Editor’s Note: Connecting the Dots is a series of monthly conversations with Michael Dominguez, President and CEO of Associated Luxury Hotels International. The series examines issues in the global economy that will “connect the dots” to be helpful not only in business but in life as well. This installment is moderated by Ashly Balding, Executive Vice President & Chief Sales Officer at ALHI.  

Ashly Balding: Mike, one of your favorite topics you're always speaking about is food and beverage. So, what cost and trends are you seeing right now? 

 

Michael Dominguez: Well, the funny thing is it's not my favorite topic. It's our Clients’ favorite topic, only because they always want to talk about it. So now it's become mine. There are some trends that I think are hard sometimes to comprehend because we hear the costs are going down and yes, costs are going down, but everything is still much more expensive than when we were in 2019. What we find is our Clients trying to talk to their stakeholders is where they struggle because their stakeholder doesn't understand. We literally had one of our Clients over the last four weeks that asked for a homework assignment because they had a boss that was asking them to stick to a 2019 food and beverage budget. Now, how is that even doable when inflation has been what it is. So, here's a couple of trends, and for all of the meeting professionals specifically, yes, food cost is coming down. It's still 19% higher than it was in 2019. Overall, that's just one data point. But we look at things and they're the things you really don't look at, and everything that's impacting food costs right now has to do with warmer weather conditions around the world. This has to do with Europe having two really warm summers, at the Mediterranean having a really warm summer, (and) South America having some really dry weather. So, what is that done? Here are the things that have really increased. I cannot believe I'm talking about eggs once again, but eggs are more expensive. And why are eggs more expensive? Because we've put down 20 million birds with a bird flu here in the United States. Now, the good thing is birds repopulate really fast, so it won't be here long, and we'll get that down. But at least for the next nine months, it's going to be a little bit of a headwind. But the things we don't think about: coffee has skyrocketed. The price of coffee beans has skyrocketed literally just in the last four months and that has to do with droughts, again in South America. Olive oil they call liquid gold, and it's called liquid gold because it is so expensive because of the droughts in the Mediterranean. True story: one of our Clients actually sent me an article, and I'm now using it in my presentations. Some thieves in Houston stole an 18-wheeler full of olive oil because it was worth $2.5 million.  

 

Balding: Oh, wow.  

 

Dominguez: That's the crazy part, but that's how expensive olive oil is. As expensive as that is, what's even more expensive is cocoa beans, which means chocolate is really expensive right now. Then probably, last but not least, is orange juice is five times more expensive than it was in 2019, and that has to do with the hurricanes we've had in Florida over the last few summers. Continues to bring down crops, and it's going to continue to keep pricing up. The biggest thing right now is pricing is going to continue to be there. My advice for Clients usually is make sure to talk to the hotels, talk to the chefs and find out what isn't increasing. Not everything is more expensive, but some of the things you don't think would be expensive are the expensive items. So that is a good, good opportunity to ask the question. Three years ago was all about pork, and pork was through the roof. That's when we had a swine flu. Right now, pork is really affordable, so there is an opportunity. Salmon is much cheaper because we're farming a lot more of it. Those are the things we should be looking at more than anything.