Holiday Inn Overhauls Food Service Approach

The prototype for Holiday Inn's new "social hub" concept is the latest entry to the obituary page for the midprice hotel's full-service restaurant.
The concept, which Holiday Inn is testing this quarter at its Gwinnett Center property in Atlanta, merges the lobby, bar and restaurant into a single space. The space will still have an on-site chef to prepare fresh food, but the dining choices center more around such grab-and-go breakfast options as sandwiches and specialty coffees and finger-food-style pre- and post-dinner munchies--sliders and chicken fingers, for example--rather than three-course meals. [more]
Members of the Holiday Inn team who designed this concept, basing it on research of guest desires, plainly said they no longer desire to compete with the Applebee's and TGI Friday's of the world. Though this might disappoint those traditionalist business travelers who enjoy sitting down to a steak-and-potatoes dinner without leaving the hotel, the fact is that full-service restaurants have long become a losing financial proposition for most hotels.
Bjorn Hanson, divisional dean of the New York University Tisch Center for Hospitality, Tourism and Sports Management, said that in terms of departmental profits, a hotel room earns about 75 cents on the dollar. A restaurant earns about a quarter. That means most hotel restaurants, particularly in times of declining long-term occupancy, operate at a loss, he said.
While this trend is most pronounced in the midprice tiers--STR, after all, jettisoned the "midprice with/without food and beverage" designations altogether last year in favor of "midscale" and "upper midscale"--it's certainly not limited to them. Hilton Hotels & Resorts this week unveiled its own new lobby design, the centerpiece of which is an 18-hour bar with a similar F&B style to Holiday Inn's. Hilton is debuting the concept at its property near its headquarters in McLean, Va., as part of a $40 million renovation of the property.
Such models might come with a slightly higher food cost to hotels, but they more than make up for it in labor savings, Hanson said. "Part of it is the economics, and part of it is the changing definition as hotel designers and developers decide how to allocate their service resources to guests," he said.
That's not to say the hotel restaurant concept is dead altogether. During one of the educational sessions at the Association of Corporate Travel Executives Global Educational Conference this month, Sofitel regional director of sales Jason Cohen said preferred options include bringing in celebrity chefs or locally known restaurateurs in to run the hotel restaurant.
Business travelers in the hotel, however, are not necessarily the only or even the primary consideration when a hotel goes this route. A city's locals aren't likely to pop into a midprice hotel to try its restaurant's burger and chicken parm, but they'll happily go to a restaurant that's a showcase for the latest Food Network favorite. As such, some luxury hotels have reported their celebrity-chef restaurants require reservations well in advance, making them not exactly a respite of convenience for a weary road warrior.