MCA | UK HOTEL RESTAURANTS MARKET REPORT …brakes-source.co.uk/assetfiles/MCA---UK-Hotel...•Market sizing of the UK Hotel Restaurants market. •Analysis of the size and growth

1MCA | UK HOTEL RESTAURANTS MARKET REPORT © 2016


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MCA | UK HOTEL RESTAURANTS MARKET REPORT © 2016

Contents

Introduction and background

Executive summary

Market

Competitive landscape

F&B initiatives

Consumer insight

Industry executive research

3


Report scope

• Market sizing of the UK Hotel Restaurants market.

• Analysis of the size and growth of different Hotel Restaurant market segments.

• Analysis of consumer participation, frequency, spend and behaviours over time.

• Comprehensive overview of competitive landscape, including physical expansion and financial performance of leading brands over time, KPI rankings and operator profiles.

• Review of new Hotel restaurant brand developments.

• Analysis of Hotel restaurant menu developments and F&B initiatives.

• Hotel industry executive research survey.

Research methodology

• 72,000 online surveys (6,000 per month) through MCA Eating Out PanelTM, year ending Sept. 2016.

• Extracts from MCA Brands & Corporates analysis.

• Desk research: news articles and trade press, company websites, industry associations and menu analysis.

•Online interviews with 28 senior executives from across the Hotel industry.

Publish details

• 7 November 2016



Contents


Executive summary

Market


F&B Initiatives

Consumer insight


5


There are significant challenges ahead for hotel restaurateurs:

• Political and economic uncertainty dampening business confidence and trading volumes

• Rising inflation, slowing real wage growth and falling employment set to impact UK consumer confidence

• Rising cost pressures yet growing competition (in restaurants and in rooms) restricts scope for price rises

• Complacency in perception of value provided – and risks from standing still and falling further behind

• Weaker customer relationships (and margins) from growth in Online Travel Agencies

Executive summary – mixed fortunes for Hotel restaurants?

But there are opportunities too!

• Effective rebasing of sterling likely to boost domestic demand and foreign tourists

• Consumer trends in favour of the experiential economy – play to many core strengths of hotel restaurants

• Growing recognition of importance of more customer-led thinking and embracing key consumer trends

• Greater appreciation of benefits of utilising High Street brands and specialist operators to drive footfall

• Polarising potential – boutique and budget appear best placed to prosper


Contents


Executive summary

Market


F&B Initiatives

Consumer insight


7


Market – Key topics

• The total UK Hotel market – turnover, outlets and number of rooms.

• Growth drivers in the Hotel market over the past five years.

• The Hotel market by segment – where has the growth been?

• Food & beverage as part of Hotel revenue – what has the trend been?

• Growth drivers & inhibitors in the Hotel market – what will these be over the next three years?

• The outlook for food & beverage at hotels over the next three years.


732,323

750,815

2011 2016

UK Hotel market – key statistics

Source: MCA Research & Analysis, STR Global, Melvin Gold. Notes: The UK Hotel market includes Full service hotels, Budget hotels, Guest Houses and B&Bs, Holiday Parks and Conference centres.

The UK Hotel market is worth

£40.3bnin 2016, from 42,249 outlets, with 750,815 rooms. There

has been reasonable turnover growth in the past five years.

Net New Rooms+2.5%

Full service, 25%

Budget xx%

Other7%

41,350

42,249

2011 2016

Net New Hotels+2.2%

£35.1

£40.3

2011 2016

Turnover (£bn)+14.8%


UK Hotel market – what’s been driving the growth?

Source: MCA Research & Analysis, ONS, Melvin Gold

Hotels Guest Houses & B&Bs2011 67% 51%2012 68% 50%2013 70% 51%2014 72% 51%2015 73% 51%2016 74% 51%

Average occupancy levels have increased at hotels while staying flat in Guest Houses & B&Bs

Spend on accommodation by UK households has seen value growth of 42% in the five years, and total spend by overseas tourists has grown by 35%

UK household spend on accommodation

Total spend byoverseas tourists

2011 £19.2bn £37.2bn

2016E £27.3bn £50.4bn

7%


UK Hotel market – what segments have grown share?

Source: MCA Research & Analysis

+3pp

+2pp-6pp

+1pp

25%

9%60%

7%Full-service

BudgetGuest Houses &

B&BsOther

Better-performing, higher turnover corporate full-service and budget hotels have won share from independent Guest Houses & B&Bs

-5pp

Share of total Hotel outlets by segment,

2011-2016E


New openings have favoured the more lucrative London market

Source: MCA Research & Analysis, PwC, AM:PM. Note: New rooms include conversions of existing rooms, and do not take into account closures.

Between 2011-2016, one in three

new rooms opened in London, where

occupancy rates and average daily rates are considerably

higher

26,400 new rooms between 2011-2016, 33% of total new UK

rooms

LONDON 2011-2016 AVG

Occupancy % 83%

Avg daily rate £139.2

RevPAR £115.1

REGIONS

Occupancy % 74%

Avg daily rate £66.2

RevPAR £46.2


Share of new room supply by segment – budget continues to dominate in 2016 in both London and regions, as it did in 2011

3% 7%

42%

50%

2%2%

3%15%

29%

36%

11%

2011 - London 2016 - London

5-star

4-star

3-star

2-star

Budget

Servicedapartments

5% 7%

54%59%

1%

0%8%7%

30% 22%

1% 4%

2011 - Regions 2016 - Regions

0%


F&B share of TrevPAR – Regions, 2000-2015 – in decline

F&B share of TrevPAR (Total Revenue Per Available Room) in regions has decreased from 40% to 30% over the last 15 years.

£40 £40 £40 £40 £40 £40 £40 £40 £35 £30 £28 £28 £28 £28 £30 £30

£60 £62 £62 £61 £62 £65 £65 £70£70

£60 £62 £62 £60 £62 £65 £70

£0

£20

£40

£60

£80

£100

£120

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Total F&B revenue RevPAR & Other revenue

40% 39% 39% 40% 39% 38% 38% 36% 33% 33% 31% 31% 32% 31% 32% 30%

F&B share of TrevPAR:

Source: MCA Research & Analysis, HotStats


F&B share of TrevPAR – London, 2000-2015 – in decline

F&B share of TrevPar has decreased in London as well, from 27% in 2000 to 17% in 2015.

27% 24% 22% 32% 26% 26% 21% 21% 21% 25% 21% 22% 19% 19% 18% 17%

F&B share of TrevPAR:

Source: MCA Research & Analysis, HotStats

£30 £25 £22 £30 £30 £30 £25 £25 £25 £30 £25 £28 £25 £25 £25 £25

£80 £80 £78 £65£85 £85 £93 £95 £95 £88 £95 £97 £105 £110 £115 £120

£0

£30

£60

£90

£120

£150

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Total F&B revenue RevPAR & Other revenue


• London occupancy levels expected to decline by 1.8pp in 2016, and a further 0.8pp in 2017

• Decline in deal volumes from unwillingness to sell and decreased business confidence

• Rising property costs are impeding hotel growth

• UK GDP growth forecast to decrease to 1.9% in 2016, and 0.5% in 2017

• Reduced numbers of business travellers, more likely to eat at in-house restaurants

• Online travel agencies increasing commission rates, adversely affecting margins

• Continuing growth of sharing accommodation e.g. AirBNB, currently offered at c.0.5% of London apartments

Key growth drivers & inhibitors, 2016-2019FHotel operators will have to attract more leisure travellers and non-guests to offset declining corporate travel. An improved food & beverage will be key.

