Motels - Food & Beverage
- Posted By Andrew Morgan
I recently stayed at a motel I had not stayed at for over 20 years. I thought it would be good to try an alternative and to have a look around. One of the other reasons I stayed there was that it was one of the few in town that still had a restaurant, and I knew I wouldn’t feel like getting back in the car and going back out after a long day. It seems that all or at least most of the other motels in town over the years had closed or repurposed their on-site restaurants. Unfortunately, when I arrived, it was obvious that the restaurant was now being used as a storeroom rather than a food and beverage outlet.
Heading back out to look for somewhere to eat, there was no shortage of options within a few minutes drive, from pub or club fare, fast food and restaurant venues. Historically a lot of these options were not plentiful years ago. Today it is clear that for different reasons, including more competition, guest’s employment demands, higher operating costs and operators wanting to simplify their lives and limit their working hours, etc, there are far less restaurants or food outlets within motels.
However, in saying this, I have recently seen two formerly closed motel restaurants re-opened since the start of the year. This is interesting to see as there must have been an opportunity identified, to endeavour to recreate this former income producing area of the business. To expand further, one included the owner being impressed with the skills of a particular chef and employed them to reopen the restaurant. The other leased the restaurant to a chef who has taken on a lease and reopened the former restaurant. Both have the opportunity to appeal to the in-house motel guests and build a following of a local nature, which good chefs often achieve.
There have been many changes to the way motels operate over the last 25 or so years, particularly regarding their income sources. The food and beverage side of a motel business was an extremely busy and lucrative side of the business model. Travellers for business purposes surrounded the bar whilst others dined alone or as part of a larger group, often entertaining their local customers. Families who travelled all day were glad to be out of the car and happy not to have go elsewhere to get the hungry kids fed. The motel owners ran the reception at the same time as waiting tables, all the while getting to know their customers and entertaining them from behind the bar. A full multi-tasking session, that occurred five or six nights a week.
That was then, and today we see a different operation being more commonplace. One where the dining side of things is not as prevalent. Many have been closed and sit dormant, or have been transformed into alternative income producing areas, such as additional units or meeting rooms. As mentioned above, there are probably four main changes that have occurred over the years that may help to explain this:-
- Increased competition;
- Higher operating and compliance costs;
- Guest’s changing work life;
- The motel owner/manager’s requirement for more of a work/lifestyle balance.
There are far more dining options available today than there was 25 years ago. Large pubs/taverns, sporting clubs, speciality restaurants and fast-food options have grown exponentially over recent years. In many towns often one can find half a dozen or more eateries within walking distance from their accommodation. This makes it extremely difficult for a motel to retain their guests to dine onsite. It is often not the case however in smaller towns, where dining options may be more limited. In towns with smaller populations, the motel restaurants without that high level of competition, are often very strong food and beverage operations.
The second change is an increase in the costs to operate a food and beverage business. The increased cost to purchase food. This is an issue not only for businesses but for most people in general. The higher cost of living, particularly over more recent years. The stress endured due to increased government and council compliance requirements and the costs associated with this. Higher employment costs today also.
The third change is today’s employment requirements and changing work life, largely with technology. The increased mobility of people being able to work more effectively outside of the office environment means more opportunity to work from a motel room at night. Every work-related traveller has a portable office wherever they go. A mobile phone, tablet, or even a “bulky” laptop allows one to be just as productive outside the office as in, thereby changing the way travel, accommodation, dining, and evenings are spent whilst away from home. Guests can have a quick meal, then start working from their iPad back in their room as opposed to remaining in the restaurant through the night. This takes away from the social side of things where the traveller could meet new people in the restaurant or bar and stay on to network and socialise (in person). Technology today means everyone wants everything immediately, so getting back to the iPad and punching out those emails demanded by the customer now take priority.
The final change is an owner/manager’s work/lifestyle balance. Many motel operators have changed the way their businesses operate, by focusing on accommodation and moving away from the food side of the industry. The higher profit margin from accommodation over food and beverage has been a catalyst for this change. Also, the added requirements of additional employees and the motel operator’s increased labour and involvement in the dining area, takes away from that desire for a better work and lifestyle balance.
Although the above outlines why things may have changed, there will continue to be a strong demand for food and beverage operations within certain motel and other accommodation facilities, based on location, clientele base, larger corporate based properties, and others. The mix of accommodation, dining, and conferencing within the one facility does have its appeal for segments of the market.
Those looking to acquire a business of any kind do not buy unless they see some level of upside they can build upon. Motel buyers within the market are always looking for something that can offer added value, and the opportunity that an under-utilised area within a motel presents, such as a closed or non-profitable dining area, can be a great way to add value without a massive capital outlay. This makes a vacant area within the property (such as a former restaurant), an asset to have.