Prestige restaurants are a key ingredient in high-end hotel success

There’s just something special about dining out. Being able to sample flavors and experience that differ qualitatively from what you can get at home is enjoyable. And consumers across America, by and large, agree. Nine out of 10 consumers surveyed by the National Restaurant Association say they enjoy going to restaurants, and 64% of full-service diners say their dining experience is more important than the price of the meal.

The near-universal appeal of dining out is one of the reasons food & beverage places have performed better than many other retailer categories over the last several years. For instance, for every $100 consumers spend at grocery stores, they spend $128 dining out.¹

This emphasis on dining out extends towards hotel guests. Fully 50% of global travelers book restaurant reservations before their flights.² In fact, the experiential element of dining takes on even greater priority for travelers. Nearly 1 in 5 consumers will travel specifically to seek out new culinary experiences and 60% of luxury travelers prioritize staying at hotels with great restaurants.​

Hotels have seen an increase in the portion of their total revenues that come from venues, including restaurants on their premises.³ As a result, hotels are elevating their dining experiences, much to the delight of guests. Positive reviews about hotel restaurants, chefs and bars surged 40% from H1 2023 to H1 2024⁴

¹Source: US Census Bureau
²Source: Stories from Hilton
³Source: STR/CoStar
⁴ Source: Hotels.com​

Travelers in the last century might have chosen a hotel for its reliable and standardized service. Today’s travelers seek out distinct experiences. To meet this demand, high-end hotels can now partner with local and nationally recognized chefs to create unique dining destinations.​

To study the economic risks and benefits of such establishments in high-end hotels, we compiled and analyzed a database of hotel restaurants. We also interviewed subject matter experts working at the intersection of food and hospitality:

• Prestige restaurants*5 in high-end hotels command significantly higher room rates and strong RevPAR premium relative to counterparts of the same class in the same market.

• Legal arrangements between restaurateur and hotel range from real estate leases, in which the restaurateur has both the most control and the most risk, to a variety of non-lease agreements offering hotels greater management oversight at a higher cost.
   

⁵Restaurants with celebrity chef, James Beard award or Michelin stars

Offering a prestige restaurant (i.e. one with a celebrity chef, James Beard award or Michelin stars)​ can be very profitable to a hotel’s bottom line – but not merely from restaurant profits alone.

• In fact, the average gross hotel profit from food and beverage operations is 27.8%.**⁶
  
  Hotels trade primarily in experience, and great restaurants are an essential ingredient of that experience, offering another means of adventure, discovery, and enjoyment. This is evidenced by high-end hotels with prestige restaurants enjoying a 6.7 percentage-point higher occupancy compared to similar hotels without such restaurants.
  
  High-profile restaurants, therefore, act as a major draw for potential guests, and it is the room that earns hotels the lion’s share of their profits.
   

• 72.9% of average hotel room revenue translates to gross profit.⁷
  
  By bringing in exciting food options, hotels hope to drive up demand for rooms, justify higher room rates and generate more F&B profits.
   

⁶Source: JLL Analysis of STR/CoStar data. Data as of year-end 2024
⁷Source: JLL Analysis of STR/CoStar data. Data as of year-end 2024

High-end hotels with top-tier restaurants featuring celebrity chefs or prestigious awards perform notably better than average luxury hotels. Our study found that these hotels have:

Higher room prices (ADR): They charge 8.8% more than other luxury hotels.

Better overall revenue (RevPAR): They earn 18.6% more per room than average⁸.

This tells us three important things:

• These hotels can charge more because they offer superior experience.
• They're more popular, with more rooms filled.
• They might be able to raise prices even more without losing guests.
   

In short, having a prestige restaurant helps hotels attract more guests and make more money, putting them ahead of their competitors.

