U.S. Hotel F&B Revenue Resurgence: The South Leads, Corporate Groups Drive Growth :: Hospitality Trends

In 2024, U.S. hotels are seeing notable trends across their food and beverage (F&B) departments, driven by regional variations, corporate group demand, and strategic responses to inflation.

Despite some uneven performance, particularly across regions, a clear recovery is taking shape, with the Southern United States emerging as a stronghold for revenue flow-through and profitability. Here’s a closer look at how the industry is adapting to shifting guest demands, inflationary pressures, and evolving revenue sources.

Figure 1

With more corporate groups filling rooms and utilizing event spaces, U.S. hotels have seen a steady rise in Conference and Banqueting (C&B) revenues. Year-to-date, C&B food revenue is up a remarkable 8.9%, and C&B beverage revenue has risen by 4.4%, marking these as some of the strongest areas of growth in F&B services. This surge is pushing C&B revenue beyond pre-pandemic levels seen in 2019, highlighting the return of group business, though unadjusted for inflation.

Figure 2

Corporate groups now make up an increasingly significant share of rooms revenue. This uptick, observed through multiple years of data, signals a steady shift back to in-person meetings and events. Hotels are capturing this demand, leveraging it for high-margin F&B opportunities, and revitalizing previously underutilized spaces. Combined with the rise in C&B, this dynamic is creating promising revenue streams within the sector.

Figure 3

When it comes to profitability, the South is setting a benchmark with higher F&B flow-through percentages, indicating efficient operations and cost management. Flow-through, or the percentage of incremental revenue retained as profit, remains a critical measure for hotels amid inflation. In contrast, the Western U.S. struggles with operational flexibility, which is impacting its ability to maximize F&B profit and revenue per available room (PAR).

Figure 4

Consistency in the South is evident in year-over-year (YOY) growth in both F&B revenue and profit PAR. This reliability not only underscores the South’s operational stability but also its ability to meet—and profit from—fluctuating demand in F&B services, a skill that is proving essential in the post-pandemic recovery.

Figure 5

The West and South also present a striking contrast in profit margins and cost dynamics. In New York, union and non-union properties reflect a “scale effect,” with non-union venues typically posting higher margins. Across the board, however, hotels are facing a steep 25% increase in food inflation, compelling them to innovate in pricing and operational efficiencies. Many are successfully passing these costs on to guests, using tailored pricing strategies that reflect inflationary pressures.

Additionally, the latest data shows that guest spending on wellness and leisure activities is rising faster than spending on traditional F&B and banqueting services. This trend suggests that while dining remains an essential part of the hotel experience, guests are increasingly willing to invest in holistic experiences such as wellness, signaling an opportunity for hotels to diversify and capture a broader share of guest spending.

Hotels have embraced innovative solutions to mitigate the impact of inflation on F&B. Many are leveraging trailing commission models with delivery companies, helping them to manage operational costs while providing guests with convenient, cost-effective options. With a clear understanding that profitability remains a priority, hotels are also adjusting menu prices and service models to counterbalance inflationary cost increases.

The 2024 data illustrates a resilient U.S. hotel F&B sector, especially in comparison to its European counterparts where profitability struggles persist. As C&B revenue recovers and corporate demand rises, U.S. hotels have a strong foundation to build on, even as they navigate regional challenges and changing guest expectations.

“While U.S. hotels have shown resilience in managing food and beverage profitability compared to their European counterparts, especially in controlling labor costs, the current F&B landscape still poses challenges. With revenue growth decelerating, hoteliers must prioritize innovative strategies to drive F&B revenue—whether through increased guest spending, integrating F&B more seamlessly with other operations, or exploring partnerships like food delivery. As demand from rooms begins to slow, F&B becomes increasingly attractive not just for operators, but for investors seeking new avenues for growth.” — Michael Grove, CEO of HotStats

If you want to explore more on how HotStats can help you drive profitability in today’s evolving market, reach out to us at HotStats and discover tailored insights and strategies for your hotel’s operations.

About HotStats: We are a global data benchmarking company offering specialized performance analysis and a benchmarking tool that helps analyze financial and operational data from a diverse range of hotels globally. This provides hotel owners, operators, and investors with valuable insights into the financial performance of their properties against their competition Ð an invaluable resource for weighing options and evaluating investment opportunities. Email us at Askus@hotstats.com for a personalized demo.