DRIVERS

INHIBITORS

• Low pound sterling fuelling international tourism and staycations

• Regional occupancy rates expected to be highest ever in 2016 & 2017

• Short term increase in inbound investments, especially from Asia

• Improved F&B offerings bringing in revenue, especially from non-guests

• Room supply growth to continue, with 19,200 new rooms expected in 2016, and 24,600 in 2017, led by Budget

• Growth of corporate chain hotels, at the expense of independents, resulting in a stronger estate of better managed hotels

Source: MCA Research & Analysis, PwC, CBRE, AM:PM.


UK Eating Out market – Hotels, Pubs & Restaurants

Hotels, Pubs & Restaurants 2016E £62.3bn – 161,740 (value – outlets)

Hotel Restaurants £8.5bn – 42,249

Full service

£7.2bn – 10,628

Budget

£0.6bn – 3,675

B&Bs, Guest houses & Lodges

£0.6bn – 25,161

Holiday parks

£0.1bn – 2,410

Conference centres £0.01bn – 375

Pubs & Bars £21.5bn – 47,458

Managed, Branded & Franchised

£9.9bn – 9,318

Tenanted & Leased £4.2bn – 17,510

Independent & Free of tie

£7.3bn – 17,900

Social Clubs

£0.2.bn – 2,730

Restaurants £32.4bn – 72,033

Service-Led £20.3bn – 33,348

Fine Dining

£0.8bn – 350

Independent £14.4bn – 28,273

Branded / Casual restaurants

£5.2bn – 4,725

Fast Food

£12.0bn – 38,685

Branded Traditional

£4.0bn – 3,031

Branded Delivery-Focused

£1.3bn – 1,776

Branded Contemporary £0.7bn – 560

Independent inc. take-away

£4.9bn – 25,834

Street Food & Mobile Vans

£1.1bn – 7,483

Hotels, including establishments ranging from full service hotels to conference centres, are a £9bn eating out industry. The Full service segment accounts for 86% of this.

Note: Pubs & Bars and Restaurants are not included in the analysis. Totals are affected by rounding.


-0.1%0.2%

0.4%0.8%

0.3% 0.4% 0.3% 0.4% 0.3% 0.4%

1.2% 1.3% 1.4%

2.3%2.6% 2.5%

2.3%

1.7%

2.6%2.9%

-0.2%0.1% 0.1%

0.8% 0.7%0.9%

0.6% 0.6% 0.7% 0.7%

-0.4%

0.7%

1.2%1.5%

1.9%

2.5%

2.2%1.9%

2.3% 2.4%

2010 2011 2012 2013 2014 2015 2016E 2017F 2018F 2019F

Hotel Restaurant outlet growth Hotel Restaurant turnover growth

Eating Out market outlet growth Eating Out market turnover growth

Hotel Restaurants vs Eating Out market growth

Hotel restaurant turnover growth has been similar to the total Eating Out market, but is expected to outpace this in 2018 and 2019, as hotel operators improve and enhance their food & beverage offerings, and business travel picks up again.


Food & beverage at hotels – examples of improvement initiatives

Breakfast – hotels are starting to address the fact that their guests now have access

to a wide array of alternative breakfast options, both eat-in and take-away Breakfast sales up 13% in 2015

after offer was improved

Concessions, Franchising & Partnerships –these will drive growth as mid-scale hotels use branded concepts and external space

to retain dining guests

Improving in-house food offerings –partnerships with leading chefs, increased

provenance and menu updates. Good hoteliers don’t necessarily make good

restaurateurs…

Atul Kochbar, Michelin-starred chef, opened a restaurant at The Compleat Angler

in Marlow


Hotel Restaurants – growth by segment, 2013-2019F

Full service hotels account for 85% of hotel F&B, but Budget expected to grow share over next three years, from 6.7% to 7.2%, on the back of strong physical expansion and improving offers.

24.3% 25.2% 25.4%

7.7% 8.7% 9.7%

61.4% 59.6% 58.4%

5.7% 5.7% 5.7%0.9% 0.9% 0.9%

2013 2016E 2019F

ConferenceCentres

Holiday Parks

B&Bs, GuestHouse & Lodges

Budget

Full service85.1% 85.0% 84.8%

6.2% 6.7% 7.2%

7.0% 6.6% 6.4%

1.5% 1.5% 1.5%0.1% 0.1% 0.1%

2013 2016E 2019F

ConferenceCentres

Other

B&Bs, GuestHouse & Lodges

Budget

Full service

Share of total Hotels Share of Hotel F&B sales


To sum up

• The Total Hotel market in the UK is worth £40.3bn in 2016, comprising 42,429 outlets across B&Bs, Guest Houses & Lodges; Full service hotels; Budget hotels; and Holiday parks and Conference centres.

• Hotel turnover has increased by 14.8% between 2011-2016, driven by rising average occupancy levels, increasing spend by UK households and by overseas tourists, and by the improving economy.

• Between 2011-2016, one in three new rooms were opened in London, where average daily rates and occupancy rates are considerably higher.

• Food & beverage share of TrevPAR (Total revenue per available room) has declined steadily for the last 15 years in both London and the regions, and now accounts for 17% and 30%, respectively.

• Yet hotels are now faced with issues around weakening London occupancy rates over 2017 and possibly beyond, and rising property costs throughout the country. Improved F&B offers can help bring in additional revenue.

• The importance of food & beverage at hotels is expected to increase over the next three years, and turnover growth for Hotel restaurants is forecast to outpace growth in the wider Eating Out market in 2018 and 2019.

• The opportunity is now for foodservice suppliers operators to target hotel operators.


Contents


Executive summary

Market


F&B Initiatives

Consumer insight


22


Groups • Who are the leading hotel groups and how do they fit into the UK market?

Brands• Who are the leading hotel brands?

• What brands are showing the fastest growth?

• How is the branded hotel market changing?

Hotel restaurants• How is the hotel restaurant market segmented?

Brand initiatives• How are hotels encouraging guests and non-guests to dine with them?

• How are brands improving their F&B offer?

Competitive landscape – Key topics


Top 10 groups by hotel numbers

Budget hotels leading in top ten. Whitbread and Travelodge accounts for just under 50% of hotels in the Top 10 groups. Nearly all of the leading groups experienced net hotel growth over the year. Whitbread and Travelodge saw impressive net growth of 45 and 11 hotels respectively.

Top 10 groups by hotel numbers, UK, Q3 2015 – Q3 2016

*Marriott merged with Starwood in September 2016, they have been kept separate for the purpose of this report.

692

524

274 287 280

114 92 80 69 61

737

535

294 293263

13195 92 70 69

Whitbread Travelodge Accor Hotels IHG BestWestern GB

Hilton Wyndham Bespoke Greene King Marriott*

Q3 2015 Q3 2016


Top 10 groups market share

Premier Inn driving market share growth. Whitbread, which includes Premier Inn, shows no sign of slowing growth as it increases market share by 0.2pp year on year, accounting for 5.2% of the overall market share. Top 10 sub-total has grown by 0.4pp in Q3 2016, showing the market is becoming more consolidated, however, at 81.8% of the market, other brands still make up the majority.

Top 10 hotel groups by hotel numbers with market share, UK, Q3 2015-Q3 2016

Top 10 hotel groups market share, Q3 2016

Other refers to independent and non-branded full-service hotels.

