Hotel financial performance influenced by changes in F&B offerings
Beverage venue revenues, public-room rental and A/V revenue saw greatest POR revenue change
By Robert Mandelbaum and Ed StacyNov 28, 2023
THE 2020 COVID-influenced lodging industry recession resulted in some noticeable changes to the way hotels provide F&B service.
Social distancing regulations forced operators to be creative in the way they served food and beverages to guests.
Rising wage rates and sharp increases in the cost of food and beverage products compelled hotel managers to find ways to control costs.
The inability of hotels to attract employees to fill the positions eliminated during the recession required creative solutions to improve productivity and offer more with less.
These factors resulted in the following hotel food and beverage trends during the subsequent recovery period:
The increased offering of kiosks and grab-and-go venues
The closing of traditional three-meal-a-day restaurants
A reduction in the menus, number of seats, and hours of remaining F&B venues
Reductions in in-room dining and mini-bar service
The conversion of food and beverage space to other revenue generating purposes
To learn how these recent changes in hotel food and beverage operations have impacted revenues and expenses, we have analyzed the operating statements of 2,500 U.S. full-service, resort, and convention hotels that participated in CBRE’s annual Trends in the Hotel Industry in 2021 and 2022. In 2022, these 2,500 properties averaged 285 rooms in size, and achieved an occupancy of 64.7 percent, along with an ADR of $225.60. To provide more current information, we also relied on the monthly operating statements of 1,200 properties during the period January through June of 2023.
Revenue Trends
Since the majority of hotel food and beverage patrons come from in-house guests, it is appropriate to analyze revenue trends on a dollar-per-occupied room basis. From 2021 to 2022, total hotel F&B revenues POR for the hotels in the study sample increased by 50.2 percent. For comparative purposes, total hotel revenue for the same hotels increased 24 percent POR. This is consistent with the delay in the recovery of revenues linked to group demand (ex. catering and banquet revenue) during 2021.
F&B revenue sources exhibiting the greatest POR percentage increases during 2022 were beverage venue revenues, public-room rental, audio-visual revenue, and mandatory service charges. The rise in beverage venue revenues (bars and lounges) is consistent with the increased popularity of specialty cocktails and craft beers, along with the conversion of rooftop spaces to bars. Public room-rental and A/V revenue gains are the result of the initial stages of the recovery of conventions and meetings. The increase in service-charge revenue is reflective of the increased implementation of mandatory surcharges within hotel F&B outlets to offset the rising costs of operations. This is similar to the increase in hotel resort fees as a supplement to rooms revenue.
On the downside, we observed reductions in the amount of revenue earned on a POR basis from in-room dining and minibars during 2022. Social distancing requirements forced hotels to limit guest interaction within the guest room. Accordingly, the extent of in-room dining service has been reduced and replaced with the increased use of grab-and-go operations. In addition, hotels have frequently removed mini-bars from guest rooms in favor of providing mini-refrigerators for guest use.
When analyzing changes in food and beverage revenue by property type and chain-scale, we see consistency with recent changes in hotel demand. From 2021 to 2022, the greatest F&B revenue POR gains were achieved by full-service, convention, and upper-upscale hotels. In general, full-service, convention, and upper-upscale hotels benefited the most in 2022 from the initial stages of the recovery of group and corporate demand.
In 2023 we have seen a slowdown in total F&B revenue growth. From January through June of 2023, total F&B revenue has increased by just 11.3 percent from the first six months of 2022. It should be noted that most of this gain occurred in January of 2023 when comparisons were extremely favorable to the Omicron-depressed performance in January of 2022.
Luxury hotels have struggled the most to grow F&B revenue in 2023. This is consistent with the inability of luxury hotels to increase room rates during the year. It has become apparent that the double-digit growth in luxury hotel room rates and F&B prices enjoyed during 2021 and 2022 has proven to be unsustainable in 2023.
