Shining STARs

Detailed focus on F&B metrics helps hoteliers make profitable decisions.

The F&B STAR Report provides hoteliers the opportunity to benchmark their F&B operation across three high-focus revenue centers: Catering & Banquets, Venues, and In-Room Dining. Additional insights are gained with the report’s hearty drill-down into food, beverage, and other revenue streams. F&B STAR program participants can use the F&B STAR key performance indicators, including Catering & Banquets, Venue Revenue per Available Seat, and related indices to identify potential revenue opportunities and measure the success of their F&B strategies.

STAR ReportThe F&B STAR Report is an idea hatched by the AH&LA F&B Committee and Smith Travel Research (STR) with the goal of creating a common language for reporting F&B data across the entire industry. Hotel F&B’s Jeanne Bischoff sat down with key members of the AH&LA F&B Committee (Alison Bybee who was employed by Kimpton at the time of this interview, IHG’s Gretchen Hazel, Marriott’s Wolfgang Lindlbauer, Hilton’s Mark Southern, New Castle Hotels & Resorts’ Vince Barrett, Christer Larsson of Carlson Hotels, AH&LA’s Brad Aldrich) and STR’s Veronica Andrews, to learn more about how the F&B STAR Report is changing the industry and how it’s helping owners make educated, profitable F&B decisions.

BISCHOFF: What was the impetus to start the STAR Report in 2010?

ALDRICH: For data and information. All the data is going back to F&B as the final deciding factor for making decisions for hotel properties. As Mark and Wolfgang and everyone else all met a long time ago, it was really about moving the experience in the minds of the owners and operators from being an amenity to a valuable asset they can start to utilize.

Kimpton has already kind of done that model, and the foresight of that was the inspiration, obviously big names and organizations that just never thought of F&B that way. Some of the smaller hotel companies are able to be a little bit more nimble. They’re starting to look at F&B and wonder why there’s no data behind it. So, it’s time to make the investment.

Wolfgang was the first one to present the idea in November of 2011, and kind of spilled the beans and said, “I can’t even get my own company to come to an agreement on what these F&B terms are, so how is everyone else going to do this?”

So everybody started jumping in. Mark Southern was with Hilton, and he was attending every meeting and was deeply involved in the process as well, and we started putting it together.

We all feel that once owners start looking at the information they will then start understanding that their properties need to participate in order to get the information.

So, for feasibility studies, for analyzing your staffing, to looking at how all the other properties are doing in comparison to your property and the overall comp set, it will be a very exciting time for F&B.

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BISCHOFF: How do you get everyone to buy into this model, from the owners on down?

BARRETT: Once [owners] fully understand it, they’ll be the driving force behind utilizing it for their assets. I think the driving force right now is going to be the paradigm shift of getting a lot of the industry to get onboard.

We’ve been fortunate that we’ve been of this mind for many years. From all of the chefs to the struggles we’ve had, it was like an act of congress to get certain players to do certain things, change their own paradigm, what have you.

But, I think like Wolfgang said it best many years ago, we’ve always had tremendous amounts of data, but it was all useless. There was no way of sorting through it. A lot of us were doing something, but we were only measuring against ourselves.

Now we can start measuring against comp set and different pieces of the silos. You’re much better at educating your staff, your salespeople, your ownership, and you’re able to get more resources because you can show growth on your improvement and then your bottom line.

Most full-service hotels represent F&B anywhere from 35% up to 55%. That was never even looked at before in a budget meeting. You spend six hours on rooms and then maybe an hour and a half-if you even get that-on F&B.

BISCHOFF: Why has F&B historically been overlooked?

BARRETT: Because it was seen as an amenity.

LINDLBAUER: Well, think about how it used to be, and then think about the STAR Report. We used to measure rooms and occupancy, and that’s how they would come to their RevPar. What they did was measure everything by how many rooms were sold. So everybody would focus on that.

They would measure the branded hotels against the Hilton hotels against the Marriott hotels, and we basically say we can all achieve X amount of RevPar if they sign up with our brand.

But to Vince’s point, we only looked at 60% to 65% of the sales. We never looked at how F&B influences people to stay at a hotel. Kimpton, on the other hand, is not just a hotel company, but a hotel and restaurant company. They have a very different philosophy.

And you have some resistance from ownership out there. You have the ones who believe in F&B and the ones who still focus mainly on rooms. So we thought if we had a new data point and a different way to look at this, then the more success we will have.

An owner looks at the profit margins in F&B, and they want to see how many customers are in their restaurant, and just to have one simple number aligned with that point of view, which is one cover equals one cover. That’s how it all started.

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BYBEE: Either way, it’s the evolution of the market and focusing on marketing better. Before, we would go in and just build a new hotel and a new restaurant. Now, we go in and research our competitive set. And now we have a better idea of what we can work with for the owners, the revenue managers, about what is really the best possible way that we can maximize our business.

It’s been enormously helpful. Revenue managers at Kimpton have really embraced it, which is very cool. They can use the STAR Report and the huge database for restaurant revenue management, and it’s a lot of fun to watch now, because we never before partnered with revenue managers. It’s a really cool dynamic that’s working well.

