Profitability Pressures: Lower F&B Margins Emphasize the Need for Creativity
🏨 U.S. hotel performance year to date shows demand nearly flat (+.1%), RevPAR growth at +1.1%, occupancy down (–.5%), TRevPAR down .3%. Labor costs increased by 5.7%, with GOPPAR declining by 8.9%. Group business is up, driving F&B revenue to 106.9% of 2019 levels but 87.9% when adjusted for inflation. Total F&B expenses PAR rose by 9.6%, with labor costs up 5.1%. In full-service luxury, upper upscale, and upscale properties, F&B revenues PAR increased by 7.5%, but margins are 1.6 points lower than 2019 due to a 26.3% increase in F&B labor since 2019. Top 25 Markets saw a 4.4% rise in F&B revenues PAR, but also an 8.5% increase in expenses; highest growth in Dallas, Atlanta, Nashville, lowest margins in San Francisco, NYC, Philadelphia. Only eight markets had higher profit margins than last year. Technology and menu curation are being used to improve margins.
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