Importance of F&B operation in luxury hotels: the case of Asia versus the US

Abstract

Purpose This paper aims to understand the effect of food and beverage (F&B) services on the operating performance of luxury hotels and to identify the heterogeneous effects of the luxury hotels’ F&B operation on the business performance between Asia and the USA. Design/methodology/approach Operating performance of luxury hotels in Asia (37 hotels), including Japan, Singapore, South Korea and Hong Kong and in the USA (72 hotels), including New York, California, Florida, Illinois and Texas was collected from STR reports. This study applied generalized estimating equations models to reach the conclusions. Findings The emphasis on F&B services exhibits a significant positive effect on the operating performance of luxury hotels in Asia. The occupancy rate and gross operating profit per available room of luxury hotels in Asia have improved with the investment in F&B offerings. Therefore, a distinctive F&B offering should be considered as one of the main products and services rather than a supplementary service in Asia. While devotion to F&B services lacks a significant positive effect on luxury hotels in the USA. Originality/value This study is the first effort to identify the importance of luxury hotels’ F&B operation for the overall hotel performance in Asia and the USA by focusing on the entire industry’s operating information.