Hotels Run up Tab to Boost Restaurants

Hotels Run up Tab to Boost Restaurants

By Ryan Tate

 

Many of San Francisco's largest hotels are upgrading their restaurants with independent chefs and adventurous food, providing restaurateurs with a much-needed influx of capital.

 

In remaking their humdrum restaurants, hotels like the Argent and St. Francis are hoping to enhance their image among food-savvy travelers and locals at a time when tourism is up -- along with the price of the city's most desirable rooms.

 

Hotel owners began planning the latest wave of high-end restaurants when business was still weak, starting with chef Michael Mina's eponymous restaurant in the St. Francis in 2004 and continuing with Ame at the St. Regis, part of a four-year construction process, and upgrades to Silks at the Mandarin Oriental.

 

With travel into San Francisco ramping up, hotel owners seem even more anxious to get into the game. Take the 667-room Argent Hotel, where the new owner is planning to install a restaurant concept to be headed by Italian-born chef Nick Stellino, who has a PBS cooking show. The new concept is expected to coincide with the property's conversion to the Westin flag.

 

Then there is the St. Francis, aiming for a second hit after Michael Mina garnered critical acclaim and is doing what Mina described as great business. In a concept dreamed up by Laurence Geller, CEO of St. Francis owner Strategic Hotels and Resorts, the hotel is planning Eno, a bar serving wine, chocolate and cheese in a low-ceilinged room dappled with leather and dark woods. Eno will also open in Chicago and in Laguna Niguel.

 

"The key to bringing back hotel dining is that restaurants be unique, standalone experiences," said St. Francis general manager Jon Kimball. "When the hotels run them is when we mess them up."

 

The 550-room InterContinental hotel next the Moscone Convention Center will open in February 2008 with an upscale, 24-hour Italian restaurant with a show kitchen and accompanying bar tentatively called "Grappas," hotel sales director Gail Gerber said. The restaurant will be run by the hotel, but InterContinental is looking for a top outside chef to head the kitchen.

 

At the Hotel Nikko, new general manager Anna Marie Presutti has overseen improvements to the decor at steak-and-sushi joint Anzu and brought in a new chef, Barney Brown, former executive chef at Betelnut and proprietor of Basque. Le Meridien owner HEI Holdings is contemplating replacing or upgrading its Park Grill, possibly in connection with restaurant Jean Georges of New York, which has a partnership with Meridien brand owner Starwood Hotels and Resorts.

 

For a hotel, a high-profile restaurant brings an additional revenue stream. It also brings in locals, who otherwise would never have reason to set foot in the hotel but who are valuable, since they provide a steady revenue stream when tourism slows and refer friends from out of town to the hotel's guest rooms.

 

A highly successful restaurant with a full reservations book also attracts business from hotel guests angling for a table. Finally, hotel managers hope a successful restaurant will put a "halo" over their brand, improving it in subtle ways.

 

Like the hotel, the restaurateur is also hoping to make extra money from the arrangement. At a time when the minimum wage is rising, healthcare costs are up and the city is imposing new sick leave standards, restaurant profits are especially tough to come by. Meanwhile, hotels are offering generous rent terms and free improvements that can easily range into the millions of dollars.

 

"With the cost of doing business here, the large multimillion investment in a freestanding restaurant is less frequent and much more difficult to assemble," said Kevin Westlye, executive director of the Golden Gate Restaurant Association. "The hotels offer the capital and environment to do a more expensive build out within a much larger budget."

 

Of course, the costs can be higher, too. When Bill Kimpton pioneered the high-end hotel restaurant in the late 1980s and early 1990s, with concepts like Postrio and Kuleto's, he installed them in small, agile and largely non-union hotels with relatively low labor costs. Meanwhile, restaurants at the more established hotels were languishing and in some cases closing, strangled, some say, by expensive and unwieldy union contracts. The newest wave of hotel restaurants, including Michael Mina, Ame, and the new places at the Argent and St. Francis, are staffed with union labor, with union wages and benefits. But they come, or are expected to come, with special partnership deals cut with the union to loosen work rules.

 

Source: www.bizjournals.com