Demand for dining out is down at United Kingdom hotels and their restaurants, but the guests who are dining out aren't limiting their spending.

“We’ve seen a bit of a shift,” said Graeme Smith, a London-based partner and managing director at business advisory AlixPartners. “The volume is down, but the spend per person is up.”

He said this is feeding into a trend called “premierization,” meaning to optimize spending at extraordinary events that simply cannot be replicated at home.

“It is about shareable moments in statement spaces, such as roof decks, curating propositions to be authentic to the location,” he said.

Andrew Stembridge, executive director at Iconic Luxury Hotels, which is part of London & Regional Hotels, said hotels can find inspiration in other types of restaurants.

“Create a vibe. Many pubs do that well,” Stembridge said.

Food-and-beverage “operators are usually way ahead of hotel operators,” Stembridge added. “See what they are doing. Borrow with pride and make a passion of creating vibrant restaurant experiences that can be balanced with cost details and disciplines.”

Some hotel food-and-beverage trends to watch for in 2024 include some new ideas and some that have been around for years, such as:

• Smaller portions.
• More technology geared toward food and beverage.
• Smaller menus, but with each dish dressed up more.
• Hotel restaurants striving to be top of class in any market.
• Pricing non-alcoholic drinks just as high as alcoholic drinks.
• Fewer staff and leaner operating models.
• Curated food-and-beverage and restaurant experiences.
• Shareable social-media space.
• Less interest in celebrity chefs.
• Hoteliers increasingly working with dark kitchens.

Hotel restaurants also are experimenting more with menu flexibility and digitalization that promotes efficiency, both key methods to reducing costs.
At a webinar hosted by business consultancy HVS, Smith said being able to hire the right staff continues to be a headache at U.K. hotels and restaurants, as does the National Living Wage continuing to outstrip inflation.

The good news as the year begins is consumers increasingly are considering cuisine to be integral part of their hotel stay and are even choosing hotels based on food-and-beverage amenities, said Karen Friebe, head of hotels, hospitality and leisure at legal firm Bird & Bird.

Food and beverage “contributes between 20% and 40% of total hotel revenue, so it makes sense to get the [food and beverage] right, to drive profitability. Still, though, [food and beverage] is not core to most hoteliers’ strengths,” she said.

James Fowler, Bird & Bird's senior associate of hotels, hospitality and leisure, said succeeding with the food-and-beverage part of the business is tricky and depends on the business model and hotel location.

He added inflation has driven up food prices, which have yet to come down even if overall U.K. inflation rates have begun to cool.

“The general manager and the [food-and-beverage] operator might be separately responsible to the owner for their respective fiefdoms. Maybe that would avoid ruffled feathers, but it does mean that the owner becomes the middle person, which might not be ideal,” Fowler said. “Or is the outsourced [food-and-beverage] operation a part of overall hotel operations and answerable to the general manager, who is not a specialist?”

David Michels, CEO of Michels & Taylor, said the competition in dining is brutal.

“I had lunch [on Dec. 13] with a successful restaurateur who charges £18.75 ($23.75) for scrambled eggs, a speciality. He cannot fit any more customers in and still he cannot make a profit. He’s a pure restaurateur, and if he cannot make a profit, how are hoteliers expected to do so? You need to reduce losses as much as possible and you need to concentrate on the guest,” he said.

Michels said there are two types of hotel restaurants: “roundabout hotels” with breakfast and little more, and the “Savoy type,” with multiple food-and-beverage experiences — “the whole nine yards.”

If food costs are passed on to customers, Stembridge said it's crucial that those meals deliver quality.

“You can charge £25 ($32) for a burger, and we do, but make sure it is a bloody good burger,” Stembridge said.

One growing profitable segment is non-alcoholic drinks. Smith said there is an increased focus on what prices are being charged for classic soft drinks and drinks specifically designed to be alcohol-free mocktails.

“We’re seeing that customers do seem happy to pay [for non-alcoholic drinks] what they would pay for alcoholic drinks, as they know those drinks have been specifically designed for them,” he said. “Operators do need to be careful not to appear to be overcharging.”

Success in hotel food and beverage comes down to details, hundreds of them, Michels said.

“Products, portions, labor, kitchens you skill or deskill, hours in which [restaurants] are open and closed,” he said. “The answer is more footfall — that is always the case — but this is so difficult, especially when there are less events happening, certainly in the U.K. and I think in the rest of Europe.”

Pablo Pimienta, founder of Riviera Real Estate, said he anticipates fewer hotel restaurants will be looking to bring in or collaborate with celebrity chefs.

“Bringing in big names is one idea, but that, too, comes with costs. Destination restaurants with hotel rooms or country-house hotels will do well, but for urban hotels, the goal has to be being the best at the type of cuisine you chose. There also will be a focus on beverage, which has higher margins, and hotels have the ability to have later alcohol licensing,” Pimienta said.

“Provide a couple of [meal] items very well done. The very clever guys at Soho House have pre-made cocktails in bottles. Take a page from lifestyle hotels that have fewer brand standards,” he added.

Smith said the best hotel restaurants have successfully made their customers their most successful marketing channel.

Laura Brinkmann, senior vice president at ownership firm KSL Capital Partners, said being flexible to consumer behavior is even more critical.

“We’ve seen costs go up disproportionately, but I have been impressed with how hoteliers had adapted and identified the many wins that are available. It is not impossible to navigate these developments, but it takes time and discipline,” Brinkmann said.

Brinkmann said she anticipates 2024 will be difficult for restaurants designed around occupancy volumes.

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