Group Q3 2015 Q3 2016Market share 2016

Change in market share

Whitbread 692 737 5.2% ↑

Travelodge 524 535 3.8% ↔

Accor 274 294 2.1% ↑

IHG 287 293 2.0% ↔

Best Western GB 280 263 1.9% ↓

Hilton 114 131 0.9% ↑

Wyndham 92 95 0.7% ↔

Bespoke 80 92 0.6% ↔

Greene King 69 70 0.5% ↔

Marriott 61 69 0.5% ↑

Top 10 sub-total 2,403 2,578 18.2% ↑

Other 11,502 11,613 81.8% ↓

Total 13,905 14,191

Whitbread Travelodge Accor

IHG Best Western GB Hilton

Wyndham Bespoke Greene King

Mariott Other


Top 5 groups by 2015E revenue

Notes: Financials are to group year end. All financials are estimates based on available reported financials. Accor only reports figures to Europe level (excluding France and Mediterranean), Hilton reports international figures (excluding America). Exchange rates used are at group financial year end.

Top 5 groups by reported revenue, UK, £m, FY 2014E-FY 2015E

Budget seeing strong revenue growth. Budget groups are seeing strong sales growth, whilst mid-market groups are seeing a more moderate growth. Whitbread has a considerable lead in revenue compared to other UK groups.

Whitbread Travelodge Accor Hilton Wyndham

FY 2014E £967.9 £489.9 £381.4 £239.5 £202.0

FY 2015E £1,116.4 £552.1 £389.0 £257.3 £184.0

Percentage growth 15.3% 12.7% 2.0% 7.5% -8.9%


Market positioning map of Top 10 hotel groups

Corporate Leisure

High Price

Low Price


Top 10 brands by hotel numbers

Premier Inn remains industry leader. Premier Inn, followed by Travelodge have a considerable lead in hotel numbers over other brands in the UK market. Four of the Top 5 hotel brands are budget led.

Top 10 brands, hotel numbers, UK, Q3 2015 – Q3 2016

692

524

280

137 13077 67 65 60 60

737

535

263

139 13380 68 67 64 61

Premier Inn Travelodge BestWestern GB

Holiday Inn Holiday InnExpress

Mercure Hilton ClassicBritishHotels

Bespoke Old EnglishInns

Q3 2015 Q3 2016


Budget seeing impressive growth

Hotel numbers, UK, 2006-2016

470

279

737

526

Premier Inn Travelodge

2006 2016

Impressive growth seen at budget brands over 10 years. Premier Inn and Travelodge have had impressive percentage growth of 57% and 89% respectively over the last 6 years.

↑89%


Top 10 brands with over 40 hotels by percentage hotel growth

Percentage hotel growth, UK, Q3 2015-Q3 2016

Two hotel brands seeing over 13% growth. Wetherspoon and Ibis lead in percentage growth for brands with over 40 hotels, with absolute growth of 7 hotels for both. With vast estates, Travelodge and Premier Inn have smaller percentage growth, but their absolute growth, particularly Premier Inn, is impressive.

41 52 40 60 45

692

77 65130

524

48 59 43 64 48

737

80 67133

535

17.1%

13.5%

7.5%6.7% 6.7% 6.5%

3.9%3.1%

2.3% 2.1%

Wetherspoon Ibis Marston'sInns

Bespoke Innkeeper'sLodge

Premier Inn Mercure Classic BritishHotels

Holiday InnExpress

Travelodge

Q3 2015 Q3 2016 Percentage growth


Top 10 brands with between 10-40 hotels by % hotel growth

Percentage hotel growth, UK, Q3 2015-Q3 2016

Polarisation of smaller brand growth. Growth from smaller brands is either coming from budget brands, such as Ibis Styles, or more up-market brands, such as Hallmark Hotels. Although some brands start from low bases, hotels brands with 10-40 hotels are showing

impressive growth year on year. The top five brands are seeing impressive growth of over 25%.

20 2314 15 8 13

31

11 16 1628 31

18 1910 15

34

12 17 17

40.0%

34.8%

28.6%26.7%

25.0%

15.4%

9.7% 9.1%6.3% 6.3%

HallmarkHotels

Jurys Inn Ibis Styles TheEpicureanCollection

Apex Hotels MalmaisonHotels

Novotel CoachingInns

EpoqueHotels

Hotel du Vin

Q3 2015 Q3 2016 Percentage growth


Estate size and financials

Q3 2015 Q3 2016

UK outlets 692 737

Regional distribution:

2014 2015

Turnover (m)

£968 £1,260

Note: Turnover figures relate to company yearly revenue.

Premier Inn

10.4%

89.6%

London Rest of UK

Company and management

Parentcompany

Whitbread

Head office

Whitbread CourtHoughton Hall Business ParkPorz AvenueDunstableLU5 5XE

Websitewww.premierinn.com/gb/en/home.html

Senior management

• Alison Brittain, CEO, Whitbread• Nicholas Cadbury, Group Finance

Director, Whitbread• Richard Baker, Chairman, Whitbread• Simon Jones, MD Premier Inn UK,

Whitbread

Deals/new developments

Restaurants

• Thyme• Beefeater• Table Table• Brewers Fayre• The Kitchen• Whitbread Inns

Deals

• Breakfast plus 2 course dinner from £23.99

• Kids stay and eat breakfast free• Full Premier Inn buffet breakfast from

£8.99• Unlimited Costa coffee at breakfast

New developments

• Thyme concept• New breakfast menu in 2016• Premier Inn Hubs• Free Wi-Fi 24/7 in all rooms

Premier Inn is a British budget hotel chain, part of Whitbread, with over 730 hotels in the UK. Located in city centres, suburbs and airports.



Q3 2015 Q3 2016

UK outlets 524 535


2014 2015

Turnover (m)

£490 £552

Note: Turnover figures relate to company yearly revenue.

Travelodge


Parentcompany

Travelodge Hotels Ltd.

Head office

Sleepy HollowAylesbury RoadThameOxonOX9 3AT

Website www.travelodge.co.uk/

Senior management

• Peter Gowers, CEO• Jo Boydell, CFO• Brian Wallace, Chairman

6.1%

93.9%

London Outside London

Travelodge is a budget hotel chain with over 530 hotels in the UK. Located in city centres, airports and suburbs.


Restaurants

• In-house restaurants called Bar Cafés

Deals

• 15% off Friday night stays• Kids eat breakfast and stay free• Unlimited breakfast for £7.95• Unlimited Lavazza coffee • Main & soft drink for £9.95• 2 courses & a drink for £12.95

New developments

• Breakfast to go



Q3 2015 Q3 2016

UK outlets 280 263


Best Western GB


Parentcompany

Interchange & Consort Hotels Ltd.

Head office

Consort House Amy Johnson WayClifton MoorYorkYO30 4GP

Website www.bestwestern.co.uk

Senior management

• David Kong, President and CEO• Terry Porter, Board Chairman• Mark Straszynski, CFO

20.1%

79.9%



Restaurants

• Selection of restaurants, bars, bistros, lounges and fine dining available

Deals

• 10% off with American Express• Tesco Clubcard vouchers

New developments

• Launch of Glō and Vīb brands

Best Western GB hotels is a franchise-led business, with venues varying from castles to coaching inns, with an emphasis on each hotel being individual. Located primarily outside London, with some seaside locations.



Q3 2015 Q3 2016

UK outlets 137 139


Holiday Inn


Parentcompany

InterContinental Hotels Group PLC

Head office

Broadwater ParkDenhamBuckinghamshireUB9 5HR

Websitehttps://www.ihg.com/holidayinn/hotels/gb/en/reservation

Senior management

• Richard Solomons, CEO• Paul Edgecliffe-Johnson, CFO• Patrick Cescau, Non-Executive Chairman

23.0%

77.0%



Restaurants

• Selection of in-house restaurants• Stock Burger Co. at Brighton

Deals

• Kids stay and eat free

New developments

• Open lobby hotels• IHG rewards App

Holiday Inn is a budget brand run by IHG, locations vary from city centres to more rural areas.



