Kosher tourism big business for hotels
 
Kosher tourism big business for hotels
26 JUNE 2014 6:05 AM

Once little-known to most hoteliers, group business from Orthodox Jews has emerged as a prized and profitable niche market.


GLOBAL REPORT—On 22 April, under the headline “Passover Inc,” the Wall Street Journal revealed what for years had been a fairly well-protected secret in the hotel industry—that kosher tour groups of upscale Orthodox Jews represent a lucrative and growing niche segment of the hotel market.
 
Kosher groups will spend $175 million next year on Passover-related travel alone, according to the paper, with much more being spent on other major Jewish holidays, as well as for weddings, bar and bat mitzvahs, and other social events.
 
Hotels from New York to Florida, Arizona to Hawaii, are reaping the rewards of what are often full buyouts for 10-day Passover bookings. And the business—typically organized by specialized tour operators or kosher caterers—even extends to more exotic destinations such as the Caribbean, Monaco and Africa.
 
More hoteliers are chasing the opportunity as a result. Doing so requires extensive considerations and planning, such as the creation of or conversion to a kosher kitchen and painstaking adherence to the other practical religious requirements.
 
Kosher business “is not only growing, but in terms of our market as a brand, there is enormous affluence in this market and these groups are looking for a true luxury experience,” said Bruce Seigel, market director, sales and marketing, for the two Ritz-Carlton properties in Naples, Florida. 
 
For the past three years, the 295-room Ritz-Carlton Golf Resort, Naples has done a Passover buyout with MD Passover, a specialized division of New York-based Mark David Hospitality that also does a buyout of the Ritz-Carlton, Dove Mountain in Arizona.
 
However, it's not just luxury hotels that are getting the business.
 
The 247-room DoubleTree by Hilton Tarrytown, in Westchester County, New York, gets an annual Passover group that books more than 50% of its rooms via kosher caterer Sovah Catering in Brooklyn, which has a large Orthodox population. 
 
“We also get business for other major Jewish holidays such as Rosh Hashanah, Yom Kippur and Hanukkah,” said Linda Ferone, executive director of sales and catering for the hotel, which is majority-owned by Orthodox Jews and features a permanent kosher kitchen. 
 
The 247-room Curacao Marriott Beach Resort & Emerald Casino in Curacao gets between 75 and 200 room bookings for Passover from Latin and South America, said director of sales and marketing Jose Castillo. For the past two years, the hotel—which bills itself as having the only permanent kosher kitchen in the Caribbean— also has gotten kosher wedding and bar/bat mitzvah groups. Last November, for example, a wedding party booked 200 rooms.
 
Castillo does dedicated advertising, promotion and public relations to book kosher business directly with event organizers instead of through tour operators or caterers.  
 
Upping the game
In February, based on the Passover successes the company had enjoyed in Florida and Arizona, Ritz-Carlton announced a first-of-its-kind partnership with MD Destinations, another division of Mark David Hospitality, to bring kosher groups and events to 13 U.S. and Caribbean properties year round. That number is expected to grow to 20 by the end of June, said Moshe David, managing director of Mark David Hospitality.
 
“The deal is truly revolutionary for the kosher catering industry,” David said, explaining the key innovation is that Ritz-Carlton assumes the highly-specialized functional role, under the auspices of MD Destinations and the Orthodox Union, traditionally played by a kosher caterer.
 
Seigel stressed that for Ritz-Carlton the appeal is “full engagement of the Ritz-Carlton brand, the Ritz-Carlton customer and the Ritz-Carlton experience.” In other words, he said, a high-profile commitment to kosher business is a perfect fit for the brand.
 
After extensive research, Atlantis Paradise Island also has made a major commitment to kosher groups and events, said VP of group marketing and sales John Washko, who recently completed a three-year deal with a kosher operator that will bring groups to Atlantis three times a year. 
 
“We looked at the business and we said to the organization we made the deal with, ‘If we could put together what we need, which is some shoulder and off-season business, we can then look at the overall revenue of three programs a year and come up with something that makes sense that you can market to, including Passover,’” Washko said. “And we said, ‘We'll lose some room rate revenue over Passover, but we'll make it up over the other two programs. So over the course of the year, it will be a win for both of us.’”
 
Like Seigel, Washko said kosher business is a perfect fit for the Atlantis brand because it is typically family business. To demonstrate its commitment to the specialized niche, Atlantis is converting one of its kitchens to a year-round kosher facility. 
 
“We wanted to send a very clear message to the marketplace that we are serious about this market segment and that we are committing resources to it,” Washko said.
 
A profitable opportunity
Kosher groups offer a handful of distinct business advantages that translate directly to the bottom line.
 
For example, Ferone said, profit margins are bolstered by the fact there are no online-travel-agency commissions or promotional costs. No expensive advertising campaigns are required because the business can be targeted easily and pursued directly. All of that equates to a lower cost-of-sales.
 
In addition, 10-day Passover bookings are unmatched in their duration as well as their food-and-beverage consumption. 
 
Unlike most other groups, Seigel said, Passover and many other kosher groups eat 100% of their meals on property.
 
“Passover groups, in particular, are incredibly intense F&B events,” Seigel said. “When it comes to this business, F&B is the whole game.”
 
However, he noted, because the hotel does not buy the food for Passover and other kosher groups, a deal must be struck to compensate for lost revenue and profit margins.
 
“For Passover, you have to look at your market and your comp set and whether you're going to benefit from a 10-day program that's purely group, with no transient,” Seigel said. “That is your No. 1 revenue-management decision. 
 
“But from a financial perspective, you have to look at the value of the incrementality. A good example is that if you're going to do X revenue during the same period historically, what do that X revenue and profit look like? Then you have to compare that to the Y scenario of what this business would bring you based on the best deal you can negotiate. So you need to know the incremental value of this business, because there is displacement, such as turning away your transient business or any other local catering business.”
 
On balance, he said, Ritz-Carlton has determined that kosher business clearly makes solid business sense.
 
“You're never going to go through the huge effort that is required to accommodate this business,” Seigel said, “just to break even against what you would normally do without it.”
 

1 Comment

  • Perhaps this will create a holiday awareness June 26, 2014 6:07 AM

    If this is big biz, then perhaps the meetings & hospitality industry and its associations will stop holding meetings over Jewish holidays!

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