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Fresh-Brewed Revenue

General Manager Joe Kurth says the Pfister Hotel in Milwaukee had it all: a prime downtown location, a strong local following, a rooftop bar with views of Lake Michigan, a reputation for catering memorable galas and elegant weddings. But one thing was missing.

“What it didn’t have was a great cup of coffee to go,” Kurth says.

The property’s Café Pfister catered to the breakfast and lunch crowds, attracting 60 percent local to 40 percent hotel guest business, but it didn’t meet the needs of customers who wanted to grab coffee on the run. Pfister Hotel was behind the curve.

“In the industry, there’s really a proliferation of coffee shops—certainly with Starbucks leading the way—which created that expectation of a coffee counter,” he says.

BRAND NAME CONSISTENCY
The number one guest request that the hotel’s concierge of 37 years couldn’t fulfill on-property was, “Where’s the nearest Starbucks?” The Pfister team looked at a variety of local and national options, Kurth says, but decided to partner with the well-known international chain in response to its guests’ desire for a consistent product.

The hotel embarked on a renovation project to incorporate a patisserie into the entrance area of Café Pfister with casual seating and a Starbucks barista counter, and reopened in late March 2011. The redesign allowed for extra table space in the dining room to make up for the tables sacrificed by adding the patisserie. In the casual seating area, locals and travelers have access to free WiFi and 45 outlets to charge up their devices.

Pfister Hotel has the flexibility to offer its own food service at the barista counter since it’s a “We Proudly Serve” location, rather than a full-service Starbucks. The breakfast and bakery menus feature house-made pastries, soups, sandwiches, salads, and other to-go items. The traditional dining area of the café still closes at 2 p.m., but the barista counter and bakery are open until 8 p.m., providing six more hours for potential food and beverage sales.

Instead of taking away from the average check or breakfast cover, the renovation has led to incremental gain. “We’re watching nearly 40 percent revenue growth,” Kurth says.

Guests who once left the hotel to find the nearest Starbucks are now spending their money with Pfister, and even more when they decide to throw in a pastry or sandwich. The amount of people willing to pay a premium because of the name brand, especially when the hotel has in-room coffee makers with complimentary coffee, amazes Kurth.

LOCAL FLAVOR
Omni Hotels & Resorts serves Starbucks at all of its properties, whether at the brand’s homegrown coffeehouse Morsel’s, its restaurants, banquet areas, a full-service Starbucks, or via room service, depending on the individual hotel.

For the $250 million Omni Nashville Hotel, which is scheduled to open in late 2013, the brand is taking a different approach. Starbucks will be available in the restaurant and banquet/catering areas, but Omni has opted to bring in one of Nashville’s independently owned coffeehouses to add local color to the property.

When Stephen Rosenstock, senior vice president of food and beverage for Omni Hotels & Resorts, visited Nashville in search of the right coffeehouse, he came across Bongo Java, which consists of four cafes and a wholesale coffee roasting company. In addition to its Nashville flair, “I was very impressed with its popularity and the coffee itself,” says Rosenstock, a coffee connoisseur.

Bongo Java’s coffee is 100 percent organic and purchased directly from small-farmer cooperatives under the terms of Fair Trade. Rosenstock has noticed how the micro-roasting movement is growing among coffee shops, and says in some cities trends are shifting away from fancy latte drinks. “There’s nothing wrong with those latte drinks,” he says, “but people really want to find the perfect cup of coffee.”

One aspect that interested Rosenstock about Bongo Java was that it makes each cup of coffee and espresso the “old-fashioned” way, with freshly ground beans, and manual espresso machines instead of super-automatics. “With a lot of larger companies today, the coffee already comes ground, they open it up and make that cup of coffee,” he says.

While some travelers seek the consistency offered by chains, others go out of their way to try new products unique to the city. Omni targets discerning guests who are more adventurous in their choices.

Once Omni can assess Bongo Java’s performance at the Nashville property, Rosenstock says the brand might consider a similar approach for other hotels in the portfolio.
The decision to partner with a local coffeehouse instead of a big chain had nothing to do with cost, Rosenstock says, and everything to do with the experience factor. “Bongo Java in Nashville is really going to be a different experience for hotel guests as well as locals,” he says.

Not everyone will be familiar with the Bongo Java name, but that doesn’t scare Rosenstock. “The aroma of the coffee permeating through the lobby in the morning time will be more than enough.”

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