Jan. 4--MUMBAI, India -- The booming business and tourism trades are driving up food and beverage revenues for hotels this year, much in line with the trend for the past two years. One of the main drivers for F&B, apart from the guests consuming food and beverages, is the meetings and incentives segment, popularly called MICE. About 20 percent of all hotel guests are part of either MICE or tours.

On an average, hotels earn about 28 percent-30 percent of their gross revenues from F&B, as per HVS International, down from its peak of 31 percent in 2002-03.

For the half year ended September '06, for example, the Taj hotels earned Rs 191 crore in F&B, up 16 percent from the same period in 2005-06. This was 34 percent of their April-September '06 sales of Rs 563 crore, against 38 percent in April- September '05.

This drop is mainly because of higher room capacity coming in since 2005 at much higher average realizations.

Interestingly, Taj earned 18 percent higher F&B revenues even in the off-peak first April-June quarter, which underlines how the hotels business is reducing seasonality in F&B. For Oberoi, F&B accounted for 39 percent of their 2005-06 revenues of Rs 756 crore, against 33 percent the previous year. F&B revenues would see another fillip for the third and fourth quarters of 2006-07 as the peak tourist season in India is presently underway.

Higher F&B revenues also come at a higher cost, unlike in rooms, where the costs of maintaining a room are much lower. For instance, HVS's analysis shows a hotel typically spends 54 percent of its total costs on F&B, which includes sourcing food items, storage, transportation, waste and so on. By contrast, hotels spend 15 percent on room costs, chiefly linen and maintenance.

Rooms once made only need replacement items, F&B always needs fresh, every day products whose price can vary significantly around the year and of which a very limited inventory can be safely maintained. Hence a rise in restaurant guests also means a rise in costs. However, the ratio is still very much in favour of the hotel. F&B revenue per available room (RevPAR) has climbed to Rs 4 lakh in 2004-05 from Rs 2.1 lakh in 2000-01.

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