its diversity, makes it difficult to identify clear strategies for success. Nevertheless by breaking the hotel sector into its component parts and examining their respective product requirements and supply routes it is possible to chart a course that will lead to success.