Expense Trends
From 2021 to 2022, total F&B department expenses at the hotels in our sample increased by 82.3 percent. For comparative purposes, this is significantly greater than the 63.5 percent rise in expenses for all operated departments. Among all the expenses within the hotel F&B department, the greatest increase was observed in the combined costs for salaries, wages, and employee benefits. From 2021 to 2022, total F&B department labor costs increased by 85.9 percent. This growth in labor costs is primarily attributable to the increase in employee wage rates, as opposed to hours worked. Supplemental analyses performed by CBRE and other firms have found that hotels are operating with fewer employees and hours worked compared to pre-COVID levels. The combination of rising labor costs and a reduction in available employees and hours worked has been a significant influence on the decision to reduce the levels of food and beverage service at hotels.
Among the other expenses within the F&B department, the cost-of-goods sold rose by 73.5 percent in 2022, while all other department expenses (supplies, tabletop utensils, uniforms, etc.) grew by 84.2 percent.
Profit Trends
The previously referenced trends in hotel F&B revenues and expenses resulted in a healthy 145.2 percent increase in F&B department profits from 2021 to 2022. This growth in profits was not only attributable to the increases in revenue but enhanced operating efficiencies in the department as well. F&B department profit margins increased from 21.3 percent in 2021 to 25.8 percent in 2022. Following revenue trends, the greatest gains in F&B department profits during 2022 were achieved by convention and upper-upscale hotels.
Unfortunately for hoteliers, the revenue slowdown in 2023 has also resulted in a deceleration of profits gains. Through June of 2023, F&B department profit growth has slowed down to 14.2 percent. Struggling the most are luxury and resort hotels that have seen profit growth of 0.7 percent and 7.1 percent respectively during the first six months of 2023.
F&B department operating efficiencies have also suffered in 2023. June year-to-date F&B department profit margins have dropped from 29.3 percent in 2022 to 28.3 percent in 2023, while department profit margins have declined in 2023 for all chain-scale and property type categories. The lone exception has been upper-upscale hotels whose F&B department profit margins have increase slightly from 32.8 percent to 32.9 percent during the first six months of 2023.
In early November, CBRE revised its forecast for the coming year to show growth is likely to recover in 2024, as inbound international travel further improves and sector-specific headwinds moderate, according to CBRE. CBRE’s forecast indicated a 3 percent growth in RevPAR, propelled by a 40 basis-point occupancy boost and a 2.3 percent increase in ADR.
AHLA Foundation is partnering with ICHRIE and ACPHA to support hospitality education.
The collaborations align academic programs with industry workforce needs.
It will provide data, faculty development, and student engagement opportunities.
THE AHLA FOUNDATION, International Council on Hotel, Restaurant and Institutional Education and the Accreditation Commission for Programs in Hospitality Administration work to expand education opportunities for students pursuing hospitality careers. The alliances aim to provide data, faculty development and student engagement opportunities.
Their efforts build on the foundation’s scholarships and link academics to workforce needs, AHLA said in a statement.
"We're not just funding education—we're investing in the alignment between academic learning and professional readiness," said Kevin Carey, AHLA Foundation president and CEO. "These partnerships give us the insights needed to support students and programs that effectively prepare graduates to enter the evolving hospitality industry."
ACPHA will provide annual reports on participating schools’ performance, enabling the Foundation to direct resources to programs with curricula aligned to industry needs, the Foundation said.
Thomas Kube, incoming ACPHA executive director, said the partnership shows academia and industry working together for hospitality students. The collaboration with ICHRIE includes program analysis, engagement through more than 40 Eta Sigma Delta Honor Society chapters and faculty development.
“Together, we are strengthening pathways to academic excellence, professional development and industry engagement,” said Donna Albano, chair of the ICHRIE Eta Sigma Delta Board of Governors.
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U.S. holiday travel is down to 44 percent, led by Millennials and Gen Z.
Younger consumers are cost-conscious while older generations show steadier travel intent.
76 percent of Millennials are likely to use AI for travel recommendations.
NEARLY 44 PERCENT of U.S. consumers plan to travel during the 2025 holiday season, down from 46 percent last year, according to PwC. Millennials and Gen Z lead travel intent at 55 percent each, while Gen X sits at 39 percent and Baby Boomers at 26 percent.
PwC’s “Holiday Outlook 2025” survey found that among those not traveling, about half prefer to celebrate at home and cost concerns affect 43 percent, rising to 50 percent for Gen Z non-travelers. Visiting friends and relatives remains the main reason for holiday travel, cited by roughly 48 percent of those planning trips.
