The importance of the food and beverage area in hotel is growing higher, As the main source of revenue in domestic hotel business is switching from the room area to the food and beverage area. The growth of food and beverage service operated inside ho...
The importance of the food and beverage area in hotel is growing higher, As the main source of revenue in domestic hotel business is switching from the room area to the food and beverage area. The growth of food and beverage service operated inside hotels, however, has limitations due to restrictions in time, space, menus and marketing strategies.
In order to overcome such limitations, to improve stalemated personnel management and to increase sales, the hotel food and beverage area is trying to extend its business to the outside based on its strong points such as service competitiveness, accumulated management know-how and capital advantage. A variety of specialized restaurants launched recklessly by hotels have been pulled out or have been forcwd to look for transformation due to the rapid change of target markets and the aggressive marketing of ordinary food service providers.
Therefore, the present study has been designed to survey the current state of domestic hotel food service businesses (185 places run by 10 hotels), and analyzed the number of food service businesses in each hotel, their types of advance into the market, their target markets, and changes in business category and business condition. This study also has aimed to draw possible recommendation concerning target markets for hotel food service business and directions for improvement in business category and business condition.
1. Changes in the hotel food service markets in Korea
1) The numbers of hotel food service companies and their restaurants have increased by 58% from 9 and 117, respectively, in 2002 to 10 and 185 in 2005 but the number of specialty has decreased by 61.4% from 71 to 44. In addition, the number of convention businesses showed 13, recording 44.4% increase, and the number of franchise restaurants increased by 284.4% from 32 to 123.
2) As changes in the type of advance of hotel food service business into the market, the number of speciality restaurants increased from 17 in 1995 to 46 and 71 until 2002 while decreased to 44 in 2005. The number of catering businesses continued to increase from 4 to 6, 9 and 13. The successes in bakeries, family restaurants and fast food businesses, the number of franchise restaurants also expanded expand from 1 in 1995 to 15, 32 and 123.
2. Current state and forecast of the target markets of hotel food service business in Korea
1) As for the current state of hotel food service companies by target market (2002~2005), the percentage decreased from 48% to 41% in business districts and from 5% to 2% in railway stations while the percentage increased from 7% to 10% in universities and hospitals, from 2% to 5% in funeral service centers, and from 5% to 8% in shopping malls. The values were constant at 16%, 13% and 2% in airports, club houses and cultural centers, respectively.
2) Specialty restaurants in business districts (downtowns and crowded streets) and airports operated by hotel food service companies are expected to shrink and be pulled out soon because of difficulties in competing with and differentiating themselves from non-hotel based large size restaurants.
3) It seems to be necessary to secure on sub divided customer groups such as golf course club houses and alumni buildings of universities and to make research concentrating on specific target markets. Larger target markets and the expansion of restaurants are expected if new customers are developed through high quality services, and items and concepts equivalent to hotel food and beverage service and its subsidiary business.
4) New target markets such as funeral service centers and large size distribution centers and cultural centers with a large number of visitors are regarded as special markets with the possibility of exclusive business. If new target markets are developed and maintained properly based on the strong points of hotel food and beverage service, the market size and the number of restaurants will grow steadily for a while.
5) With the opening of KTX, restaurants around railway stations will be taken by fast food franchises or takeout restaurants than refined restaurants with elegant atmosphere considering the characteristics of major customers and the location.
3. Future directions for hotel food service business
1) Speciality restaurants need to expand their competitive brands focusing on business categories advantageous to hotels rather than jumping recklessly into every area. It is also urgent to specialize and concentrate on target markets, to restructure the wage and personnel systems, and to simplify, standardize and document products and services.
Speciality restaurants in decline need to review the feasibility of their business, and restaurants with low earnings should be pulled out or establish a purple ocean strategy through changing the business items or finding new target markets to sharp competitiveness against non-hotel based food service companies.
2) Hotel convention business is expected to grow into the main hotel food service business with high sales and earnings through diversification and enlargement. It, however, strongly needs a strategy for differentiating itself from existing group catering business and family restaurants in target customers and target markets. It is considered to be urgent to develop and concentrate on new target markets, to lower prices by expanding outsourcing of items, and to activate hotel convention marketing for attacking sub-divided target markets and customer groups.
3) For franchise business, it is desirable to improve the most competitive concepts and items from popular low or medium price service to distinguished high class service and to develop franchise business that can advance to overseas markets.
The keys to success in specialty restaurants, convention business and franchise business, which are the most competitive hotel food service areas, are finding alternatives, selecting business concepts and items and developing new target markets applicable in completely new business environment.