Notable increases in compensation and staffing levels of corporate food and beverage executives reflects the increasing importance that hotel companies are placing in this functional area.

It is difficult to quantify the increased investment in human capital and program development that hotel companies have made over the past several years in the area of food and beverage. However, this increased investment is seen as critical to driving overall asset value, not only because f & b revenues and profitability increase, but also because hoteliers are able to leverage f & b to position a property within its market and drive revenues in the rooms division.

In recent years, the industry has witnessed a few notable trends, including:

  • Increasing emphasis on in-house development of retail-style restaurant concepts
  • A new focus on f & b in the select service segment (Hyatt Place, Aloft, Indigo, Courtyard)
  • An explosion of partnerships with celebrity chefs; and
  • The addition of f & b service in hotel public spaces.

To support the focus on food and beverage development, many companies are expanding expertise in this area by increasing the number of corporate staff members or adding senior level positions where none existed before. This buttressing of corporate F & B talent has occurred not only at some of the world's biggest hotel companies such as Starwood and Marriott, but also at some smaller companies such as Destination Hotels and Resorts, which recently hired a Vice President of Food and Beverage, a newly-created position for the organization. Similarly, Felcor Lodging Trust hired a seasoned professional into a newly created Vice President of Food & Beverage role for its organization early this year. Interestingly, while Felcor, a REIT, does not manage any of its assets, senior leadership saw value in adding a food and beverage professional to its asset management function to support both the management companies and brands with which Felcor partners: a trend we expect will continue. Tishman Hotel & Realty added a first-time f&b executive to its team four years ago. Other hotel ownership and management companies have created entire restaurant companies, such as the Sage Restaurant Group, which was developed within Sage Hospitality Resources.

Examination of compensation trends further illustrates the increasing value placed on f&b executives, as the chart below illustrates:

Hotel VP Food and Beverage - Base Salaries
Year Minimum % Change Median % Change Maximum % Change
2004 $77,750 * $117,301 * $169,744 *
2006 $82,610 6.3% $151,500 29.2% $241,322 42.2%
2008 $91,062 10.2% $161,931 6.9% $261,014 8.2%

There is a notable jump in base compensation level at both the median and maximum points in the data range, from $117,301 to $151,500 or 29.2%, and from $169,744 to $241,322 or 42.2%, respectively, between 2004 and 2006. It was during this period that the greatest increase or enhancement of corporate f&b staff occurred. The substantial increases indicate that hotel companies are placing a premium value on top-level f&b talent. This is particularly interesting when examined alongside the base salaries of other corporate VP-level positions that HVS tracked for the same period, which did not experience as dramatic an increase.

In order to gain some perspective on these trends, we asked several corporate food and beverage executives the following questions:

  • Why are hotel companies placing a greater emphasis on food & beverage than in the past?
  • How has corporate hotel food & beverage staffing structure changed over the past 3-5 years?
  • What backgrounds, talents, and competencies are sought after in today's f&b talent?
  • How is the performance of corporate f&b teams measured?
  • What is the financial impact of the growth or addition of corporate f&b staff?
  • Have organizational changes in the areas of corporate f&b had an impact on property-level staff?

Overall, the executives agreed that in the past five to ten years, consumers from nearly all market segments have become more demanding when it comes to food and beverage quality and the dining experience. This shift is partially credited to the increased presence of specialized media content such as the Food Network, which has elevated chefs from people traditionally hidden away in the kitchen to innovators with celebrity status. Hoteliers also concur that competition in the hotel and food and beverage industries is at an all-time high, with the emergence of more concepts in the past five years than in the past fifteen. Further, hotel food & beverage has been recognized as an important contributor to a hotel's positioning within its market. As such, a guest's experience with food & beverage plays a critical role in his or her overall hotel experience, and has been credited as an important driver for rooms revenue as well as overall asset value. This explains why, in recent years, corporate food and beverage departments are either hiring or remaining intact while other departments have faced downsizing.

How has corporate hotel food & beverage staffing structure changed over the past 3-5 years?

