Are European hotel restaurants problematic or instrumental in creating value?
In Western Europe the majority of the hoteliers and other stakeholders involved with them agree that hotel restaurants are a liability because of the very low profit margins and the difficulty of making a return on investment. This is without even mentioning all the operational problems inherent to this type of activity. It is true that in Europe hotel restaurants are subject to the same constraints as other restaurants which most resemble the Lernean Hydra. Each independent hotel, or hotel chain, tries to find its own solutions. For this reason numerous consultants offer innovative solutions, which are more or less ephemeral, and which generally concern the concepts’ design and atmosphere; elements which cannot provide any more a competitive edge and which have become indispensable. North American hotel restaurants show the same issue. The solutions provided by US hotel chains, such as sub-contracting to national restaurant chains or creating their own restaurant brands, are only partially applicable in Europe due to the differences in market structure and the cultural diversity of customers in European hotel restaurants.
The goal of this article is not to propose specific innovative hotel restaurant concepts, each one being more extreme than the last, but rather to stimulate hotel stakeholders to analyse their own situation and reflect on their individual objectives for opening a restaurant in their hotel or continuing to operate a restaurant in their hotel but with needed modifications for their main targets. It is only then that they will be competent to evaluate their strategic choices and decide on an appropriate approach to creating value for the customers and for the company.
The first part of this article deals with the identification and analysis of strategic solutions applied by a large European hotel chain. The second part provides a short comparison with North American hotel chains with restaurants, followed by a table including a practical framework that links hotel’s objectives to effective strategies that could be implemented in order to achieve the goals and create value for both the customer and the hotel along with types of measurement as well as examples.
Accor was chosen to be the hospitality chain studied in this article along with its principal hotel brands for the following reasons. Firstly, Accor is the owner and/or operator of 2’280 hotels in Europe. Half of its hotels are under management contract, one quarter are subsidiaries or leases and one quarter are franchises. Secondly, Accor owns, operates, or franchises different hotel brands around the world. Thirdly the group hotel brands cover almost all of the different market segments in the hospitality industry from the minimum budget category to the ultra luxury. Therefore, Accor has become a master in making appropriate strategic choices concerning the restaurants in their numerous and diverse hotel brand portfolio.
Accor, The European leader (www.accor.com)
Turnover 2008 : 7,739 million Euros
3,982 hotels / 478,975 rooms
Room distribution: 25% Europe (outside France), 27% France, 22% North America, 6% Latin America, 5% Africa and the Middle East, 15% Asia-Pacific.
Net earnings: 575 million Euros
Workforce 2008 : 158,162 staff members in nearly 100 countries
To give them their due, Sofitel, Sofitel Legend and So by Sofitel defend « made in France » luxury in their 172 hotels in 53 countries. Their business mix is mostly aimed towards a business clientele as it accounts for 65% of their business. For Accor, the location of these hotels is essential which explains why they always choose important cities with prestigious addresses; for example, next to the Arch of Triumph in Paris. Furthermore, they choose exceptional and legendary buildings for the Sofitel Legend Hotels (the Grand in Amsterdam, in the Netherlands). They also emphasise...
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