Business model innovation in the Indian hospitality industry: A study of the willingness to outsource specialty restaurants in luxury hotels

This study aims to explore the reasons for the rise of independent, stand-alone restaurants and ascertains the benefits of outsourcing food and beverage (F&B) in luxury hotels in India from the perspectives of the strategic partners involved in such an alliance. The study also proposes different formats for F&B outsourcing in luxury hotels.

An exploratory study was carried out by collecting primary data from 16 Hotel General Managers and F&B operations experts through qualitative, semi-structured, personal and in-depth interviews. NVivo12 software was used to carry out a qualitative thematic analysis of the data. The primary data collected were triangulated with secondary data gathered through literature review of academic papers, industry reports and studies on the trends of restaurants in luxury hotels being outsourced.

The study focusses on the antecedents of the rise of stand-alone restaurants in the Indian hospitality industry. To combat the competitive disruption arising because of this trend, the study posits the business model innovation of outsourcing F&B operations in luxury hotels.

The benefits of a strategic alliance from the perspective of both parties – the luxury hotel and Michelin-star chef or branded/marquee restaurant – are elucidated. Further, three broad formats, which can be adopted for speciality restaurant outsourcing are also proposed. Practitioners, researchers and educationists in the hospitality industry would find the implications of this study useful in the context of the present customer-centric business environment where hotels are constantly striving to meet the exponentially rising bar of guest expectations in an increasingly globalised milieu.

The study proposes a preliminary road map for internationalisation of F&B operations through the business model innovation of outsourcing operations of in-house specialty restaurants by luxury hotels in the Indian context.