Consider benefits, challenges of mixed-use hotels

restaurant with tables and chairs
By adding a restaurant, a hotel can bring in extra foot traffic and raise brand awareness. Photo credit: Getty Images/dit26978

There are close to 5 million hotel guests each night in the United States and competition in the market is continuing to rise. One way to distinguish your hotel from others is to rethink the space and transform it into a dynamic mixed-use property. To offer a competitive edge in the industry, developers increasingly are combining hotels with projects such as restaurants, fitness centers, co-working spaces, office, residential and other offerings.

The Harvard School of Design describes mixed-use as “three uses in one building, where no component makes up more than 60 [percent] of the overall space.” Typically, uses include hotel, office, residential, entertainment, retail and food and beverage. Before deciding if mixed-use is right for your property, consider the following:

Benefits of Mixed-Use Properties

Aside from increasing the property’s foot traffic, mixed-use hotels create exterior energy and provide a “one-stop-shop” experience for guests. The opportunity to partner with a local spa or a restaurant group with distinct concepts can be instrumental in a mixed-use property’s success. Finding the right mix of retailers and entertainment options will not only increase brand awareness for your hotel, but the properties provide distinct experiences guests are unable to get at other area hotels.  These experiences also can be integrated into the hotel by potentially using an on-site retailer’s items as in-room amenities, such as minibar offerings or welcome amenities.

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When choosing tenants for your development, it’s important to source locally and ensure the businesses reflect the energy, theme and experience of your property. Overall, they should represent what the development is all about. It is crucial to analyze the market to best appeal to both local and out-of-state travelers. For example, if your hotel is located in a metropolitan area, consider tenants that would be beneficial for business travelers such as meeting and conference space, fine-dining options, rooftops, outdoor spaces and coffee shops with Wi-Fi and other key amenities. Mixed-use hotels can transition your hotel into a lifestyle hub to come back to again and again rather than simply a place to stay.

Additionally, mixed-use allows you to focus on more specific travelers, which can increase your development’s sales performance. Integrating mixed-use can allow hotels to bundle packages and offer specific, themed staycations by partnering with tenants throughout the mixed-use development. If your development has a massage retailer and a restaurant with an extensive bar, you can package the stay as an “experience” and offer bundled deals to benefit both the tenants, hotel guests and other area consumers. These packages can help your property perform better on weekends and appeal to locals and visitors alike.

Challenges of Mixed-Use Properties

Mixed-use generates a greater demand, so one crucial component when expanding an existing hotel to mixed use is ensuring your development has the capacity to hold additional tenants and guests. For example, developments need to ensure there are ample parking options and parking lots are accessible to all visitors to the property, not just hotel guests.

A potential challenge can arise if tenants aren’t reflecting the hotel brand. Communicating and working with multiple tenants at once to ensure this synergy can be difficult to manage. Mixed-use hotels must rely on tenants to help execute a full encompassing experience; therefore, a consistent representation and respect between hotel and tenants is crucial.

Additionally, when considering this type of space, make sure room counts can be supported in overall development.  Offices can provide potential business travel and meeting space demand, while residences can bring F&B demand across multiple outlets. However, there needs to be a balance between properties within the development to ensure the hotel isn’t overshadowed or overbuilt in terms of capacity and overall look and feel.

Is Mixed-Use Right For Me?

Mixed-use developments start with a vision. This requires understanding and researching which tenants to bring in, as well as assessing what they are for and who they are appealing to. Be thorough and diligent when considering this format so that your property is the right mix for the right community.

Many mixed-use hotels go for the “work, play, stay” experience, which offers guests a one-stop-shop. When including restaurant tenants, consider the overall experience you are trying to create. Mixing F&B options into your hotel should provide guests with diverse options for a cohesive dining experience—include options for all three meals and late night. Instead of traditional brick-and-mortar restaurants, you may consider a food hall or public market to increase foot traffic and expand your offerings.  Popular mixed-use developments may also include salons, spas and fitness centers into their properties to create a more relaxing, therapeutic wellness experience. Additionally, it’s necessary to find creative avenues to highlight the entire development. Creating a holistic marketing strategy that accurately reflects your brand and desired image can be an important key in introducing your property and the additional amenities a mixed-use development offers.

Each part of the mixed-use hotel supports one another by providing the space and convenience to offer a constant stream of potential guests. Properties coming together for mixed use have the potential to increase foot traffic and gain customers in a new, exciting way.

Jonathan Webster is VP of lodging for Geronimo Hospitality Group. For more information, visit www.geronimohospitalitygroup.com.

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