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F&B Case Study: Middle East/Africa

For travelers across the globe, hotel food & beverage (F&B) offerings play a significant role in shaping an overall lodging experience and opinions of particular destinations. Today’s travelers increasingly expect more diverse and customized F&B options, and are often willing to pay top dollar for higher quality.

With that in mind, we wanted to take a look at hotel F&B data to identify trends and gain a sense of where this department is heading. However, data for this revenue generating department often reflects cultural differences, so global trends are not as telling as those that are more localized.   

We know, regardless of region, as occupancy and average daily rate (ADR) increase and contribute to increased room revenue, in-house guest spending increases on minibars, in-room dining, F&B outlets and spas. We also know F&B is a labor intensive department, and payroll costs have a direct impact on profitability no matter where in the world a hotel is located.  

So for this case study on 2018 profitability data, we decided to focus in on the F&B trends of a region that very much reflect cultural influence—the Middle East/Africa region.

F&B MEA Ratio To Sales 2018
  • The region’s drop in F&B revenue in 2018 was worse than its drop in room revenue, which is likely a function of an influx of new supply. Our AM:PM platform showed 1,106 new hotel openings in 2018, adding 260,646 rooms to the market. Naturally, a considerable amount of hotel restaurants have also opened, creating a more competitive market for F&B.  


  • A drop in oil prices since 2014 has likely had an effect on travel and tourism as well as disposable income. Room demand increased 4.4% in 2018, but that growth was not sufficient on its own to mitigate the effects of decreased spending in the sector.


  • F&B still accounts for 35% of total revenue in the region. This is likely because there are not many outside restaurant choices—most restaurants are located inside of hotels, so they are frequented by locals in addition to travelers. Legal restrictions on alcohol sales in the region push even more F&B business for hotels.


  • MEA hoteliers benefit from a lower-cost labor force and an F&B payroll ratio-to-sales (RTS) of 25.6%.


Overall, F&B has exciting times ahead with immense growth opportunities for hoteliers, regardless of their location around the globe. The key is of course being mindful about profitability in a low-margin industry driven by high labor costs. We expect new trends such as self-service amenities, grab-and-go outlets, and partnerships with food delivery services to continue increasing in popularity worldwide in the near future. But again, it will be important to monitor these trends on a per-region basis. We look forward to providing you with additional F&B insights when we draw nearer to our profitability data submission in 2020.

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