What do Chef Vikas Khanna, Vineet Bhatia or Gordon Ramsay have in common? They all have opened restaurants inside hotels. And, we have seen that an increasing number of established restaurateurs are doing this. What’s driving the trend?
While a solid concept, skilled kitchen, front-of-house staff, and, of course, financial capital are key ingredients to a successful operation, the location may be a critical element in determining whether a restaurant concept will succeed. And, hence we see that more and more restaurant owners who are coming up with high end restaurants are looking at a hotel as key location. Similarly, rather than going with a conventional f&b operation, hotel owners are increasingly approaching independent restaurateurs to open outlets in their hotels. It provides a different vibe to the guests as well as adds up to the overall profits.
Anchoring on advantages
“Primarily, it is the advantage of rent since the property is owned by the hotel and maybe space needs filling. Rental can be charged at subsidized rates or on a percentage of the sale,” said Chef Irfan Pabaney, Country Head, SodaBottleOpenerWala.
Apart from the rentals, one of the biggest advantages comes with the alcohol license which is much easier when compared to the permits for restaurants operating in a standalone location (outside hotel).
“Hotel no doubt is a secure and great location to be in. Input Tax Credit (ITC) is one of the major other drivers to the trend. Restaurant owners can claim the ITC on the GST paid at the time of output while operating an outlet in a star hotel premises. Also it’s a more secure place where infrastructure is good as well as the services. There is a perk of having ample parking space,” pointed Akshay Anand, Co-Founder of Ophelia who operates the restaurant at The Ashok New Delhi.
It opens us up to an entirely new demographic of business and corporate travelers as well as tourists and wedding parties which is not something one would consistently see in a high street restaurant.
For Rachel Goenka, CEO & Founder of The Sassy Spoon, who has just launched her restaurant, ‘House of Mandarin’ in Sheraton Grand in Pune, it has been an elating experience. “Partnerships with hotels/developers/landlords are a win-win for both sides and we do hope to execute similar tie-ups in the future. In the post-pandemic world, sustainability will be the top priority and these sorts of partnerships will be critical,” she said.
In such partnerships and tie-ups, the benefit for the hotel owner comes with an appealing amenity to hotel guests while also attracting a critical mass of locals that may end up using the hotel’s services. Restaurateur too gets an immediately available audience to help create a buzz.
Here’s the catch
However, getting to this win-win potential is not without its own cons. The hotel owner and restaurateurs will need to address various operational issues in any lease of space. Also, the entry area should be addressed, with entrances both from the hotel and from the street along with a waiting area apart from the hotel lobby helps in reducing the likelihood of operational conflicts.
“For regular patrons, the whole effort of entering a hotel today is painful because of the heightened security. Also, there can be an insecurity of having to pay a five-star price. Personally, I’d rather do a restaurant on the high street than in a hotel location,” added Pabaney.
A well thought out business plan, careful consideration of each party’s objectives, sensitivity to a hotel operator’s agreement, and proper documentation by each party’s professionals can be the key ingredients of a successful venture. However, there are a few rules of thumb for opening restaurants in a hotel; they must have a strong brand presence within their customer base so that majority of the time doesn’t go waste trying to please everyone at all hours of the day.