F&B, MICE and weddings emerging as a good revenue generator
The travel and hospitality industry has experienced a roller-coaster ride during the pandemic that was highly anticipated to ease down by the conclusion of 2022. Contributors to the hospitality sector expressed to T3, the outcome of 2022 and how they are planning to navigate through the new year.
Current status
In 2022, the first quarter was a wash out due to the 3rd wave, just when the industry thought that it was out of the woods. But with a positive outlook, the industry came out with flying colors to reassure its position. “Q2 witnessed a strong revival driven by the demand due to revenge business travel and IPL in Mumbai. This trend somewhat tapered in July and August, but we ended the year with a bang,” Subhrajit Bardhan, General Manager, Holiday Inn Mumbai International Airport, said. Holiday Inn Mumbai International Airport achieved registered the highest revenue, average daily rate and F&B revenue in November 2022.
Drawing light on an over-achieved target for 2022, Shiv Bose, General Manager, DoubleTree by Hilton Goa – Panaji, mentioned that they have outperformed the budget for the year 2022. The aggregate occupancy for the year hit the 75% mark with average rates increasing by 30% over past years.
Sameer Singh, Sr VP (Operations), Lemon Tree Premier, Jaipur, also expressed that the financial performance in 2022 has been very encouraging. H2 saw a sharp recovery in the post-Covid era. The YTD ADR clocked at Rs 5,200 and the occupancy was above 70%.
Kunal Pahwa, General Manager, Welcomhotel by ITC, Jodhpur said, “The overall performance of the unit has been very encouraging as occupancy has grown by 18%, ARR by 25% and RevPAR by 45%.”
As the year 2022 ended on a positive note, the industry aims to maintain the momentum in 2023. Bardhan is quite positive to ride a similar high in 2023, as the beginning has been very solid. An all-round and balanced growth is their focus backed by IHG’s sustainable business strategies. Pahwa added that in the financial year 2023-24, they are looking at a 15%- 18% growth.
Domestic vs International
Domestic and international travel opened up with greater exposure in 2022, that is when the industry vigorously raced towards revival. Ravi Rai, Cluster General Manager of Novotel Visakhapatnam Varun Beach, Novotel Vijaywada Varun, and The Bheemili Resort mentioned that in 2022, the ratio of international to domestic arrivals was 40:60, with 40% of guests being international arrivals and 60% being domestic arrivals.
Bose expressed that their domestic tourist base was over 90% for last year, however off late they are seeing an increment in inbound travel. According to Singh, international travel has still not recovered completely due to the changing international macro scenario. International tourist arrivals contributed 5% of the total arrivals at the Lemon Tree Premier, Jaipur. Pahwa mentioned that the industry is seeing the international tourist coming back, and currently the breakup is 92% domestic 8% international majority domestic.
F&B and MICE: Revenue Stream
“It is likely that ‘Business’ travel will be the most in-demand segment in 2023, as people look towards completing their business goals which have been pending for a long time. Keeping in mind, India is leading the G20 Summit this year, which will give great opportunities to the hospitality industry. Additionally, the easing of travel restrictions in many countries is expected to lead to a resurgence in leisure travel this year”, Rai added.
According to Bardhan, packed meals, buffet in a box, office and social caterings have been a source of augmented revenues. Themed dinners, outsized outdoor meeting spaces and different kinds of seating, are being sought after. All put together Food & Beverage, MICE and Weddings contribute to around 43-45% of the overall topline of the hotel.
Bose said that they launched a new banquet hall at the fringes of the resort, giving an ideal location for MICE and social events. “We have increased our banquet revenue budget to 100% over last year. Traditionally, 75% of our revenues come from rooms and the balance is pivoted from food and beverage and ancillaries. MICE and weddings contribute 25% of the overall revenues which includes rooms and meal plan sales. We are optimistic that this year we can scale it to 30% on a higher top line”, he added.
In Lemon Tree Premier, Jaipur, business is dominated by the leisure & MICE segment and the business segment contribution is around 10 to 15%. Therefore, Singh mentioned that they will be focusing to increase yield from the leisure segment & MICE. He revealed, “F&B has contributed 30% to the total income and MICE/Wedding contribution was around 40 % of the overall business.”
Sustainability
As the globe shifts towards the sustainability agenda, hospitality industry also bends its area of operations and planning towards achieving reduction in carbon footprint. Bardhan mentioned that IHG have come up with the ‘Green Engage system’, an online environmental sustainability system that lets the hotel to measure and manage the impact on the environment. The system has over 200 ‘Green Solutions’, designed to help reduce energy, water and waste, to create an impact on the environment.
Rai, drew light on some specific functions on which sustainability is ensured, the Novotel Visakhapatnam have adopted sustainable procurement practices by sourcing products and materials from environmentally responsible suppliers, and reducing the use of single-use plastics. They adopted energy-efficient technologies such as LED lighting, smart temperature control systems, EV charging point at the basement and energy-efficient appliances to reduce energy consumption and carbon footprint.