Q3 2015 Q3 2016

UK outlets 130 133


Holiday Inn Express

22.6%

77.4%



Restaurants

• Selection of in-house restaurants

Deals

• Breakfast included with stays

New developments

• IHG rewards club• Next generation hotels

Holiday Inn Express is a budget-oriented brand run by IHG, with a strong city and airport focus.


Parentcompany

InterContinental Hotels Group PLC

Head office

Broadwater ParkDenhamBuckinghamshireUB9 5HR

Websitehttps://www.ihg.com/holidayinnexpress/hotels/gb/en/reservation

Senior management

• Richard Solomons, CEO• Paul Edgecliffe-Johnson, CFO• Patrick Cescau, Non-Executive Chairman



Q3 2015 Q3 2016

UK outlets 77 80


Mercure


Parentcompany

Accor Hotels

Head office10 Hammersmith GroveLondonW6 7AP

Websitewww.mercure.com/gb/united-kingdom/index.shtml

Senior management

• Sébastien Bazin, Chairman and CEO, Accor Hotels

• Jean-Jacques Morin, CFO, Accor Hotels• Nadra Moussalem, European CEO of

Colony Capital

17.3%

82.7%



Restaurants

• Selection of in-house restaurants

Deals

• Gourmet offers

New developments

• Wine tasting as select hotels

Mercure Hotels are a mid-market brand run by Accor Hotels, locations vary from city centres to more rural.



Q3 2015 Q3 2016

UK outlets 67 68


Hilton


Parentcompany

Hilton Worldwide

Head office

Maple CourtCentral ParkReeds CrescentWatfordWD24 4QQ

Website www3.hilton.com/

Senior management

• Christopher J. Nassetta, President & CEO

• Kevin Jacobs, Executive Vice President & CFO

• Simon Vincent, Executive Vice President & President, Europe, Middle East & Africa

30.9%

69.1%



Restaurants

• In-house restaurants• Some Michelin starred• Some branded restaurants, such as

Jamie’s Italian

Deals

• Breakfast & Wifi• Bed & Breakfast

New developments

• Hilton HHonors app

Hilton is a mid-market to up-market brand owned by Hilton Worldwide, it has a strong London focus with regional hotels mainly located in city centres.



Q3 2015 Q3 2016

UK outlets 65 67


Classic British Hotels


Parentcompany

The Hotel Partnership Ltd.

Head office

Suite 113 The MayfordCentreMayford GreenWokingSurreyGU22 0PP

Websitewww.classicbritishhotels.com

Senior management

• Len Louis, CEO• Jean Hart, Finance Director

1.5%

98.5%



Restaurants

• In-house restaurant• Private members bar at selected hotels

Deals

• Gourmet Getaways

New developments

• Online blog• Murder mystery themed hotel stays

Classic British Hotels is an up-market brand with focus outside London, selected hotels include spa facilities and fine dining.



Q3 2015 Q3 2016

UK outlets 60 64


Bespoke


Parentcompany

Bespoke Hotels Ltd.

Head office

Unit 5 BanksideCrosfield StreetWarringtonChesireWA1 1UP

Website www.bespokehotels.com

Senior management

• Haydn Fentum, CEO• Stephen Littlefair, Managing Director

(Finance Commercial)• Robin Sheppard, Chairman

9.8%

90.2%



Restaurants

• Selection of in-house restaurants• RAW at La Suite West• Mediterranean with a modern twist at

My Hotel Chelsea• All day dining at Bermondsey Square

Hotel

Deals

• Dining and seasonal offers

New developments

• Bespoke hotel gift vouchers

Bespoke Hotels offer a tailored hotel experience, situated in the mid to up-market.



Q3 2015 Q3 2016

UK outlets 60 61


Old English Inns


Parentcompany

Greene King

Head office

Greene King PlcWestgate BreweryBury St EdmundsSuffolkIP33 1QT

Websitewww.oldenglishinns.co.uk

Senior management

• Rooney Anand, CEO, Greene King• Kirk Davis, Group Financial Director,

Greene King• Philip Yea, Chairman, Greene King

100%



Restaurants

• In-house restaurants

Deals

• Free Wifi• Sunday roasts from £8.99• Fizz Friday• Value meals from £4.99

New developments

• New Autumn menu

Owned by Greene King, Old English Inns are often historic hotels, with a complete focus outside of London.


Hotel restaurantsHotels diversifying restaurant offerings. Hilton restaurants vary from in-house, to Michelin starred and certain branded restaurants such as Jamie’s Italian. Ibis has a selection of in-house restaurants, as well as their new Fogg’s restaurant brand. Brands with celebrity chefs, fall into the branded and finer dining category.

In-house restaurants are defined as hotel brands with no set menu across their estates, branded restaurants are hotel brands with consistent branded menus and fine dining includes hotel brands with majority AA Rosette or Celebrity kitchens or any Michelin starred restaurants.

Finer dining

Branded

restaurants

Non-standard restaurants


Marketing initiatives

Marketing initiatives promote hotel dining. These are aimed at special occasions, daytime occasions and events, and boost guests and non-guest dining numbers.

Special occasions Daytime occasions Events

Britannia Hotels – Champagne weekends • 3 course dinner• 2 Nights Bed & Full Buffet Breakfast• Bottle of Champagne• Room upgrade

Legacy Hotels – ‘Great British Break Off’ • 2 night stay• 3 course dinner both nights• Bottle of prosecco

Sofitel – Chic Cocktail• 25% off 3 or 4 night stay• Cocktail and canapés for 2 one

evening

Wine tasting • Mercure• Hotel du Vin

‘Celebrity’ collaborations• Hand Picked hotels offer a dinner

with Greg Wallace

Afternoon tea - Pride of Britain Hotels • 4 afternoon teas for the price of 3

every Sundayat select hotels.

Afternoon tea - Welsh Rarebits • Autumn Afternoon Tea: overnight

accommodation, three course meal, full welsh breakfast and afternoon tea on arrival.

Pre-theatre menu – Guoman Hotels• 3 course dinner• Drink• Breakfast• Stay


Hotel operators enhancing F&B offer

Gourmet Burgers

• Thyme at Premier Inn• Beefeater Bar + Block at Premier

Inn• Stock Burger Co. at Holiday Inn

Brighton

Adventurous cuisine

• Fogg’s at Ibis• Grange St Paul’s part of

Grange Hotels – ‘atrium’ of restaurants

Artisan Coffee

• chill#02 at Ibis in Cambridge• Square Mile Coffee at Ace

Hotel

Premium drinks

• Bourbon Bar at JW Marriott hotel

• The Alchemist at The Grand Hotel, Birmingham

Food to go

• Travelodge – breakfast to go

• Moxy by Marriott – grab-n-go food all day

Health focused

• Firmdale Hotels - vegan, sugar free and gluten free menu

• RAW at La Suite West, part of Bespoke hotels – vegan menu


• Budget brands are the growth drivers. Premier Inn has seen the largest increase in market share, from 5.0% to 5.2% due to continued rapid expansion of their estate.

• Hotels are diversifying their restaurants, through branded, non-standard or finer dining.

• Hotels are embracing trends to improve F&B offerings

• The Top 10 groups are increasing their market share, growing by 0.4pp in Q3 2016 from 17.8% to 18.2% of the total market.

• Polarisation of growth at smaller brands, either at the budget or up-market brands.

Key Findings


Contents


Executive summary

Market


F&B Initiatives

Consumer insight


46


F&B initiatives – Key topics

• How are hotel operators improving their in-house food offering?

• How can hotels enhance their drink offering?

• What are hoteliers doing to drive trade during quieter periods?

• How are hotels partnering with branded concepts and leading chefs to improve their food & beverage offers?