Many corporate food and beverage departments have expanded in recent years. Specifically, IHG's food and beverage team on the franchise side has doubled in size according to Jean-Pierre Etcheberrigaray, Vice President of Food & Beverage for the company. Starwood's department has grown from three to ten in the past four years, and similarly, Marriott's corporate staff has nearly doubled in size from five years ago. The team at Sage Restaurant Group, a division of Sage Hospitality Resources, has grown from one to six in the last three years, according to Peter Karpinski, COO of Sage Restaurant Group. In recent years, several companies have added corporate food & beverage positions where none existed before including Tishman Hotels, Destination Hotels & Resorts, and Felcor Lodging Trust.

What backgrounds, talents, and competencies are sought after in today's F&B talent?

Overall, the executives with whom we spoke agree on the basic qualities they seek to hire: stability, career progression, creativity, innovation, leadership, the ability to develop bench strength and a solid track-record of making money. Beyond this, the combination of multi-unit freestanding restaurant experience and a background in hotel food & beverage is highly valued. Also of growing importance is the ability to understand and participate in the design and development process - looking at projects from both the operator's and the owner's viewpoint.

How is the performance of corporate F&B teams measured?

Beyond the typical metrics of overall revenue and profitability growth at the property and corporate level, the executives with whom we spoke identified several other ways in which performance is measured. For example, the rate at which properties are signing up new concepts, feedback from franchisees and changes in guest satisfaction scores are all important factors for evaluating performance, according to Lou Trope, Senior Director of Concept Development at Marriott. Hotel guest capture rates at a property's restaurant outlets, as well as the volume of street traffic are also critical metrics, according to Mark Hickey, Senior Vice President of Operations at Destination Hotels & Resorts. Guest ratings of the hotel brands are also factored into performance evaluation, according to a senior-level executive at Starwood Hotels & Resorts.

What is the financial impact of the growth or addition of corporate F&B staff?

For some companies such as Felcor and Destination Hotels & Resorts, it is too early to measure the financial impact, as the allocation of resources in this area is still relatively new. For others, it is entirely clear that the focus on food and beverage has provided greater opportunities to enhance a property's overall performance, which ultimately adds value to the asset as well as the real estate. Marriott has seen improvements in its food and beverage cost control, in guest satisfaction scores under key food & beverage indicators, as well as in top-line revenue growth. At Starwood and Sage, overall revenues and profitability have increased considerably. So passionate about the financial impact that food and beverage can have upon a hotel, Jean-Pierre Etcheberrigaray went so far as to commission a study examining the relationship between Food & Beverage and RevPAR. The relationship, he stated, was proven to be highly correlated. Mr. Etcheberrigaray uses this study to persuade property GM's to modify their food and beverage programs.

Have organizational changes in the areas of corporate F&B had an impact on property-level staff?

For some companies, the ability to attract top quality food & beverage talent at the property level has become easier. There are several reasons for this, according to the executives with whom we spoke. Food and beverage outlets which stand on their own and have greater visibility in the local marketplace are attracting the attention of higher quality restaurant management and culinary staff. Also, with higher average checks and an increase in overall revenues, service teams are able to earn higher tips and thus elevate the level of service staff a property can attract. Several executives noted that turnover rates at the property level have decreased as a result of greater visibility that food and beverage has enjoyed, a trend that most hoteliers would welcome.

It will be interesting to watch the evolution and impact of corporate f & b professionals on their companies, employees, and guests in the next five years. Based on our research and conversations with various corporate f & b executives, we expect that this function will continue to grow and attract attention in the hospitality sector for years to come.

About Juliette Boone | Ms. Juliette Boone is Vice President of HVS Executive Search, a division of HVS. HVS Executive Search is the premier executive search and compensation consulting firm specializing in the Hotel, Restaurant, Retail and Gaming industries. Ms. Boone's operational experience spans the industry from hotel food and beverage to catering, culinary arts and institutional food service. Ms. Boone has a B.S. and Master of Management in Hospitality from Cornell University. For more information about HVS Executive Search, visit .