Will food delivery apps eliminate the need for hotel room service?

What is the best way for a hotel to meet guests’ dining needs?

For decades the answer has been room service, handled through a very manual process of taking orders, preparing the food and delivering it to individual rooms, at all hours of the day and night.

But in recent years, new options for on-demand, personalized meals have emerged – initially disrupting the way people dine while at home and now also gaining traction among both business and leisure travelers as a convenient way to eat while on the road.

To understand more about the needs of both travelers and hoteliers related to in-room dining, Phocuswright and iSeatz surveyed 800 consumers and interviewed hotel managers and food and beverage executives from both chains and independent properties, to learn more about perspectives on dining and loyalty from both travelers and hotel management.

The study found that travelers perceive both traditional room service and third-party food delivery platforms as providing ease and convenience, and overall satisfaction is similar with both options.

But for room service, a notable issue for travelers is the perceived value – or lack thereof – in relation to the product received.

As the report states, this “...may be one of the forces driving increased use of third-party food delivery sites by increasingly budget-conscious travelers.” Travelers also showed a strong interest in eating local food while traveling - something that room service is typically unable to provide.

And the cost of room service is not only a concern for travelers – most hoteliers responded that, in fact, room service is not a profit center.

According to STR, the average profit for food and beverage departments in all full-service hotels in the United States was 28.4% in 2018, but only 23.2% for properties with significant in-room dining business.

The report states: “Despite this, room service is often maintained because of outdated brand standards or, to a lesser extent, due to customer expectations, particularly in luxury properties.

But could there be better options – ones that meet the needs of both travelers and hotels?

Change is coming

Hotels can keep costs down by reducing hours of service and menu size and transitioning to a more app-driven, automated model for their in-house dining services, thus eliminating some labor and supply costs.

The report states that “Several of the major chains, including Wyndham and IHG, are actively rolling out such solutions, with varying degrees of success.”

Wyndham’s integration with DoorDash launched in May 2019 and is available at more than 3,000 of their 9,000 hotels.

Notably, Wyndham guests can earn loyalty points for their in-room dining orders, echoing the 60% of survey participants who said they would be interested in using loyalty points for room service or food delivery.

Hotels can pursue partnerships with third-party delivery platforms or develop their own service.

The study found that two out of five respondents would “definitely” or “probably” use a food delivery service directly from a hotel if it was available.

The addition of a delivery option for guests could help to fill gaps if a hotel opts to reduce its in-house dining service, and can augment existing loyalty programs with more options for microburn that tap into guests’ desires for local flavors.

And while there are challenges related to third-party delivery – such as logistical questions around whether deliveries go directly to rooms or to the hotel lobby - whether to pursue a shared payment model, most hotels recognize this growing trend as both inevitable and necessary to satisfy guests and preserve their margins.