Younger consumers are more cost-conscious, while older generations show steadier travel intent. This split influences travel operators’ planning: younger travelers may require clear value, bundled perks and flexible options, whereas older travelers respond to reliability and convenience. Despite overall spending pressure, travel remains a key priority, reflecting its social and emotional importance during the holidays.
PwC surveyed 4,000 U.S. consumers from June 26 to July 9, with 1,000 each from Gen Z, Millennials, Gen X and Boomers, balanced by gender and region.
Generational spending patterns
Gen Z plans a 23 percent reduction in spending after last year’s 37 percent surge, while Boomers expect a 5 percent increase. Millennials are largely flat, down 1 percent and Gen X edges up 2 percent. Overall holiday spending is down 5 percent, with gift spending falling 11 percent, while travel and entertainment budgets remain stable, increasing 1 percent.
Households with children under 18 plan to spend more than twice as much as households without, averaging $2,349 compared to $1,089, highlighting the focus on family-centered experiences.
For travel and hospitality operators, these patterns suggest stronger conversion potential among older cohorts with steadier budgets and the need for clear value and cost transparency for younger travelers. Consumers are prioritizing experiences and togetherness over material gifts. Flexible fares, transparent pricing and bundled benefits such as Wi-Fi, breakfast, or late checkout can reinforce value and encourage bookings, especially among younger demographics. Gen Z’s pullback makes price-to-experience ratios decisive.
AI, timing and travel strategy
About 76 percent of Millennials say they are likely to use AI agents for recommendations, signaling a shift to “assistant-first” travel discovery. Operators must provide structured, AI-readable content, including route maps, fees, loyalty policies and inventory availability. Brands that do not may be invisible in AI-driven search and recommendation systems.
This year’s late Thanksgiving on Nov. 27 compresses the holiday booking window. Short-haul visiting-friends-and-relatives trips may see bunched reservations, increasing demand for early inventory visibility, simple cancellation policies and accurate last-minute availability. Operators should hold a portion of inventory for late bookings, streamline mobile checkouts and maintain flexible policies to capture last-minute travelers.
Strategies should be generationally targeted. Boomers and Gen X respond to comfort, reliability and multi-generational options, while Millennials and Gen Z require clear value and AI-optimized offers. Focusing on VFR travel through “home for the holidays” packages, flexible dates, partner transport and easy add-on nights can capture demand in key residential hubs.
Despite overall spending declines, travel remains a priority. Operators that deliver transparent value, AI-ready content and offers tailored to each generation can maintain bookings, convert last-minute demand and meet consumers’ evolving holiday expectations.
A TravelBoom Hotel Marketing report found that Americans continue to prioritize travel despite inflation and economic uncertainty, but with greater financial caution. About 74.5 percent plan a summer vacation and 17.5 percent are considering one, showing strong demand linked to careful budgeting.
Global hotel RevPAR is projected to grow 3 to 5 percent in 2025, JLL reports.
Hotel RevPAR rose 4 percent in 2024, with demand at 4.8 billion room nights.
London, New York and Tokyo are expected to lead investor interest in 2025.
GLOBAL HOTEL REVPAR is projected to grow 3 to 5 percent in 2025, with investment volume up 15 to 25 percent, driven by loan maturities, deferred capital spending and private equity fund expirations, according to JLL. Leisure travel is expected to decline as consumer savings tighten, while group, corporate and international travel increase, supporting RevPAR growth.
Major cities continue to attract strong demand and investor interest, particularly London, New York and Tokyo. APAC is likely to post the strongest growth, fueled by recovering Chinese travel, while urban markets remain poised for continued momentum.
Lifestyle hotels are emerging as the new “third place,” blending living, working and leisure. The trend is fueling expansion into branded residences and alternative accommodations. JLL said investors must weigh regional performance differences, asset types and lifestyle trends when evaluating opportunities.
Separately, a Hapi and Revinate survey found fragmented systems, inaccurate data and limited integration remain barriers for hotels seeking better data access to improve guest experience and revenue.
Fragmented systems, poor integration limit hotels’ data access, according to a survey.
