F&B Forecasting: Setting the Table for the Next Frontier of Total Revenue Optimization

The future of revenue management will be one of total revenue optimization, where every area of the hotel is taken into account in order to maximize a potential return on each guest.
Restaurant diners laughing and eating

When most hoteliers think about revenue management, they are often thinking exclusively about managing room rates. However, the future of revenue management will be one of total revenue optimization, where every area of the hotel is taken into account in order to maximize a potential return on each guest. This requires accounting for room revenue in addition to F&B, events, and other ancillary services. Hotels employing total revenue optimization practices will have a buffet of profit centers to choose from, but in order to eat a meal of this size and quality, hotels need to make sure they have all the ingredients first.

The key components to F&B optimization come in the form of pricing controls, purchasing optimizations, menu engineering, and properly timing events and promotions. True optimization comes from building individual profiles based on your guests’ purchase history to provide targeted offerings. This could translate into an email delivered prior to a guest’s arrival asking if they would like to book a reservation at the hotel restaurant, with the added upsell for wine or other indulgences based on a guest’s previous orders with the hotel or brand.

In order to deliver this level of F&B service, hotels must become better at talking to themselves. The hotel’s revenue optimization tools must be connected to customer relationship management, point-of-sale, property management, and central reservation systems. Once these departments are on speaking terms, it is possible to use automation and data analytics strategies to apply scientific forecasting to a hotel’s F&B strategy, cutting down on spending while improving guest satisfaction.

To make sure your F&B data findings are as fulfilling as the meals served in the hotel restaurant, it’s also important to include a visual element to their delivery. This is doubly important in hospitality, where labor remains a challenge and F&B optimization is new ground.

Delivering on each of these factors is a tall order on its own, but together they will require extensive alignment across every department. Preparing this meal will take some time.

Setting the Menu

First, hoteliers must make themselves familiar with the metrics that are most crucial to successful F&B operations. The key performance indicators that impact F&B may seem like those in hospitality, but they differ in crucial ways. While both hotels and restaurants are interested in the capture ratios of each business, hotels are most interested in revenue per available room while restaurants typically deal in revenue per available seat hour, as well as average check values, capture ratios, and a plethora of other KPIs and drivers. Digging into these factors will give hoteliers more insight into their F&B operations than if they stuck to traditional hotel metrics.

Hoteliers should also clarify the communication channels between operations and finance directors to ensure they are in contact and aware of each department’s goals. Identifying who will take charge of managing your revenue management and F&B strategies, forecasts, and budgets on property will be important for settling ownership of these initiatives. This is important to consider going forward as the frequency of online food deliveries remains on the rise, with the global online food delivery services market expected to grow from $115.11 billion in 2021 to $128.32 billion in 2022 – an increase of 11.5 percent. If these trends continue at their current rate of growth, hotels will have to consider the challenges associated with the growth of delivery culture, from labor to implementation.

Finding a way to bridge finance, operations, and revenue management under one strategy is the core component of total revenue optimization, but no one said it would be easy. Bringing these departments together has been a constant struggle in hospitality because understanding a demand forecast from a revenue management perspective requires a different approach from other financial or operations forecasts. As a result, hotel owners and operators have each struggled to trust financial forecasts generated by revenue management systems when tuned to look at anything apart from room revenue – but not for long.

Revenue management systems today can deliver highly automated forecasts capable of anticipating revenue for banquet events, catering, and more based on several factors from historical data to current trends. These reports can help reduce an F&B department’s preparation time and more accurately inform purchasing and worker scheduling decisions.

Using these forecasts, hotels can drive labor efficiency to improve their operating revenue while helping avoid worker burnout. Therefore, improving the flow of information throughout a hotel’s data infrastructure is one of the main goals of the industry today.

Forecast Du Jour

Hoteliers looking to employ F&B forecasting also need an abundance of patience. Not only will the financially minded side of the business struggle to understand the KPIs behind F&B, but they will also likely push back against the amount of time and experimentation that will be required to put the right plan in place. This is not a subset of the traveling audience hotels can afford to lose, and it may require extensive hands-on examples before operators come to realize the benefits of F&B forecasting.

Considering the frequency and method of delivering these insights is also important if hotels are expected to act on them quickly. F&B and finance leaders are often uncomfortable with multiple forecasts optimizing on a daily basis. This may be sustainable for optimizing guestroom bookings, but for F&B such a forecast schedule can be interpreted as unreliable and intimidating to both operators and customers. Instead, a daily snapshot of the business delivered through flash reports is not only easier to understand but is also more impactful and less time-consuming for all parties.

These flash reports are also valuable because much of the historical data from two years ago has been rendered useless as a result of positive economic recovery, and a move away from social distancing. Historical data from prior to the pandemic may be more accurate than information from the midst of the COVID pandemic, but it is also not entirely indicative of the hotel and F&B landscape today. For this reason, rapid short-term forecasts will be the key to painting a new tapestry of today’s industry.

This is transformative technology because it takes the core tenets of F&B and combines them with the most impactful innovations to reach hospitality in decades. It makes a key distinction between guests and visitors to the property and uses that data to find the optimal F&B forecast in alignment with other hotel and travel data. It’s a holistic addition to the hotel ecosystem, and it will change the way we dine in hotels forever.




With IDeaS since 2013, Neil has over 20 years of hospitality experience. He began his career training as a hotel general manager in London, moving on to roles in sales, marketing and revenue management. Prior to joining IDeaS, Neil held a number of corporate sales positions and senior revenue management roles. He has designed and deployed various business and system procedures for four major domestic hotel companies, managing centralized and regionalized revenue management & distribution teams, involving major change management and re-organization programs that specialize in applying revenue management beyond guestrooms.