Naturally, the actual cost of a nightly stay is only one part of the spending dollars hotels hope to capture from consumers. Restaurants, gift shops, spas/salons, in-room amenities, and additional services and experiences are also on the table, providing plenty of opportunities for guests to spend substantially more than the simple cost of the room.
Unfortunately, one of a hotel’s biggest moneymakers is facing an uphill battle, at least with the younger generations. A 2023 Gallup poll revealed that drinking is down among young adults ages 18 to 34. Only 62 percent of adults under age 35 say they drink, down from 72 percent 20 years ago.
The reasons why they don’t drink as much vary, but generally include health concerns, high prices and an increased use of marijuana, Gallup noted. This presents a challenge for hotels and the bars and restaurants that occupy them, as food and beverage sales can represent between 30 percent and 40 percent of total hotel revenue. Alcohol sales can account for up to 25 percent of that profit, according to the National Alcohol Beverage Control Association.
Alcohol alternatives
Many hotels and restaurants are responding to this trend by leaning into what Gen Z does drink. This includes spirit-free mocktails.
“The cultural change has already begun, and the non-alcoholic category is exploding in popularity,” said Edwin Frizzell, general manager of Fairmont Royal York and regional vice president of Central Canada of Fairmont Hotels and Resorts.
An $11 billion industry in 2022, the non-alcoholic category is expected to grow by 25 percent in the four-year period ending in 2026, according to the International Wine and Spirits Record (IWSR).
“As no- and low-alcohol becomes a more established part of the beverage alcohol landscape, growth is slowing after a peak in 2020 to 2021 – but the category is poised for robust gains in the coming years, spearheaded by no-alcohol and persistently strong recruitment levels,” said Susie Goldspink, head of no- and low-alcohol insights at IWSR.
To read the rest of this article, visit our sister site Hospitality Investor.