Hotel F&B: Where Are The Clients?

Revenues down 50 – 90%

When Sri Lanka Tourism rolled out the ‘So Sri Lanka’ campaign in 2018, little did they know what the country would be up against a few months into the New Year. The Easter attacks have had a severe impact on the tourism industry, that had just begun to leverage the worldwide publicity.

While occupancy numbers are on the tip of everyone’s tongue, little attention is paid to the food and beverage sector – a considerable revenue generator for many of Colombo hotels, which boast multiple restaurants. 

The fact that of the six targets, three were hotel restaurants, is a huge concern for many who patronise these establishments on a regular basis. This alone has prompted many families – the main clientele for buffet spreads – to think twice before visiting a hotel.  

Colombo hotels we spoke to recorded a drop in Food and Beverage revenue from 15 to 90 per cent in May and June. Restaurants that once buzzed with people and activity are now forced to come up with innovative F&B promotions to attract guests to cover costs and stay afloat. 

A small hotel renowned for its food, particularly its dinner offerings, used to credit 65 per cent of its revenue to the restaurant. In the weeks following the attack, the hotel, witnessed a 40 per cent drop in revenue. Although, breakfast and lunch times have picked up as the weeks passed, the anti-Muslim attacks and the subsequent curfews in the second week of May further disrupted the business. As the island gains a semblance of normalcy, the number of guests for dinner has been on the rise. Despite low occupancy rates, the restaurant’s loyal clientele has played a vital role in sustaining the hotel during these tough times. 

For larger hotels, the losses are colossal. The food and beverage director of a city hotel popular for its range of restaurants, say they barely make “one million in revenue now compared to the six million rupees” they made per day prior to April 21. The hotel has seen a 90 per cent drop in footfall to their restaurants, an additional setback on top of dwindling occupancy numbers. Another city hotel, whose biggest attraction is their high tea promotion, scarcely had any guests during the weeks following the attacks. Due to the 50 per cent drop in F&B revenue, the management has decided to host buffets on alternative days and only when they have sufficient pre-confirmed bookings, in order to minimise costs and wastage.  

Hotel F&B: The wider impact

Hotels located beyond city limits were positioned at a slight advantage. Diners opted to avoid city centre hotels due to safety concerns and chose to visit these establishments instead. This meant in addition to the regulars who continued visiting the hotel to show their support, new faces also began to patronise the restaurants. Although this is welcome, the hotels we spoke to confessed that these numbers are not adequate to survive.  

Colombo’s once thriving culinary culture had come to a standstill, especially in hotels which drew in large crowds with minimum effort. In addition to the significant drop in tourist arrivals, many locals are hesitant to dine at restaurants, especially those situated within hotels. Colombo city is home to a considerable number of the expatriate community who are known to dine out regularly. Many establishments voiced that at present, they are dependent on the business the locals bring in – particularly regulars who have graced the restaurants for years. This begs the question, why are the expat community not patronising hotels in the same way once again? 

Military presence on the streets and next to hotels has seemingly been toned down however, Sri Lanka is still under emergency law. The current ‘state of emergency’ is not the best situation for a country that is trying to reposition itself as a tourist destination. As one hotelier commented, “As soon as the government is able to ensure the country’s safety and lift the emergency law, it will have a positive effect on the country and the tourism sector.”    

Sri Lanka Tourism bolstered by SLTDA and SLTPB are actively working on coming up with various strategies and promotions to gain the trust of travellers. This ultimately is the determining factor for any nationality to visit and explore another country.  

With the easing of travel advisories, travel companies and hotels are starting to breath easier. It is not yet a sigh of relief, but they are slowly gathering courage to climb uphill and convince travellers that ‘yes’ Sri Lanka is safe and that they should visit. Hopefully in the months to come these strategies will gain momentum and have an impact on occupancy numbers as well as the F&B revenues.  

For the time being, hoteliers are dependent on the reduced VAT percentage, creative thinking and attractive marketing promotions to persuade the local market back to their restaurants.  

Hospitality Insider Issue 4