Hotel initiatives to improve in-house food offer – Travelodge breakfast offer

Travelodge sees breakfast sales growth of 13% after investing in its breakfast offer in 2015. Travelodge provides an unlimited breakfast menu in November 2015 as part of a customer’s booking experience for £7.95, plus a lighter option for £5.95 and kids eat free. This translated into a sales increase of 13% as a result of this offer. Travelodge has also launched a breakfast on-the-go bag for guests who do not have time to eat the most important meal of the day.


Hotel initiatives to improve in-house food offer – Moxy (Marriott Hotels)

Moxy grab & go food and beverage options available to guests 24/7. Moxy Hotels is Marriott’s new economy lifestyle brand, targeting millennial customers. The brand offers self service so guests have grab & go food and beverage options available 24/7 suited for day-trippers with breakfast also available in this format. The Moxy brand is set to roll out in the UK next year with openings expected in London Excel, Stratford and Heathrow airport.


Hotel initiatives to improve in-house food offer – Holiday Inn Stock Burger Co

Holiday Inn launches standalone site, Stock Burger Co in Brighton. As part of the development of Holiday Inn Brighton seafront, Stock Burger Co is a standalone venue where hotel guests and the local community can eat, drink and socialise in comfortable surroundings. Stock Burger Co. brings together leading artisan food and drink producers to offer guests and non-guests gourmet burgers, craft beer and cocktails.


Hotel initiatives to improve in-house food offer – Best Western

Best Western Leigh Park Country House Hotel and Vineyard Best Western Hotel Llyndir Hall in Chester

Provenance focus at Best Western hotel restaurants. Best Western hotels are operated as franchises, and localisation and autonomy is encouraged. A few Best Western Hotels grow their own restaurant produce: Best Western Leigh Country House Hotel and Vineyard produce their own wine on site; whilst Best Western Llyndir Hall in Chester produces their own jams, marmalades and lemon curd from their gardens.


Hotel initiatives to enhance their drink offer – Travelodge and Lavazza coffeeTravelodge rolls out Lavazza coffee across estate as part of improved breakfast offer. In late 2015, Travelodge partnered with the Italian espresso brand Lavazza to offer its customers a premium coffee range as part of its new unlimited breakfast menu. The partnership has been heavily advertised on television and on their website.


Hotel initiatives to enhance their drink offer – The Ham Yard HotelHam Yard Hotel bar menu dominated by extensive cocktail offer. Ham Yard Hotel, owned by the Firmdale Group, is known for their extensive cocktail offer which is becoming popular at hotel bars for pre-dinner and theatre dates.


Hotel initiatives to drive trade during quieter periods – Ace Hotel Shoreditch

Bulldog Edition coffee shop

Miranda nightclub

East London Juice Co.

Hoi Polloi restaurant

Ace Hotel is providing wider experience to guests and non-guests. Ace Hotel has managed to transform their site into a cool hangout. Hoi Polloi restaurant has a dedicated menu that offers breakfast, casual daytime dining and evening snacks; Bulldog café, supplied by Square Mile Roasters, is popular amongst people pinging away on a laptop; a juice bar where all juices are made from locally sourced ingredients where items are available in-room or in the Hoi Polloi restaurant; and a basement club, Miranda, which attracts an eclectic mix

of guests and non-guests.


Hotel initiatives to drive trade during quieter periods – Themed Afternoon Tea

Hotels rolling out themed Afternoon Tea offers. Increased competition has led to hotels pushing the boundaries in afternoon tea offerings. Themed Afternoon Teas have been popular amongst London hotels with The Sanderson Mad Hatter’s Tea celebrating the 150th anniversary of Alice in Wonderland. The One Aldwych has created a Charlie and the Chocolate Factory Afternoon Tea in partnership with the West End musical.


Partnerships with F&B operators – Jamie’s Italian and Aubaine at Hilton Hotels (April & July 2015)Hilton partnered with two branded restaurants in 2015. The hotel brand partnered with Jamie’s Italian in Tower Bridge in April and Aubaine at Hyde Park in July 2015, with the former offering breakfast in London for the first time. Aubaine has also offered an Aubaine-to-go service with breakfast and afternoon tea packed in gift boxes.


Partnerships with F&B operators – Carluccio’s at the Marriott (May 2016)Carluccio’s opens first hotel restaurant in Marriott Regents Park. Carluccio’s opened its first hotel outlet in Marriott Regents Park with is own entrance on Adelaide Road, featuring an espresso bar, outdoor terrace, retail area and deli. The brand’s all day dining trading format is well suited to a hotel operation where breakfast and

dining are an integral part for guests and non-guests.


Partnerships with F&B operators – Gusto at Grand Hotel Birmingham (September 2016)

Gusto opens at the Grand Hotel Birmingham as part of its renovation in September 2016. Gusto, part of Living Ventures, has opened at the Grand Hotel Birmingham, alongside the cocktail bar the Alchemist, Gusto is known for its contemporary Italian dishes and extensive wine and cocktail offer.


Partnerships with F&B operators – The Alchemist at Grand Hotel Birmingham (October 2016)

The Grand Hotel Birmingham opens its first cocktail bar. The Alchemist owned by the same company as Gusto, incentivises guests and non-guests to drink on hotel premises with the brand being well-known for its theatrical cocktail making.


Partnerships with F&B operators – Belgo at Crowne Plaza Bloomsbury (December 2016)

First franchise for Casual Dining Group in the hotel market. Belgo is set to be Crowne Plaza’s main food and drink offer. This is currently being converted from a Holiday Inn at King Cross Road, Bloomsbury. Known for its Belgian food and craft beer offer, Belgo appeals to a wide customer demographic.


Partnerships with Celebrity Chefs – Marco Pierre White & Hilton Marco Pierre White restaurants increasing presence in Doubletree by Hilton hotels. Marco Pierre White has opened in its fourth Doubletree by Hilton Hotel in Islington in March 2016 with the hotel aiming to become a destination for local food lovers and achieve standout appeal to customers booking hotels in the area. The Marco Pierre White Steakhouse is operated under franchise by Black & White hospitality with 28 aged steaks

being prominent on the menu.


Key findings

• Hotels are improving their in-house food offerings through investing in breakfast offers, enhancing drinks, highlighting provenance and through high street brand-style offerings.

• Hotels, with large buildings in high-footfall areas, are increasingly looking to add reasons for non-guests to visit. The Ace Hotel’s coffee shop, juice bar and restaurant are examples of effective diversification.

• Afternoon tea, offered by numerous hotels, is being reimaged with themed offers appealing to younger customers.

• Partnerships with branded F&B operators is another growth area. Hotel operators must choose between concessions, franchising, partnerships, with each offering different amounts of operational autonomy and potential additional revenue.


Contents


Executive summary

Market


F&B Initiatives

Consumer insight


66


Consumer insight – Key topics

Who is visiting?

How much are they spending?

Why are they visiting?

How are they scoring hotel restaurants?

What are they eating and drinking? How often are they

visiting?