Most hotel professionals use data daily but struggle to access it for revenue and operations.
AI and automation could provide dynamic pricing, personalization and efficiency.
FRAGMENTED SYSTEMS, INACCURATE information and limited integration remain barriers to hotels seeking better data access to improve guest experiences and revenue, according to a newly released survey. Although most hotel professionals use data daily, the survey found 49 percent struggle to access what they need for revenue and operational decisions.
“The Future of Hotel Data” report, published by hospitality data platform Hapi and direct booking platform Revinate, found that 40 percent of hoteliers cite disconnected systems as their biggest obstacle. Nearly one in five said poor data quality prevents personalization, limiting satisfaction, loyalty and upsell opportunities.
“Data is the foundation for every company, but most hotels still struggle to access and connect it effectively,” said Luis Segredo, Hapi’s cofounder and CEO. “This report shows there’s a clear path forward: integrate systems, improve data accuracy and embrace AI to unlock real-time insights. Hotels that can remove these technology barriers will operate more efficiently, drive loyalty, boost revenue and ultimately gain a competitive edge in a tight market.”
AI and automation could transform hospitality through dynamic pricing, real-time personalization and operational efficiency, but require standardized, integrated and reliable data to succeed, the report said.
Around 19 percent of respondents cited communication delays as a major issue, while 18 percent pointed to ineffective marketing, the survey found. About 10 percent reported challenges with enterprise initiatives and 15 percent said they struggled to understand guest needs. Nearly 46 percent identified CRM and loyalty systems as the top priority for data quality improvements, followed by sales and upselling at 17 percent, operations at 10 percent and customer service at 7 percent.
Meanwhile, hotels see opportunities in stronger CRM and loyalty systems, integrated platforms and AI, the report said. Priorities include improving data quality for personalized engagement, using integrated systems for real-time insights, applying AI for offers, marketing and service and leveraging dynamic pricing and automation to boost efficiency, conversion and profitability.
“Clean, connected data is the key to truly understanding the needs of guests, driving amazing marketing campaigns and delivering direct booking revenue,” said Bryson Koehler, Revinate's CEO. “Looking ahead, hotels that transform fragmented data into connected data systems will be able to leverage guest intelligence data and gain a significant advantage. With the right technology, they can personalize every interaction, shift share to direct channels and drive profitability in ways that weren’t possible before. The future belongs to hotels that harness their data to operate smarter, delight guests and grow revenue.”
In June, The State of Distribution 2025 reported a widening gap between technology potential and operational readiness, with many hotel teams still early in using AI and developing training, systems, and workflows.
Hyatt partners with Way to unify guest experiences on one platform.
Members can earn and redeem points on experiences booked through Hyatt websites.
Way’s technology supports translation, payments and data insights for Hyatt.
HYATT HOTELS CORP. is working with Austin-based startup Way to consolidate ancillary services, loyalty experiences and on-property programming on one platform across its global portfolio. The collaboration integrates Way’s system into Hyatt.com, the World of Hyatt app, property websites and FIND Experiences to create a centralized booking platform.
World of Hyatt members can earn and redeem points on experiences booked through Hyatt websites, including wellness programs, cultural activities, ticketed events and local collaborations, the companies said in a statement. Members can also access FIND Experiences, which includes activities and auctions where points can be used to bid on events.
"In our search for an on-brand platform to power experiences and tap into ancillary revenue opportunities, Way's collaboration has been a true unlock for us," said Arlie Sisson, Hyatt’s senior vice president and global head of digital. "After a thorough evaluation of potential solutions, Hyatt chose Way to power the next chapter of our digital strategy by streamlining operations, elevating brand differentiation, enhancing personalization and, most importantly, delivering care at every touchpoint in the guest journey."
The Way initiative spans Hyatt’s portfolio, covering cabana rentals, in-room amenities and partnerships with local providers, the statement said. Way’s technology supports real-time translation, more than 100 currencies, multiple payment methods and data insights to help Hyatt manage operations globally.
"Hyatt set a high bar and Way is proud to bring their vision to life," said Michael Stocker, Way’s co-founder and CEO.
"The platform supports enterprise needs while preserving the guest experience."