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Facing the Food and Revenue Challenge in the Caribbean

In the hospitality industry, Food and Beverage (F&B) is considered an expense, a marketing strategy and an indispensible part of the vacation experience. It also makes up to 20 percent of all hotel revenue. Consequently, hotel executives have begun to view their full-service restaurants as a way drive new clients and incremental revenue to their business.

Growing trends such as culinary travel are making F&B even more vital to hospitality success. Customers now seek out new and exciting culinary experiences that they may have seen on TV, heard about from a friend or saw on social media. In spite of the customers hunger for new gastronomic delights, they still crave the certainty of knowing the total cost of their vacation before departing. The no surprises, peace of mind provided by meal plans, particularly all-inclusives are becoming ever more popular.

The All-Inclusive Trend

According to the U.S. Consumer Travel Report, high-end all-inclusive resorts are the fastest growing segment of vacation lodging. The proportion of leisure travelers choosing this travel option rose from 8 to 14% over the last three years. This is challenging news for the Caribbean given that the cost of all inclusive plans tend to be cost prohibitive to small/medium sized hotels. The cost of food in the Caribbean is historically higher than in other parts of the world and the lack of goods makes operations even more expensive with import costs.

The all-inclusive market in the Caribbean has stayed primarily concentrated in countries such as Mexico, Jamaica, and the Dominican Republic with a larger workforce and lower wage rates enabling them to better off-set costs.

Don’t Beat Them, Join Them

Small/medium Caribbean hotels cannot compete with larger resorts in the all-inclusive game and expect to win solely based on price. Hotels can compete by offering additional value with their meal plans that allow them set a price point that boosts their revenue.

A perfect example of this value driven strategy is Bay Garden Resorts in St. Lucia. In response to the increasing demand for meal plans that provide guests with up front pricing, Bay Gardens Resorts Executive Director, Sanovnik Destang, devised an alternative to all-inclusive: the Dine Around Program.

The Dine Around Program offers guests that have signed up for the All-Inclusive or Modified American Plan (MAP) the option of dining out at a number of different restaurants for up to three nights during a stay of seven (7) nights or more (including the cost of transportation to and from the restaurants). The Dine Around option allows the hotel to embrace local restaurants and build stronger relationships with the community, enhances the travel experience for guests, keeps dinner time food costs down and most importantly, it significantly increases revenue. According to Mr. Destang, the Dine Around program increased All Inclusive Plan Revenue by over 700% and overall F&B Revenue by 15%.

 

“We believe that our All Inclusive Experience is a new model for All Inclusive that embraces, rather than competes with independent restaurants and  is part of a collaborative approach to tourism marketing that creates a win-win situation for all parties” said Mr. Destang.

Ultimate Loyalty Programs

Another way to enhance your meal plan offer to maintain a revenue generating price point,  is to pair your meal plans with the loyalty program offers that  provide distinct amenities to customers such as special VIP privileges, early check-in and late checkout, good locations throughout the property, and at times a discount on the all-inclusive fee.

As the high-end all-inclusives continue to emerge, a hotel that offers cost effective meal plans combined a loyalty program will foster fiercely loyal client base and increased revenues.

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