Over 50s are the key hotel restaurant visitors

Age and gender, % share of visits

YE September 2016

18-34

35-49

50+

18-34

35-49

50+

18-34

35-49

50+

Total market Hotel restaurants

18% 17%

15% 21%

12% 17%

7% 7%

13% 18%

19% 36%

15% 11%

15% 15%

22% 21%

8% 8%

14% 8%

28% 34%

17% 13%

16% 16%

19% 20%

7% 7%

13% 12%

32% 31%

55%

62%

63%

+

+

+

=

=

=


More affluent consumers are visiting hotel restaurants

13%

24%

38%

39%

26%

23%

23%

15%

Hotel restaurants

Total Market

Under £20K £20K-£40K £40K-£60K Over £60K

23%

28%

41%

39%

19%

20%

17%

13%

Hotel restaurants

Total Market

21%

24%

37%

39%

24%

22%

19%

15%

Hotel restaurants

Total Market

Total household income, % share of total visits

YE September 2016


Incidence in total market

A full English and fish dishes are key in hotel restaurants

Top five food items in hotels

Q3 2016

Full English Toast Cereal FruitCroissant (sweet)

Fish/seafood dish Roast Sandwich Pasta Salad

Fish/seafood dish Chicken dish Steak Roast Curry

59.4% 21.5% 16.5% 4.7% 13.7% 5.1%14.0% 2.8% 13.7% 2.3%

18.3% 8.4% 10.9% 3.3% 3.8% 2.6%10.1% 12.0% 3.8% 3.9%

18.7% 14.3% 13.7% 8.5% 9.4% 5.0%12.5% 7.3% 6.6% 8.6%

Incidence in hotels


Coffee most popular at breakfast, wine at lunch and dinner

Top five drinks in hotels

YE September 2016

Coffee Fruit juice Tea Tap waterBottled water

Bottled water Wine Coffee Beer/cider Tap water

Wine Beer/cider Bottled water Tap water Coffee

52.0% 40.2% 43.5% 7.7% 13.4% 19.9%29.9% 17.6% 3.3% 2.4%

25.2% 19.6% 21.5% 5.5% 12.9% 7.4%17.1% 19.5% 11.5% 5.0%

43.0% 20.0% 20.4% 21.6% 11.4% 6.3%18.8% 14.2% 9.0% 6.6%

Incidence in total marketIncidence in hotels


0.8

1.0

1.0

1.4

1.4

1.5

1.6

1.7

1.9

2.0

2.3

2.7

2.9

Hotel Restaurants

Fine Dining Restaurant

Street Food Vendor

Leisure Facilities

Vending Machine

Chain Restaurants

Local Independent Restaurants

Department Store/Supermarket Café

Pub Restaurants

Fast Food Outlets

Sandwich Retailer

Supermarket To-Go

Coffee Shop/Cafes

Room for growth in hotel participation and frequency

14%35%

40%

51%

57%

57%

65%

69%

71%

72%

73%

78%

78%

85%

Vending Machine

Street Food Vendor

Hotel Restaurants


Leisure Facilities

Supermarket To-Go

Department Store/Supermarket Café

Sandwich Retailer

Chain Restaurants

Fast Food Outlets

Local Independent Restaurants

Coffee Shop/Cafes

Pub Restaurants

2pp

Arrow = change vs. YE September 2015

Average growth 1pp Average growth 11%


36%

24%

40%

Dinner and breakfast are the core day-parts in hotel restaurants

Share of hotel visits split by day-part and compared to total market

YE September 2016

Over-index (26% total market)

Under-index(47% total market)

Over-index (27% total market)


2.9%

Hotels account for a small part of the Eating Out market

2.7% 0.1pp 1.0% 0.1pp

Arrow = pp chg vs. YE September 2015

Share of total out of home visits accounted for by hotel restaurantsYE September 2016

52.3 M50.1 M 34.3 M

Number of visits to hotel restaurants per annumYE September 2016


£4.88 £7.62

£17.52

£7.73

£13.97

£26.39

Total Market Hotels

Consistently higher average spend in hotel restaurants

£5.36 £11.75 £20.13

Average spend at a popular channel

Average spend per head per visitYE September 2016


£6.36

£8.22

£9.53

£9.93

£12.04

£12.07

£16.89

£16.95

£17.56

£20.13

£21.05

£26.39

£36.17

Sandwich Retailer

Supermarket To-Go

Fast Food Outlet

Street Food Vendor

Vending Machine

Department Store/ Supermarket Café

Coffee Shop/Café

Leisure facilities

Pub Restaurant

Chain Restaurant

Local Independent Restaurant

Hotel


A higher average spend at hotels requires justification

£3.30

£3.41

£3.48

£3.74

£4.54

£4.67

£5.13

£5.36

£5.97

£6.04

£6.77

£6.82

£7.73

Vending Machine

Sandwich Retailer

Supermarket To-Go

Street Food Vendor

Fast Food Outlet

Leisure facilities

Department Store/ Supermarket Café

Coffee Shop/Café

Pub Restaurant

Local Independent Restaurant


Chain Restaurant

Hotel +2%

Arrow = change vs. YE September 2015

Average growth +7% Average growth +13%

-3%


Low spend dinners becoming more common in hotel restaurants

Low spend(< £15 )

Mid spend( £15-£29.99)

High spend(≥£30)

29%

43%

28%

+2pp

-2pp

Arrow = pp chg vs. YE September 2015

N.B. Hotels split by average dinner spend: Budget <£15, Midmarket £15-£29.99, Premium ≥£30

Hotel dinner visits split by spend threshold

YE September 2016


Leisure journeys and special occasions key for hotels

Total Market

Hotel restaurants

Top 5 reasons for eating out

YE September 2016

7%

7%

8%

13%

32%

7%

2%

2%

10%

5%

Get together

Business meeting

Special occasion

Work basedjourney

Leisure basedjourney

7%

9%

9%

12%

21%

5%

10%

2%

4%

13%

Spend time withpartner

Having a treat

Special occasion


Get together

8%

9%

11%

12%

20%

9%

14%

19%

8%

4%

Spend time withpartner

Having a treat

Get together

Special occasion


Having a treat Having a treat

6%13%Having a treat

6th


42%

20% 16%

34%25%

34% 32% 28% 28%17%

Food quality/taste Convenient location -other

Nice environment/pleasant atmosphere

Been there before/previous experience

Good value for food &drinks

Weak consumer perceptions of food quality in hotel restaurants

Top 5 reason for selecting the venue, % share of visits

YE September 2016

23%32% 28%

11%

27%

43%

26% 24% 24% 21%

Convenient location -other

Food quality/ taste Been before Nice environment/pleasant atmosphere

Good value for food &drinks

Total market Hotels

35%

13%

32%26%

8%

34% 33% 32%24%

19%

Food quality/ taste Nice environment/pleasant atmosphere

Been there before/previous experience

Convenient location -other

Chosen by someone else/Recommendation

N.B. Convenient location – other refers to somewhere close to a location other than work or home


Value for money

Hotels: 7.8/10Total Market: 8.0/10

Enhanced quality necessary to provide better value for money

5.0

6.0

7.0

8.0

9.0Convenient location

Atmosphere/environment

Value for money

Low prices

Speed of service

Friendly service

Food quality/taste

Drink quality/taste

Freshness

Menu choice

Cleanliness

Ethical practices/products

Family friendly

Overall experience

Low prices

Low prices


Value for money

Key Performance Indicator Scores – breakfast, lunch and dinner combined

YE September 2016

Total Market Hotel restaurants

Food quality/taste


Food quality/taste


Highest spend occasions are rated no better for food quality

5.0

6.0

7.0

8.0

9.0Convenient location

Atmosphere/environment

Value for money

Low prices

Speed of service

Friendly service

Food quality/taste

Drink quality/taste

Freshness

Menu choice

Cleanliness

Ethicalpractices/products

Family friendly

Overall experience

N.B. Hotels split by average spend: Budget <£15, Midmarket £15-£29.99, Premium ≥£30

Food quality/taste

Food quality/taste

Low: 8.2/10Mid: 8.6/10High: 8.5/10

Freshness

Low: 8.2/10Mid: 8.6/10High: 8.5/10Freshness

Key performance Indicator Scores

YE September 2016

Low spend(< £15 )

Mid spend( £15-£29.99)

High spend(≥£30)


Key messages

• Who is visiting? Older and more affluent consumers are the key focus for hotel restaurants.

