In 2020, major wellness hotels and resorts generated nearly 18.5% more in average F&B revenue at their restaurants than those properties with smaller wellness and 40.7% higher than those properties with no wellness. But another interesting fact is that F&B revenue was US$106 Per Occupied Room in major wellness properties, 103% higher than the F&B revenue in minor wellness.
Those numbers can be mitigated by the fact that wellness properties are typically luxury assets that offer comprehensive F&B products and where discretionary spend is usually higher. However, many factors support higher revenue at major wellness properties:
- The F&B offer at major wellness properties includes healthy gourmet options as well as specific nutrition programme that are charged at extra cost to the clients.
- Major wellness properties offer an extensive range of F&B outlets that allow them to welcome more walk-in guests that ultimately use the F&B outlets whereas limited wellness properties did not have the resources to attract external guests into their premises.
- Major wellness properties proved to have more adaptability to cope with COVID-19 pandemic appeal to the leisure-minded guest. During the pandemic and with travel restrictions, guests re-allocated their spending resources to F&B and wellness experiences.
However, translated into F&B profit conversion, minor wellness properties outpace their big sister with an F&B profit conversion of 17% against 11% in major wellness properties. That is mainly due to higher operating costs incurred at major wellness properties. Indeed, the extensive F&B facilities and the level of service required in most outlets demand higher staffing which ultimately has an impact on the F&B profit conversion. In addition, the F&B concepts typically require higher quality products and specific “health” and organic ingredients that increase the cost of sales, allowing for lower margins.
Lower profit conversions are a clear indication that major wellness properties don’t necessarily call for higher profit; therefore return on investment. Investing in wellness means adapting the F&B concepts to reflect the wellness nature of an asset which incur further investment and operational costs. Although revenue are higher at F&B outlets in major wellness properties, the latter call for higher costs and specific F&B concepts that potentially hinder financial returns.
When looking at wellness investment, it is important to look at the impact of wellness on other department’s performance not only from a revenue point of view but with profit margin and return in mind. Wellness is an all-compassing area that can’t be looked at from one angle and the analysis of the F&B performance in wellness properties is yet another proof.
For further insights, download the 2021 edition of the Wellness Real Estate Report.
About the author: Laura Dutrueux, RLA Global, Managing Director of EMEA Hospitality Advisory
Since 2015 Laura has worked across most of Europe, the Middle East and Africa representing owners, developers and investors with feasibility studies, valuations, conceptualisation, renovation and improvement plans and tourism and operational consulting services for various hospitality and leisure assets as well as upscale and luxury residential developments.