Friendly Hotels has overturned conventional thinking and handed over the food and drink operations in its UK hotels to an outside firm.

Two weeks ago, Friendly Hotels, owner of 44 UK Clarion, Quality and Comfort hotels and inns, did something no other hotel group in the country has ever done. On 20 March, it handed over the operation of all restaurants and bars, and the room service, banqueting and hospitality facilities to the recently renamed catering and support services company Sodexho, formerly Gardner Merchant.

That a supplier of non-core services should find itself taking on what hoteliers would usually regard as part of their core business turns assumptions of which services do and don’t fall within the scope of outsourcing on their heads. Simon Marshall, head of Sodexho’s hotels division, acknowledges that the close relationship between catering and the heart of a hotelier’s business makes the hotel market more difficult than others, but is convinced that the Friendly Hotels deal is the first of many.

‘It is the case that philosophically the decision to outsource something that is core is more difficult than something that is non-core,’ he says. However, he argues that a lot of hoteliers regard their core job as selling rooms, leaving an ‘appetite and interest’ for outsourcing food services.

‘We believe the market for this is huge and are extremely enthusiastic about it,’ he says, pointing to the USA, where it is common for hotel groups to have franchised food arrangements. ‘While I don’t think that hotels are consciously rethinking what is core business to them, I think it is reasonable to assume that what happens in the US will follow in the UK.’

Peter Cashman, chief operating officer of Friendly Hotels, explains his thinking behind the move: ‘Food and beverage is a large and core part of our business, but we were looking at how we could get a better return and better purchasing cost base.’

Under the arrangement, Friendly pays a fee to the catering and services group, which has agreed performance guarantees covering purchasing and profitability. Services in the hotels will fall under one overall manager to ensure that, ‘although we have two teams, the client will only see one,’ says Cashman.

Like Marshall, he is sure that Sodexho will find more hoteliers looking for a deal. ‘Like a lot of hotel companies, we already had outside suppliers for food purchasing and have simply taken it a step further.’

But not everyone is convinced – not least Martin Waller, sales director of Sodexho’s rival Sutcliffe Catering UK, the primary commercial sector food services business of the Granada Group. ‘I’m not so sure whether the hotel market is as big a market opportunity as Sodexho is making out. Hoteliers are hoteliers,’ he says.

‘Put yourself in the shoes of the hotel manager who has gone through a lot of training and is used to taking full responsibility for the management of the hotel – then you come along and say: “We’re subcontracting out your work”.’

Mike Oldfield, UK business development director at Compass, the third of the ‘big three’ UK contract caterers, is more positive: ‘There is a market out there. We have won business in the US with a major hotel group.’

However, he warns: ‘Frequently hotels do not make any money on food and beverages and you have to question why. But with the right opportunity we will go for it.’

Sodexho, which was rebranded in February to underline the company’s commitment to extend its provision of support services alongside catering (box, below), will also be looking to offer multiple services to hotels. The next step will be the provision of a full hotel management service; Marshall says he hopes to sign a deal with a property developer in the next few weeks.

‘We believe in sticking to our knitting,’ says Sutcliffe Catering UK sales director Martin Waller when asked whether the firm intends to further develop support services alongside catering for commercial contracts. ‘There are circumstances where clients ask us to take on additional soft services, which we will do… but we are primarily contact caterers,’ he adds. Mike Oldfield, sales director at Compass which, like Sutcliffe, will provide additional services where a client has a specific need, takes a similar view: ‘Our core business has been, and will remain, the food business.’ Sodexho chief executive David Ford sees things differently. ‘We’re targeting support services because our clients are increasingly asking us to do more,’ he says. ‘Catering management is not seen as a straightforward service and clients believe that if we can manage that effectively, we can manage other services as well.’ Ford recognises there are certain technical areas where Sodexho doesn’t have expertise. He says he isn’t planning to rush out and buy a specialist firm, but adds: ‘These days contracts are increasingly of a multi-service nature.’

Source

The Facilities Business