• What are they eating and drinking? At breakfast, a full English and coffee are the most popular, at lunch and dinner, fish/seafood dishes and wine.

• How often are they visiting? Frequency and participation in hotel restaurants are both relatively low, allowing room for growth.

• How much are they spending? Hotel restaurant average spend is the highest of the channels at breakfast and the second highest at dinner.

• Why are they visiting? Leisure based journeys and special occasions are key focuses for hotel restaurants. Opportunity lies in encouraging treat seeking consumers.

• How are they scoring hotel restaurants? Hotels score relatively poorly for value for money and low prices. Stronger food quality/taste needed to justify the higher average spend in hotel restaurants.


Contents


Executive summary

Market


F&B Initiatives

Consumer insight


83


Industry executive research – Key topics

• Respondent profile

• State of the market – and growth drivers & inhibitors

• Evolving Food & Beverage preferences – and challenges – of hotel guests

• Changing importance of Food & Beverage within Hotel business mix

• Perspectives on key trends and developments

• The outlook for food & beverage at hotels over the next 3-5 years


28 hotel executives participated in this industry survey

25%

25%

21%

18%

4%

4%

4%

Premiumplayer

Country househotel operator

Standardhotelier

Boutiquehotelier

Budgetoperator

Innkeeper

Hotelconsultant

Where

39%

18%

14%

7%

7%

7%

4%

4%

London

South East

National

North East

Scotland

South West

East ofEngland

North West

68%

14%

11%

4%

4%

1-5

11-20

6-10

51-100

More than100

No. of outletsin the UK


The majority of hoteliers agree value of bookings and Catering / F&B sales are ahead during Mar-Sep 2016 vs Mar-Sep 2015

4% 7%

30% 26%

11% 15%

44%48%

11%4%

Value of bookings Catering / F&B sales

Significantly ahead

Slightly ahead

No change

Slightly down

Significantly down


Reasons for Catering / F&B performing ahead

+

“We have seen the number of guests from overseas increase along with significant improvement in domestic travel.” - Standard hotelier

“Increase in weddings and social banqueting.” - Country house hotel operator

“Consumer confidence is high and the trend for eating out is maintaining the growth from last year - in London this is particularly the case.” - Standard hotelier

“Growing appeal of the product together with the ability to push pricing up without deterring the guest and at the same time attracting new business.” - Boutique hotelier

“Afternoon tea more successful in 2016 due to promotion.” - Boutique hotelier

“Slight recovery in meetings market and retail F&B volumes ahead.” - Standard hotelier


Reasons for Catering / F&B performing down

“There is a lower average spend in the bars especially.” - Premium player

“Referendum gave us a slow start to the year; Uncertainty in the pound; People are coming but are spending cautiously; Suppliers are driving up their prices due to the weaker Pound.” - Country house hotel operator

“People are eating and drinking less in the hotel as there is so much choice elsewhere, it is hard to keep up and compete.” - Budget operator

“Occupancy shortfall and increased competition.” - Standard hotelier

“People are spending more on accommodation but still want value for money on F&B sales.”- Premium player

+


Key changes in guests' F&B preferences in recent years


Key changes in guests' F&B preferences in recent years (1)

“Better knowledge of premium products and more discerning approach towards food.” - Standard hotelier

“People want something different or to be wowed” - Premium player

"There is still a requirement to have something new/inventive/exciting that no-one else seems to have/do. There's a huge need to keep changing as people get bored faster and faster it seems.” - Premium player

“More experiential-led. Less loyal. F&B operations need to look to innovation to stay relevant.”- Boutique hotelier

“Afternoon tea has been the most significant but there has to be variety and it has to be themed e.g. a Halloween afternoon tea as that is what will attract people away from the usual afternoon tea.” - Country house hotel operator

Halloween Afternoon Tea, The Milestone Hotel Street food afternoon tea, The Arch London


Key changes in guests' F&B preferences in recent years (2)

“More relaxed, the formal scene is slowly becoming less appealing to the wider market.”- Country house hotel operator

“Cuisine that is unusual enough that the guest could not replicate it at home, but recognisable enough to make them relaxed enough to enjoy it.” - Boutique hotelier

"The introduction of coffee shops in hotels has increased traffic in hotel lobbies. Breakfast has become healthier and more adventurous as hotels strive to attract outside guests. People are also looking for locally sourced produce.” - Standard hotelier

“Guests are far more open with expressing personal likes & dislikes and as a result, are expecting more bespoke menu choices.” - Country house hotel operator

“Greater flexibility around service times, premium coffee offer and rise in gluten-free.”- Country house hotel operator

“Increased desire to eat off menu, or to tweak items on the menu to their taste.” - Boutique hotelier

?

“Increasing demands on value but with an unwillingness to pay for it.” - Standard hotelier


Evolving guest preferences = Heightened challenges for hoteliers

Healthier

eating

More ordering

convenience

Adventurous

Experience-led

Operational challenges

Changing guest preferences

Rising costs

Applied knowledge

Menu tailoring

Innovation

Skilful supply

chain mgt

Personalisation Customisation

Better cost mgtAllergies &

Dietary reqs

Flexible & multi-

skilled staff


Operational challenges/solutions to guests' evolving preferences

Eat off

menu

Last

minute

“Finding the time to be more creative, finding the products and then delivering it well for a short time – before the process starts again.” - Premium player

“We need to better listen to feedback and understand it, rather than dismiss it – as has often been the case previously.” - Boutique hotelier

“Keeping pace with trends and the costs associated with this.” - Boutique hotelier

"Additional late evening and night staff. Understanding of kitchen pressures with guest focus on more flexibility in dining timings.” - Standard hotelier

“More focus on menu planning and costing.” - Standard hotelier

“Offering tailored services and keeping pace with preferences for using technology.” - Standard hotelier

Rising

costAdventurousExperience

- led


Operational challenges/solutions to guests' evolving preferences

Healthier

eatingDietary

Gluten

freeAllergy

“We are happy to cater for this, but it does generate an extraordinary amount of work for the kitchen.” - Country house hotel operator

“Obviously dietary requirements are coming more and more to the fore which were never so 'popular' in previous years and we have to be on top of those all the time.” - Country house hotel operator

“Dietary requirements - groups wanting more menu choice.” - Country house hotel operator

“Make sure the team is aware of allergies and how to address those.” - Premium player

“Coordination in a busy kitchen environment and flexibility of accounting / stock management / POS software in adapting to these needs.” - Boutique hotelier

”Delivery of fresh fruit products or services require last minute labour, broader range of choices, have a knock on for the wider chain in terms of ordering/delivery/stocking/replenishment.” - Premium player


Top 10 MOST important occasions contributing to growth in Catering / F&B sales

46% 43% 39% 32% 21% 21% 18% 18% 11% 11%

Afternoon tea Dinner for

non-residents

Weekend special

occasions / celebrations Business

conference – daytime

Dinner for residents

Cocktails & evening

drinkBreakfast /

Brunch

Business conference – evening

Sunday lunch

Seasonal events

1 2 3 4 =5 =5 =7 =7 =9 =9


Top five LEAST important occasions contributing to growth in Catering / F&B sales

46.4% 42.9% 42.9% 21.4% 21.4%

1 =2 =2 =4 =4

Lunch

Breakfast Mid-morningCoffee & snacks

Dinner -residents

Business conferences - evening


Growing importance of Catering / F&B sales in business models

21.4%

35.7% 35.7%

7.1%

0.0%

Significantlymore

important

Slightly moreimportant

No change Slightly lessimportant

Significantlyless important

More important:

57.1%

No change: 35.7%

Less important:

