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Definition
Full service hotels are generally mid-price, upscale or luxury hotels with a restaurant, lounge facilities, and meeting space as well as minimum service levels often including bell service and room service. These hotels report food-and-beverage revenue.
Overview
Full service can have a wide range of food and beverage (F&B) options. Properties with a less ambitious on-site café or lounge can classify themselves as full service, as can properties that offer multiple restaurants, banquet halls, and catering options. While full service properties offer a benefit to guests of allowing access to dining without the need to leave the hotel, they also offer challenges best addressed by a savvy, experienced owner or management company.
Full service properties generally offer more rooms that are necessary to support the F&B component. These properties may see greater revenue with much of it coming in the form of restaurant, bar and meeting income. The caveat for investors is to carefully review expense components, especially Cost of Goods Sold and Payroll as both of these can easily turn the F&B income stream into a negative cash flow component of the overall hotel operation, especially without diligent and informed oversight and cost control. There are greater regulatory hurdles as well, working with the liquor licensing and health departments for the jurisdiction covering the property.
Investment Style
Full service properties can be exciting and high energy, offering tremendous upside for an experienced owner who is able to keep a firm control on expenses. These properties can perform well with absentee owners under professional management provided costs are carefully monitored.
