Hotel Owners Look To Bring In Local Restaurateurs To Boost Revenue

Hotels in D.C. have struggled to increase revenue from rooms as a surge of incoming supply adds competition to the market, and hoteliers are increasingly focusing on opening quality restaurants that appeal to locals as a way to bring in more money. 

"Our food and beverage in most of our properties contributes a bulk of total revenue," Dream Hotel Group Development Director Judy Chen said Wednesday at Bisnow's Hotel Leadership Investment & Management Summit in D.C. 

Dream's Hollywood Hotel, for example, brings in about 75% of its revenue from its restaurants and nightlife offerings, she said. The company does not own a hotel in D.C., but Chen said Dream has been touring the city and is actively seeking to open one.

Chen has spent time visiting D.C. hotels with strong food and beverage components to find out what type of demand exists in the market. She said she was impressed with the crowded food and drink offerings at Adams Morgan's Line Hotel, and thinks there is room for more similar concepts in the District. 

"There is clearly a demand for something of a certain caliber, and clearly the demand is under-met," she said. "We love the [D.C.] market, and I think there is a lot of room for opportunities." 

While it has come under scrutiny since its founder became president, The Trump Organization's Trump International Hotel on Pennsylvania Avenue has also brought in significant revenues from its food and beverage offerings, Trump Hotels Executive Vice President Kathleen Flores said. 

The hotel, a redevelopment of the Old Post Office Building, features a BLT Prime by David Burke, Sushi Nakazawa, Benjamin Bar & Lounge and a Starbucks, all of which Flores said have been successful. 

"Most of what we do maximizes guests experiences and revenues from locals," Flores said. "The lobby programming is robust, and there is something going on in the lobby every afternoon and every night."

Flores confirmed last week's reports that the company is exploring a sale of the hotel, but she did not discuss it in detail. 

RW Restaurant Partners Executive Chef Robert Wiedmaier said the D.C. restaurant scene has shifted in recent years to have more high-quality dining options in hotels that bring in customers that are not staying at the property. 

"Now you're seeing a change that a lot of the good restaurants are in hotels," Wiedmaier said. "Hotels have spent the money to bring in talent to give their guests, and the outside guests more importantly, a good dining experience."

Wiedmaier, who has opened several restaurants in D.C.-area hotels, said attracting locals is critical to making them successful. 

"The key is to open restaurants that aren't considered hotel restaurants and are going to drive people into the hotel," he said. "If you have to rely on people staying in the hotel to make a restaurant successful, you're going to lose." 

Big-name celebrity chefs can add a level of cachet to a hotel, but Wiedmaier said he is seeing a shift toward more local operators. 

"What happens is a lot of times you bring in a celebrity chef and then see them four times; I think that's going to die out a bit," he said. "Local chefs from the area that are in hotels will drive more business than bringing somebody from across the water."

Papadopoulos Properties principal Tom Papadopoulos, a broker who has worked on restaurant deals in hotels, also sees the trend toward more local chefs.

"The celebrity chef thing may be coming to an end in some respect," he said. "Just because somebody puts his name on the door and you don't see him again, it doesn't really work out. Here in town some of the hotels with the most successful F&B have well-known local guys."

Streetsense Managing Director Jay Coldren said hotels are increasingly searching for restaurants that create buzz throughout the city that will keep them crowded. 

"The way to think about it is 'how do I create a local base of business first, and make amenities for travel guests second,'" Coldren said. 

The retail amenities that can bring money into hotels are not just limited to bars and restaurants, Forrest Perkins founder Deborah Lloyd Forrest said. Retailers like bookstores, such as the one that opened at a Dallas hotel her company designed, can also bring people in and create activity throughout the day. She said hotels are increasingly looking for concepts that can bring in revenue outside of the rooms. 

"The rooms are not secondary, but they are less important in a way," she said. "You have to sleep, but we want you downstairs spending money."