In-room dining is considered a valuable amenity to guests, and offering this service also is required to participate in luxury consortia as well as to achieve prestigious star ratings. With the continued increasing cost of labor and goods in today’s environment, many urban luxury hotels have seen margin declines and exacerbated losses in the room-service department.
The following list of tips can be used help drive profitability in room service without sacrificing luxury standards.
1. Review pricing
Conduct quarterly price shops to see how your hotel is positioned versus your competition. Areas to focus on in addition to the actual food/beverage prices include increasing administrative/delivery fees, which help mitigate the incremental labor costs being experienced across the hospitality industry.
2. Evaluate profitability by item
Review your product-mix reports — report outlining sales by menu item — as well as the retail price versus all-in cost by item to see which items are your “stars.” Explore cutting low-producing items which have weak profit margins due to high food cost and longer kitchen preparation time.
3. Analyze hours of operation
Look at sales by hour reports to see if there is opportunity to shrink hours of operation. Do you need to be open for overnight room service? Evaluate the pros/cons of modifying the offering during low-traffic times, including menu items, as well as delivery style/procedures.
4. Understand staffing models
Review schedules for both front-of-house and back-of-house labor. Do opportunities exist to cross-utilize staff to assist in other areas during off-peak hours? Is there potential to combine job positions to create efficiencies (e.g., server/order-taker)?
5. Explore alternative offering models
There are many alternative operating models worth exploring. With the rise of third-party meal delivery services such as Uber Eats, Seamless, etc., hotel guests have been using this option frequently; there also are options to outsource in-room dining entirely via ghost kitchen operations. However, hotel owners should be cautious when outsourcing as this would affect their overall flexibility. How do you implement this to maintain a luxury offering?
6. Invest in furniture, fixtures, equipment and technology to drive ROI
Potential hotel capital investments could contribute to labor efficiencies, particularly on the delivery. Would it make sense to have small tables in rooms so servers don’t need to carry them? Are there other delivery mechanisms that would help lower ongoing operational costs?
7. Streamline the breakfast ordering process
Most breakfast orders come during a 60– to 90-minute period in the morning. Consider adding an “express breakfast” or proactively seeking pre-orders either through doorhanger menu, concierge outreach (voice or chat) or while setting up wake-up calls. Pre-ordering greatly speeds up the prep and delivery processes.
There are many more options to explore as each asset presents its own unique opportunities and constraints, but these are a few of the most common and successful tactics that hotelAVE has had success in implementing. Additionally, please note, before actioning anything, it is important to evaluate the pros/cons of each decision, the impact on guest satisfaction scores, as well as review any potential pushbacks as it relates to brand standards, corporate account/consortia requirements.
Silvie Cohen is senior vice president at Hotel Asset Value Enhancement (hotelAVE).
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