7.1%


Rising importance of Catering / F&B sales reflects growing responsiveness to evolving customer demands

"Customers today are looking for destinations, and we are seeing more hotel companies follow the examples of Hotel du Vin, the Hoxton, and Ace Hotel in investing in F&B to increase sales from guests and local residents too.” - Standard hotelier

“People want an experience and to indulge.”- Premium player

“Millennials are looking for additional experiences which requires significant investment in F&B.” -Standard hotelier


Catering/ F&B is becoming a more attractive sales driver

“Hotels have historically done a better job on room sales than F&B, but are finally waking up to the opportunities that are available to them with the right focus and resources applied to the discipline.” - Premium player

“Bedroom sales have reached maturity in terms of occupancy, however there is still excess capacity within our food and beverage business for growth.”- Standard hotelier

“Trends are pointing towards faster/slicker/wider choices of F&B, which encourage higher sales but can impact on resources to achieve consistency.”- Premium player


Extent of embrace of High Street foodservice trends

11%

39%

25%

7%

18%

Strongly embraced Somewhat embraced Occasionallyembraced

Being ignored Not relevant/applicable


Extent of agreement that having a branded High Street operator on-site significantly increases hotel catering/ F&B sales?

13%

43%

22%

0%

22%

Strongly agree Slightly agree Neutral Slightlydisagree

Stronglydisagree

Agreement: 46% Neither: 22% Disagreement: 22%


Why hotels should replicate High Street trends …

“The High Street is showing hotels and restaurants what consumers are wanting, especially in the healthy food and light lunch areas. We are certainly keeping a close eye on the high street and reacting accordingly.”- Boutique hotelier

“Hotel chains are looking to skill set partners to recover cost and deliver on the bottom line. It also creates a varied atmosphere in these spaces which hotel guests can better connect with.”- Boutique hotelier

“Hotels’ biggest challenges are creating spaces unique to their neighbourhoods which non-residents will be attracted to. This is being done by recruiting either quality talented chefs or concept providers.”- Boutique hotelier

“Hotels have realised that High Street outlets are quicker to respond to clients needs. The fact that hotels are starting to outsource F&B outlets is proof of this.” - Standard hotelier


Concerns over duplication of High Street trends …

“Hotel locations often preclude the type of investment justified in high street locations, so hotel F&B customers don't get the same experience.” - Standard hotelier

“We consider our restaurants to offer an experience you do not find at a high street outlet. But there will always be an argument for adapting your offering to match the trends of your consumers, something the high street outlets are constantly doing.” - Country house hotel operator

“Hotels should not replicate the high street as we need to remember that hotels are offering a completely different experience vs a Costa say.” - Country house hotel operator

“A restaurant has a concept it follows and then morphs over time to stay valid. A provincial hotel needs to have a broader approach to cover various demands and expectations from different market segments, so the concepts perhaps are not as true or defined.” - Standard hotelier

“Some companies are doing this, but most international chains are still approaching their restaurant operations in a very bland, conventional and safe manner.” - Standard hotelier


How important is having a Celebrity Chef endorsed restaurant on-site in driving catering/food beverage sales?

4.3%

39.1%

34.8%

17.4%

4.3%

Highlyimportant

Somewhatimportant

Marginalimportance

No importance Disadvantage

Important: 43.4% Not important: 21.7%


Key factors factors in driving catering / F&B sales

61% 61% 54% 36% 29% 25% 11% 4%

=1 =1 3 4 5 6 7 8

Atmosphere/ environment

Value for money

Convenient location

Food quality/ taste Overall

experience Friendly service

Menu choice

Low prices


What is your outlook for how catering/ F&B sales will grow across the wider hotel market over the next 2-3 years?

4%

71%

7%

18%

0%

Significantlyahead

Slightly ahead No change Slightly down Significantlydown

Ahead: 75%

No change: 7%

Down: 18%


What is your outlook for how YOUR catering/ F&B sales will grow across the wider hotel market over the next 2-3 years?

11%

64%

18%

7%

0%

Significantlyahead

Slightly ahead No change Slightly down Significantlydown

Ahead: 75%

No change: 18% Down: 7%


What will be the main revenue drivers behind hotel catering sales growth over the next 2-3 years?

“Prices will inevitably rise due to Brexit, which coupled with direct increases in labour costs, will have to be passed on to the consumer.” - Boutique hotelier

“Sterling weakness creates more spend at home and attracts more foreign tourists.” - Premium player

"Expansion of additional service periods, .e.g. Brunch and Afternoon Tea. Also, growth in specialised services and NPD from successful independents, particular in beverage.” - Boutique hotelier

“The growth of healthier light lunches and all-day snacking/sharing platers.” - Boutique hotelier

“Weddings, events, hotel resident and non-resident diners.” - Country house hotel operator

“Meetings will continue to develop as people get a greater benefit out of meeting up vs. a phone conversation.”- Country house hotel operator

“More modernised menus and concepts.” - Hotel consultant

“Good quality offerings that are experiential.” - Standard hotelier

BrexitOff-peak day-parts

Events & experiences

More varied F&B offers


Which business competencies and skill sets will be most important to ensuring catering sales growth is achieved?

“Recruiting and retaining talent in the aftermath of Brexit.” - Country house hotel operator

“International access and labour retention.” - Country house hotel operator

“Greater knowledge of customers’ expectations for trends and adapting training to encompass these demands.”- Premium player

“Service, marketing and concept design.” - Standard hotelier

“It is all to do with the consistency of good service. People go back to places because they have enjoyed the experience. Don't make it more complicated than it needs to be - provide good and competent service.”- Country house hotel operator

“We have to listen and engage with our guests, and indeed our teams to keep up with their wants and needs.” - Boutique hotelier

“Demonstrating a consistent value for money.” - Premium player

“Ability to show value for money and to provide experiences that guests want to repeat.” - Standard hotelier

Talent management

Great service ResponsivenessExperiential

value for money


Which of the following market segments/hotel formats will see the strongest growth in sales over the next 3-5 years?

46% 46% 21% 21% 11% 11% 11%

1 =1 =3 =3 =5 =5 =5

Budget(in a 1-2

star hotel)

Boutique

Standard (in a 3-4

star hotel)

Country house hotel

Premium (5 star)

Inn Mixed portfolio


Perspectives on how Catering/ F&B offers in hotels will be different in 5 years' time? Pt 1 of 2

“Greater variety. Quicker, more convenient restaurants as well as fine dining.” - Boutique hotelier

"More ‘grab & go’ options to cater for food requirements throughout the day, not just at main meal periods.”- Premium player

“More relaxed, informal and accessible dining. Fast and friendly service, design-led concepts.” - Country house hotel operator

“Stronger international influence and more relaxed environments.” - Premium player

“Rising influence of street food concepts - people want it now, simple, value for money and high quality.” - Premium player

“Hotels will revert back to tradition to encourage people to enjoy the experience.”- Country house hotel operator


Perspectives on how Catering/ F&B offers in hotels will be different in 5 years' time? Pt 2 of 2

“All will be outsourced.” - Standard hotelier

“More hotels will outsource their operation.” - Standard hotelier

“Greater contracting out. More partnerships with local restaurants.” - Country house hotel operator

“More branded operators within hotels at the budget level and more unconventional restaurants at the boutique end of the market.” - Boutique hotelier


MCA – Key contacts:

Sophie Barber, Sales & Marketing Manager

[email protected]

Peter Linden, Market Analysis Manger

[email protected]

Documents

MCA | UK HOTEL RESTAURANTS MARKET REPORT …brakes-source.co.uk/assetfiles/MCA---UK-Hotel...•Market sizing of the UK Hotel Restaurants market. •Analysis of the size and growth