⁸Source: JLL analysis of restaurants in luxury and upper upscale hotels in a selection of the top markets for international tourists. Data as of year-end 2024.
Note: ADR measures the average price paid for rooms sold, indicating how much guest are paying on average. RevPAR, on the other hand, measures the hotel's ability to fill available rooms at an average rate. While ADR shows pricing power, RevPAR provides a more complete picture of overall performance by considering both price and occupancy.

• Gordon Ramsay’s Hell’s Kitchen opened its first California location – and third overall – at Harrah’s Resort Southern California in summer of 2022. The restaurant was designed to offer diners a taste of the star chef’s most famous dishes and to give a peek into what it’s like on the set of the long-running cooking show. The San Diego restaurant booked more than 25,000 reservations before it officially opened, with Gordon’s beef Wellington and sticky toffy pudding among the most popular dishes ordered.​

• José Andrés opened Mediterranean restaurant, Zaytinya, at both the Ritz-Carlton New York Nomad and Ritz-Carlton South Beach in 2022 and 2023, respectively. The restaurant concept highlights a mix of Turkish, Greek and Lebanese flavors via small-plate selections. The Bazaar by José Andrés is another restaurant by the celebrity chef located within the Waldorf-Astoria in Washington DC.​

• Richard Blais, the first winner of Top Chef All-Stars, opened up Four Flamingos in Hyatt Regency Grand Cypress in December 2021. The restaurant features tropical-inspired Florida flavors like stone crab and spiny lobster bisque.

• Stephanie Izard has opened two locations of her Peruvian-inspired Cabra restaurant at Hoxton Hotel in Chicago and Los Angeles. Izard is a James Beard award winner, won the Iron chef title in 2018 and was the 4th winner of the Top Chef competition.​

Notable restaurants can benefit hotels economically as well as deliver prestige and recognition.

• Famous chefs generate publicity and press coverage.
• Renowned chefs draw travelers to the hotel.
• Distinctive restaurants helps hotels qualify for programs like the Michelin Guide, the Virtuoso Network and Forbes Travel Guide.
• Hotels can charge higher room rates, justified by the unique experiences they offer.
• Hotels can offer packaged room and dining experiences and preferential dinner reservations to hotel guests.
• Some hotels have a long-term residential component. For them, the high-income residents benefit from the amenity, while a restaurant benefits from on-site potential customers.
   

Chefs and restaurateurs see many potential benefits in operating a restaurant in a hotel.

• Most U.S. cities lack inventory of restaurant space for lease. Hotel restaurants can be an appealing option.
• Chefs often enjoy the publicity and esteem that comes with partnering with a high-end hotel brand.
   

Depending upon the type of agreement with the hotel, the financial risk can be lower and reward higher than in a traditional restaurant lease.

• Chef José Andrés plans to open his first hotel in Washington, D.C.'s high-end Georgetown neighborhood. The boutique luxury hotel called Bazaar House by José Andrés is scheduled to open in 2027 and is expected to include multiple dining venues and events space, upscale retail and a members-only private club and restaurant on the penthouse level.
• Celebrity Chef Richard Blais is partnering with the Hyatt Regency Scottsdale Resort & Spa at Gainey Ranch to reimagine the resort’s food and beverage experiences. He will debut six new dining experiences at the resort as part of the property’s $110 million renovation and branding into a Grand Hyatt property. Restaurant themes will include Italian American cuisine, a Japanese fusion concept and a Southwest-style grill.
• In 2024, Waldorf Astoria New York announced a culinary partnership with James Beard award winner, Chef Michael Anthony. Anthony will oversee the revamp of the signature restaurant’s dining experience by elevating its classic American menu.

Even when hotels do not have prestige restaurants (boasting awards, Michelin stars or celebrity chefs), the quality of the experience matters.

Since most luxury travelers (60%) prioritize staying at a hotel with great restaurants, dining options that are delectable, attractive and convenient – and highly rated – will often factor in to where guests book their stay.

Some hotels will partner with an internationally known chef, while others will choose a local favorite. The decision includes consideration around branding and cost.

