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Crowne Plaza Muscat outdoor setting.

Across the industry, hotels are feeling thepinch of soaring food prices - and large-scale catering events have been especially affected. Could this be the end of the party? Lee Jamieson digests the issue.

Rising food costs, shrinking labour resources and increased competition is a difficult pill to swallow for many F&B managers currently operating in the region.

But for many, the situation is creating an environment where only the fittest survive, and the best ideas are being rewarded with client loyalty and increased market share.

"Without exception, we have seen a price rise for every item that we offer on our menus from meat to vegetables to dairy products," says Novotel and Ibis World Trade Centre executive chef Timothy Kairu. "As a hotel in the Middle East, we are particularly affected because nearly all the food items we use are imported."

Kairu's concerns are shared by many F&B directors in the region. The combination of the current economic instability and soaring food costs is taking its toll on the profit margins of catering events, and F&B directors have found themselves on the front line.

They need to put in place cost-effective solutions that do not affect the overall quality of their menus.

"Rising food costs are definitely hitting the bottom line," agrees Radisson SAS Hotel Muscat assistant F&B manager Yash Singhal.

"In a market like Oman, it's becoming extremely tough to offer quality products at reasonable prices and meet guest expectations. Also, many of our products are imported. The combination of rising fuel prices, rising food prices and export restrictions in a number of countries has intensified the problem in the Middle East."

According to Kairu, the cost of food has risen by 22% over the last 10 months and Singhal reports a staggering 43% increase in fish prices this year.

These increases are particularly sensitive to economic fluctuations because the limitations of local agriculture have made Middle Eastern hotels somewhat reliant on imported goods - and therefore at the mercy of economic conditions.

Positive outcomes

Hotels have been working hard to restructure their large scale catering events in an effort to retain their overall profitability - with some surprisingly positive outcomes.

Grand Hyatt Dubai's executive chef Josef Miklavc and food and beverage director Till Martin report that price increases have actually invigorated their business practices and refocused their menus.

"The price increases made us re-evaluate our relationships with suppliers and also brought us into contact with new suppliers," they explain.

"In addition, we discovered more options to make more use of local products instead of imported products without influencing the quality of our offerings."

Similarly Crowne Plaza Muscat F&B manager Cedric Gaillard has found that the re-evaluation of his business processes has led to a more dynamic and integrated departmental structure.

The hotel has recently regrouped all the revenue generating departments together including food and beverage, conference and banqueting, reservation, and sales and marketing.

Gaillard explains that this restructuring has facilitated the flow and speed of information within these departments, providing better customer service and growing the revenue and profitability of the hotel.

In turn, this has increased the demand for large scale catering events which has offset the price increases in food over the last year. For example, Gaillard notes the increasing demand for residential meetings, which has maximised the revenue for the entire hotel.

"Ultimately, our strategy has always been to focus on quality regardless of the cost pressures," says Gaillard. "In the long-term this has resulted in a more successful and profitable food and beverage operation."

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