Our hospitality model has always been to be a rooms specialist from the beginning. It would be easy to think that this is something which has evolved because of the worsening margin issues around food and beverage, but it has always been intentional and unrelated to cost.
What we do is focus on our space and make sure that the service of the rooms and the experience the guest has are brilliant. This may mean less requirement for team members with leaner operations as a result, but it doesn’t mean having no one on the front desk. We always have two members of the team at reception to provide that engagement and ensure that, should our guests want anything, they have somewhere to go and receive exceptional service.
Specialization also creates a simple story for investors. Hotels are made up of more and more moving parts and it can make them hard to read. When you look at our profit-and-loss statement, it’s very straightforward. It’s rooms revenue, rooms costs and then operating costs. There aren’t extra layers of food and beverage, gyms, event space or coworking, all of which can make it harder for the business to understand and harder to be valued. When you have a bit of this and a bit of that, it could create a level of confusion which can be very off-putting.
Ours is a very simple structure to buy in to. You can take the number of rooms, the size of the building and do a relatively simple valuation and we have found this does attract investors.
It’s also a simple story for the guest. There are no added costs, no feeling that you are being charged for more than you have used. We don't come with any strings attached. And because there is no connection with the local restaurants we recommend — other than our team having experienced them and enjoyed them — the benefit to us is purely that the guest is happy.
Whitbread’s recent decision to change some of its food and beverage into rooms illustrates a growing trends of more and more hotels cutting back on restaurants for the sake of profit.
I don’t think food and beverage will be a priority on most people’s lists going forward. Instead we will see companies renovate or build their hotels to optimize the front of house, maybe creating an area where guests can relax, but not a specific food-and-beverage area. We may see some hotels building or allocating a space which they will sublet to another brand or operator and taking the revenue, but that’s as close as they will get to food and beverage.
It will remain a decision specific to your location. We are always in the city center and we felt that there was no point trying to compete with the local Michelin-starred restaurant. We have no interest in opening any food and beverage. It’s better for us to have an informed, interested team who are happy to get to know the guest and recommend somewhere nearby for them to explore.
This also helps us to integrate into the local communities. It’s common for hotels to stand alone and feel adrift from their surroundings, but if you have a team which is embedded in the local area, then they are supporting local businesses by driving demand and you can develop a thriving ecosystem. We want the community to be thriving, we want great restaurants, great cultural events around us, because the more that happens, more visitors come and more people benefit from it. Then it becomes easier and easier to promote the area and promote the business.
There is great value to be found in specialization. A room-only product need not mean a barren hotel room where the guest is cast adrift and left to their own devices. This is not a budget product; our expansion so far has shown that there is real demand for a stylish room served with heartfelt hospitality. It allows the guest to achieve what they came to the city to do; enjoy a truly memorable experience.
Ameesh Shah is chief financial officer at United Kingdom-based Resident Hotels.
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