BARRETT: We just opened an Autograph hotel about a year ago. One of our partners, who’s a 50% partner in it, was really adamant about putting all of these touchpoints on it-doing an indoor pool with a spa, and all these different venues. And then when it came time for the restaurant, they were like, “Let’s combine the restaurant and take over some space from the gift shop space, and we’ll turn the veranda, which used to be a restaurant, into some free space for people to hang out in.”

With the data that we had for this 239-room destination hotel, we would not have been able to show through those numbers that there’s no way you can take 239 rooms, with the potential of 500 people, and only have a 63-seat restaurant. You’re going to crush the operation.

From that we were able to get from our partnership and our ownership group an additional $250 million to really spend the money where it needed to be, which was revitalizing the veranda, which is now a 220-seat restaurant.

Without that kind of data before, that would have been a hard struggle to convince them. They would have thought, “You’re just an F&B person, and that’s your passion,” and then you get dismissed. That’s when you live the nightmare. They want their dream restaurant, and you get to live the nightmare of operating it.

By having all that data, granted, we weren’t able to compare it at that point in time, but they can build a case just from that data just to show what they did before and what we would do going forward based on this new visionary approach.

BISCHOFF: How is that restaurant doing now?

BARRETT: It’s doing very well.

LINDLBAUER: When you see what’s happening in the restaurant industry outside the hotels, it’s booming everywhere. Inner cities are coming back with entrepreneurs that are starting to drive this, and we have the same momentum on the hotel side if we do it right.

Without this data, we will be way behind, and I think it will help the entire industry to go in a very different direction. And it will be a several-year journey, because we have two mindsets of owners out there. So, the more numbers we have, the more analytics we have, the more people will come aboard, and we’ll seize the opportunity.

BYBEE: We can only work with whoever is actually reporting, so we also need to synchronize the way that we report. Not everybody is going to be consistent right off the bat with counting customers, because everybody was doing it differently, and it was all over the place. But we agreed that we’re all going to work consistently together, counting customers and establishing check averages-it’s going to be really helpful. But it’s going to take some years for that to take off and stabilize.

BISCHOFF: Where are we now with regard to compliance?

SOUTHERN: The real issue is uniform consistency throughout the industry. Now finance people can start establishing a metric and start reporting it properly to ownership. Up until this point it was all touchy-feely.

BYBEE: Our financial statements don’t say “covers” anymore; they say “customers.”

LINDLBAUER: Ours still say “covers,” but covers are customers, which is important. We have been reporting now for two years, the new data, and I think the most important thing for us to make progress is that we promote that everybody else come aboard the program too.

Right now, we have some big players who agreed to change their reporting, so, the more momentum we get, the quicker it will go. But where you (HFAB) can really help us is [to] get the word out there, and I think we need to get it out to all the asset managers and investors. Because if you think your property is underutilized, and you’re paying a lot for power, rent, and wages, but you have empty F&B venues out there, it’s probably not a bad choice to participate.

BISCHOFF: What is the objection from others to participating? Do they just not know about it, or don’t want to report their numbers?

BARRETT: We all started the conversation about the awareness of the STAR Report, and we were committed to it, so now we have to get the finances involved, and you have to get your revenue management team involved. At the end of the day, at least for us, it was really educating the night audit folks, because they were the ones taking that information and doing that audit. So it was making sure all those dots were connected along the way.

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ANDREWS: Absolutely. It’s collaborative, and we’re talking at the property level, right from point of entry into the system. So, if you have technology that will count your customers, which is probably the biggest challenge as far as the revenue performance data, that can come from the P&L.

From the larger brands and partners, as well as the individual hotels-night audit, day audit-they can either send a sheet over or enter the data online. Very easy.

When it comes to what we call supply data, which is the available meeting space in the U. S. for several cities, or our available venue space in our restaurants, bars, if there’s a lobby bar, then we need the lobby seating. That’s a manual track.

That is ad hoc, we look to that as one-time reporting, but it’s not in the P&L. So we’re rallying the troops at the corporate level or portfolio level to understand what the F&B STAR report can do, the importance of sharing our data, the confidence to know what affects you, which will remain confidential.

BARRETT: One of the main goals is to communicate accurate occupancy usage. For example, let’s say you have a restaurant that can go from 100 seats in cold weather to 180 seats with outdoor space in the summertime. We don’t count that, because it’s not year-round. [We need to help] the operator to understand what we mean when they lose all that revenue in the report is that it’s a 180-seat restaurant in the summer and a 100-seat restaurant year-’round. There’s a spike because of temporary occupancy.

HAZEL: We’re helping them succeed if there’s a spike, because we’re not counting all the extra seats outside.

BISCHOFF: How would you convince a skeptical owner to participate in the F&B STAR Report?

SOUTHERN: If you can identify who your high performers are and who your low performers are, it gives you the tools to say, “Why does this hotel here do X number of dollars in F&B at the bar, and I’m not making the same, even though I have the perfect venue, I have the right space. What are we doing wrong?”

For owners, this gives them all the tools to catch the big fish and get rid of the little fish. Now they have a wonderful blend of information so they can start to think about how best to spend their money on remodeling and concepting their bars.

LARSSON: Some owners will initially question the data, though.

LINDLBAUER: When we first approached STR, they said, “Well, we tried this 10, 12, 15 years ago, so you people are dreaming.” But once we got the alignment, how we’re going to count the day’s data, that’s when they came to the table and said this time is different, and this time, the industry is behind it.

To learn more about the F&B STAR Report and to participate, contact STR at