restaurant table with food and beverages at a hotel

The Importance of Food and Beverage Revenue Management for Hotels

November 8, 2023
Nathan Baws

While room nights generate the bulk of hotel revenue, food and beverage (F&B) sales also represent a significant income stream. However, many properties leave money on the table by not optimizing their F&B operations through a dedicated revenue management approach. 

Applying proven RM strategies around demand-based pricing, customer segmentation, and inventory allocation can dramatically improve F&B profitability.

The Value of Food and Beverage to Hotels

On average, F&B generates 25% of total revenues for full-service hotels. Outlets like restaurants, bars, catering/banquets, and room service contribute substantial dollars. F&B also enhances the guest experience and drives higher guest satisfaction scores. With margins around 60-80%, optimized F&B outlets can be highly profitable.

Challenges of Effective F&B Revenue Management

However, restaurants and bars have challenges unseen in room revenue management:

- Highly perishable inventory

- Variable costs per diner

- Real-time demand fluctuations 

- Complex preparation/staffing requirements

- Numerous offerings to optimize

These factors make disciplined F&B revenue management critical but challenging to perfect.

Core F&B Revenue Management Strategies

Hotels can borrow proven RM approaches from rooms to improve F&B performance:

Demand-Based Dynamic Pricing

Adjust menu pricing across dayparts, seasons, events, etc., to match demand. Leverage real-time data.

Customer Segmentation  

Offer differing menus, packages, and promotions tailored to various audience groups and their purchase behavior. 

Inventory Allocation 

Manage table inventory and availability across outlets to capture the highest revenue mix.

Meal Period Management

Optimize offerings, prices, and channel mix strategically for breakfast, lunch, dinner, late-night, and in-between periods.

Ancillary Revenue Programs

Generate add-on revenue through packaged deals, upsells, premium dishes, bar programs, retail, and more.

table with scrumptious food and beverage at a hotel

Tactics to Implement F&B Revenue Management

Here are proven tactics to drive F&B revenues:

- Forecast demand by meal period using historical covers and external events data

- Set variable pricing across menu items and dayparts using dynamic tools

- Develop demand-based promotions like happy hour or prix fixe menus 

- Analyze POS data to optimize the menu mix and offerings

- Cross-train staff to balance labor costs and utilization

- Restrict deals and discounts to low-demand periods to capture base demand  

- Perfect table assignment strategies and manage reservations to seat preferences  

- Upsell and package high-margin items like beverages, desserts, and add-ons

Benefits of Food and Beverage Revenue Management

Dedicated F&B revenue management offers multiple financial and operational benefits:

- Increased revenues, margins, and profitability

- Reduced waste and spoilage through demand forecasting

- Maximized table utilization and reservation effectiveness

- Improved kitchen production and labor planning

- Enhanced understanding of customer preferences and behaviors

- Greater merchandising ability across outlets


To drive better returns from significant F&B outlets, hotels must move beyond basic operations into strategic, analytics-driven revenue management. Though complex, proven RM principles tailored to F&B’s unique challenges provide significant opportunities to boost revenues, margins, and bottom-line impact.

Emersion Wellness partners with hoteliers to build capable in-house F&B revenue management and analytics. Contact us to evaluate your current operations and discuss solutions that maximize profits.

Also, See: What Is RevPAR Meaning and How to Calculate and Use It in Your Hotel Revenue Generation Strategies?

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