In recent years, hotel restaurants have had a difficult time attracting local markets. The less formal dining trend makes hotel restaurants less attractive to the casual ‘Every Night’ diner. In an effort to improve bottom lines, and attract local patronage, hotels are beginning to reinvent their dining experience by designing smaller, more modern rooms with casual food and beverage offerings. Hotels are leasing venues to high profile operators who, in their own right will attract locals and travelers alike through their doors.
Hotels in Canada are beginning to follow the New York and Las Vegas trend by utilizing celebrity chef run food and beverage outlets to attract guestroom demand. The Hazelton in the Yorkville neighbourhood of Toronto has garnered rave reviews not only because of the quality of guest rooms and amenities, but because of the availability of high end food and beverage provided by celebrity chef Mark McEwan’s One Restaurant. The Shangri La Hotel in Toronto and Vancouver, due to open in the next few years, have broadened their reach to include food and beverage provided by New York chef Jean-Georges Vongerichten, who operates restaurants in Tokyo, London, Las Vegas and Dubai. These restaurants historically attracted ‘Special Occasion’ diners with limited repeat visitation over the year. By aligning themselves with hotels, they can capture both local diners and corporate travelers with expense accounts staying in the hotel. This style of restaurant has been available in major cities throughout the world, but there have been few opportunities in Canada until now. These partnerships promote the hotel as a destination but ultimately help to market the home city globally as gastronomic destinations, which will benefit the hotel industry in those markets.
The trend towards a more casual dining experience is apparent in Western Canada with the proliferation of casual fine dining chains, including Earls, Cactus Club and Sandman Hotel owned Moxies. Although these restaurants are more casual in service style and design, they continue to offer high quality food with strong revenues. Hotels have begun to take notice and are beginning to design new spaces that are smaller, more intimate and increasingly casual. The recently opened Moda Hotel in Vancouver had replaced a pub style restaurant with a wine bar featuring tapas and a wide variety of wines by the glass. In line with consumer tastes, tapas themed menus and extensive wines by the glass generate more local market demand, making the entire operation more profitable. The Four Seasons in Vancouver has also undergone extensive renovations and designed the new Yew Restaurant, with clean lines and a modern theme. Restaurants such as these target higher alcohol sales by creating an ‘after work’ allure that contributes to a stronger bottom line.
With soaring labour and operating costs across the board, hotels are opting to lease their food and beverage outlets to third party operators. Food and beverage leases create steady revenue sources for the hotelier and limit the risk involved in operating a restaurant. David Hawksworth, formerly of Vancouver’s top restaurant West, will be opening his eponymous restaurant at the Georgia Hotel in 2009 as a leased operation. Restaurants of this calibre attract cooks who are willing to intern, in order to learn from specific chefs thereby reducing labour and the cost of those operations at modest levels. Although the hotel may assume some cost in terms of tenant inducements or building out the space, the developer or hotel owner hopes that a restaurant tenant of this nature will create a buzz that could not have otherwise been achieved. Ultimately, synergies created by this type of partnership benefit both parties and help to distribute overhead costs.
Although leases create more reliable revenue sources, other hotels have opted to keep the food and beverage in house in order to maintain better control. Occasionally hotels have run into situations where the restaurant’s hours of operation and availability of services do not meet the demands of the guest and in the end, the hotel operation suffers. Of course with the variable nature of the industry, a negotiated option for how to handle disputes or buy backs should be included within every lease.
In the case of the Loden Hotel in Vancouver, they have hired a local Vancouver chef with significant accolades, but allowed him to run the restaurant as part of the hotel. The seamless operation between the hotel and restaurant allows guests to easily charge food and beverage to portfolios alleviating potential issues. In a smaller boutique style hotel such as this, where customized service is paramount, this may likely prove to be a better option. Providing both street front and access from within the hotel will ensure ease of use and attractiveness.
Hoteliers are no longer looking at food and beverage outlets as a way of driving room rate, instead they are using them to create buzz and draw demand to the entire property. The importance of capturing a wide variety of demand sources will be essential in the long term sustainability of any restaurant.
Nigel Lucas, Consultant
PKF Consulting, Vancouver
