CHICAGO—When First Hospitality Group (FHG) acquired the management contract for the 297-room Holiday Inn Hotel & Suites Chicago-O’Hare, part of the package was a down-to-earth eatery called Harry Caray’s, named after the famed baseball broadcaster who became an iconic presence here in the Windy City.
As a full-service IHG brand, the Holiday Inn was expected to offer f&b, and First Hospitality was used to having a food outlet as part of its management contact where appropriate.
The decision to keep the restaurant turned out to be more than just a good fit. It became—what else?—a home run, according to Robert Habeeb, FHG’s president/CEO.
In the seven years since inking that agreement the sports-themed restaurant has become a favorite watering hole and a sports celeb hot spot and the tenant/landlord relationship with FHG has proved mutually beneficial.
Habeeb said when his company took on the hotel, a sit-down was had with the team of the Harry Caray’s Restaurant Group, led by ex-Hyatt Hotels exec Grant DePorter—whose late father, Don, was a key executive at Hyatt—and decided to “exploit the daylights out of it.”
Officially know as Harry Caray’s Italian Steakhouse, there are three such restaurants in the Chicagoland area, although the Holiday Inn boasts the only one in a hotel. There also are a Harry Caray’s Seventh Inning Stretch at Midway Airport, a Harry Caray’s Tavern at the Navy Pier and a catering and events operation as well.
To capitalize on the restaurant’s popularity FHG emblazoned its shuttle vans with the restaurant’s logo and the restaurant and hotel do “a lot” of cross promoting, said Habeeb. “That’s helped us build occupancy in the hotel and traffic in the restaurant. It’s been a win/win situation.” So much so, the restaurant at the Holiday Inn is expanding for the second time.
The restaurant also does the food and beverage for the hotel on a revenue-share basis.
First Hospitality Group takes “a prescriptive approach” when it comes to f&b. “In our urban hotels, even the select service, we like to build out restaurant space that either adjoins or is part of the hotel, and our first option is the Harry Caray’s model, which is to find a high-quality operator with a well-known brand and have them operate the restaurant,” said Habeeb.
Well aware of the paradox hotels in the midscale segment have faced over the years wherein hotels without f&b have been more profitable, Habeeb feels the industry’s view that f&b is a “necessary evil” has changed and that the Harry Caray’s is a prime example. “We feel food and beverage is a profit center. We see those restaurant outlets being great contributors to the overall profitability of the hotel…Harry Caray’s is a great brand, they run a good operation. It’s like the anchor of the hotel. People stay there because they like the Harry Caray’s experience.”
Technology also helps play a role, noted Habeeb, citing a consistency within food-prep operations at Hyatt Places and Hilton Garden Inns FHG has. “The old paradigm, which was if it’s a low-volume restaurant operation you’re likely not to have much food quality, is no longer the case.”
Now marking its 26th year, First Hospitality also has an in-house restaurant concept it can call into play when a strong operator can’t be found or the market might not attract such an operator.
While “hospitality” umbrellas both hotels and restaurants, Habeeb acknowledged the latter “is very specialized. The people that are good at it are good at it.”
And when they are, he noted, it pays off. “At the Harry Caray’s at O’Hare we probably make as much NOI off our revenue share as we would operating even a decent food and beverage operation ourselves. We get all the profitability without all the muss because the restaurant is that popular…it was just such a home run that it didn’t make sense to try and do something ourselves there.”
