Hotels focus on lobby renovations to boost room rates, profits

 

The lobby at the newly renovated Courtyard by Marriott Capitol Hill/Navy Yard includes a variety of seating options, including this communal table.

For years, beds and showers were the focus of hotel renovations, but the hotel lobby has come into its own. More and more are being transformed into places to work, surf the Web or meet friends for a drink.

Large, traditional hotels are spending billions in renovations to try to mimic the style and financial success of luxury and boutique hotels, which have always drawn free-spending crowds to their lobbies. Walls are being torn down to make lobbies feel less confined. Communal tables are popping up. Wine lists are being upgraded. And quiet nooks are being carved out that give business travelers space to work but still be near the action.

Hotel owners say the investments are beginning to pay off, not just in alcohol sales, but in their ability to charge higher room rates.

"People want to go where people are," says Michael Slosser, managing director of operations for Destination Hotels and Resorts, a group of 40 hotels in the U.S. "They want to go to be seen, to relax and to people watch."

U.S. hotels are forecast to spend $5.6 billion on capital improvements this year, up 10 percent from 2012 and more than double the $2.7 billion spent in 2010, according to a study by Bjorn Hanson, dean of New York University's hospitality school. The bulk of that money pays for new beds, showers and other room improvements. But Hanson says a "proportionally record amount" of money is going to reconfiguring lobbies.

Marriott International is freshening up lobbies in its namesake brand with "Great Rooms" that feature free Wi-Fi, comfortable seats and menus stocked with small dishes and local craft beers. The concept was first tested in 2007 and is expected to be in 70 percent of the 550 Marriott hotels worldwide by the end of the year.

Starwood Hotels & Resorts Worldwide launched a $4 billion lobby revitalization of its Sheraton brand in 2009. Nearly half of the 427 Sheratons worldwide now have lobbies with communal areas, modern rugs, improved lighting and flat-screen TVs at the bar.

Additionally, Sheraton has tried to inject a bit of pizazz to all its lobbies by adding upscale wine lists, each rated by Wine Spectator magazine.

Having better wines gives waitresses "something more to talk about than `Can I take your drink and where are you from?"' says Rick Ueno, general manager of the Sheraton Chicago.

It also gives the hotel more revenue. In the first six months of this year, the hotel bar sold 18,000 glasses of wine. That's 24 percent more than the same period last year. At $14 a glass, that adds up to $50,000 more in revenue.

Nearby, the Hyatt Regency Chicago spent $168 million to spruce up its lobby, adding clusters of chairs and couches, a grab-and-go marketplace and a restaurant that flows into rest of the lobby. Similar renovations have taken place at Hyatts in New York, Atlanta and San Francisco.

Robert Mandelbaum, director of research information services at consulting firm PKF Hospitality Research, said the changes are "very much guest driven."

"It isn't fun being one of 20 business people sitting by yourself in a hotel restaurant reading a magazine, eating the $19.95 steak special," Mandelbaum says.

While overall hotel food and beverage revenue has fallen 27 percent in the last five years, sales in hotel bars have grown 5 percent, according to Mandelbaum.

For proof that the investment works, look no further than Destination Hotels and the $26 million renovation of its seaside L'Auberge Del Mar resort in Southern California. Its new living room-style lobby features large doors that open out to the ocean, allowing the breeze to flow through. A fireplace warms guests on cold days as they enjoy $25 charcuterie plates and $12 hibiscus margaritas.

Prior to the renovation, the hotel sold $450,000 worth of food and drinks in its lobby each year. Today, it sells more than double that.

Other recently announced lobby renovations include:
  • Pechanga Resort & Casino, the largest resort/casino in the Western United States, started a multimillion-dollar renovation this week. The resort’s hotel lobby, guest check-in, VIP check-in lounge, three restaurants and retail gift store will all close to the public during the project. 
  • Renovation is nearing completion on the historic Lancaster Hotel in Austin, Texas, which opened as the Auditorium Hotel in 1926. The extensive redesign of the 93-room property included the hotel’s lobby, which now opens up to the surrounding downtown streetscape with windows introduce more natural light.  The lobby was designed to be more of a gathering space that flows into the reception area, meeting space and The Bistro restaurant. 
  • The Courtyard by Marriott Capitol Hill/Navy Yard in Washington, D.C. completed a major lobby renovation. The hotel, managed by Crestline Hotels & Resorts, now features the brand's new Refreshing Business lobby concept, designed to give travelers the flexibility to work and socialize however they choose while on the road. Flexible seating options range from a communal table in the middle of the action, to more private booths with HD televisions, to a more intimate, semi-enclosed lounge area.
 

Suggested Articles

In addition to a new deal to expand in Denmark, the chain also is growing in France, Greece and Vietnam.

The new styles offer an array of finish choices, allowing designers to create their own interpretation of the Mid-Century-Modern style.

The textiles supplier has acquired the Warrenville, Ill.-based wholesale distributor to expand its business in the Upper Midwest.