• Globally known chefs can draw visitors from around the world, but with that notoriety comes a higher cost to the hotel.
• Locally-known chefs won’t drive as many out-of-town visitors, but they can offer a unique sense of place that feels authentic to the region and help to build a local customer base loyal to their local chef.
   

Some hotels will choose both the celebrity chef and the local favorite.
 

• For example, The Four Seasons Hotel Philadelphia features Jean-Georges Philadelphia by global favorite Jean-Georges Vongerichten, as well as Vernick Fish by Greg Vernick, winner of Best Chef: Mid-Atlantic by the James Beard Foundation.

The “hotel restaurant” stigma: While diners in New York or Beverly Hills might be used to having dinner at a hotel restaurant, many other cities don’t have this tradition.

• In these cases, there is additional PR and marketing work is required to educate the public about the quality of restaurant.
   

The unprofitable breakfast: Some brands require hotels restaurants to serve breakfast, a meal generally considered unprofitable.

• To overcome this, the hotel might agree to compensate the restaurateur for the labor costs associated with serving breakfast.
   

Room service considerations: Some hotels require they provide food for room service delivery, which many chefs believe reduces food quality due to the delivery time.

• To overcome this, chefs can offer a very limited menu of delivery-safe items through room service.
   

Too many cooks : The nature of the hotel business means there will be multiple parties involved in the approval process. There is the hotel brand, the hotel owner and the hotel operator, each with a hand in the process at a single property.

Regardless of the structure of the agreement between hotel and 3^rd party restaurant operator, the goal is for the diner to feel as though he or she is experiencing the singular vision of the chef.

A traditional lease puts the risk on the restaurant.

Leases are typically 10-15 years in length and often include a minimum fixed rent, along with a percentage rent component, in which the tenant pays the landlord a percentage of gross revenue above a mutually agreed-upon minimum sales threshold. While leases are the least risky to a hotel, they also limit the profit potential. Furthermore, hotel managers will have little oversight of the management of the restaurant, a potential point of future conflict.

Non-lease agreements give the hotel bigger costs, but also more control. They can be arranged in several ways, but in each of them, the hotel pays for the restaurant build-out and the chef is paid both a flat fee and a percentage of profit or revenue.

Non-lease agreements come in three main flavors:

• Management agreements give the restaurant partner a percentage of revenue and/or profit. The hotel employs the staff and operates the restaurant under the name of the restaurant partner. The chef will conduct staff training, quality control, menu creation, guiding the design and operation and a make several personal appearances after opening.

• Operating agreements have the chef operating the restaurant as if it were their own, including the hiring and management of staff. It requires the chef to be physically present to manage the staff and becomes difficult to execute in cities far from the chef’s home.

• License agreements allow a hotel to operate the restaurant using the Chef’s brand, menu, likeness and other intellectual property. The chef is paid for staff training, creating a menu, quality control and personal appearances. These agreements are most common in large hotel chains with an existing F&B infrastructure.

The data

The JLL research team assembled a database of restaurants opened since 2020 in luxury and upper upscale hotels in 19 of the top markets for international tourists. The team then identified a subset of restaurants with Michelin or James Beard awards as well as those boasting a celebrity chef and compared performance metrics at these hotels with the average in the same market.

The experts

The following subject matter experts kindly lent their time and knowledge to our team:

• Phil Colicchio, Principal, Colicchio Consulting
• Emily Durham, Senior Vice President, Brokerage, Food and Beverage Advisory, JLL
• Devin Klein, Vice President – Retail Brokerage, JLL
• Tim Marvin, Managing Director, JLL
• Tony Muscio, Senior Managing Director, JLL
• Susie Park, Executive Vice President Asset Management, JLL
• Daniel Peek, President, Hotels & Hospitality, JLL
• Chris Wilson, Executive Vice President, National Retail Agency Lead, JLL