Walls are coming down and drinks are being served to make hotel lobbies social centers that bring in more money.
Hotels want you to stay a while – in their lobbies.
Long treated as dead spaces that hotel guests raced through on the way to the elevator, lobbies 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.
Companies like Marriott, Hyatt and Starwood are betting that more vibrant lobbies will leave guests – especially younger ones – with a better feeling about their stay, even if their room is bland. Hotel owners say the investments are beginning to pay off, not just in alcohol sales, but in their ability to charge higher room rates.
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“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.”
The changes are meant to attract travelers like Michael Coscetta, a 31-year-old consultant from Wantagh, N.Y., who spends about 90 nights a year on the road.
“Working in a hotel room feels claustrophobic,” says Coscetta, who instead takes his laptop and heads to the lobby or a nearby coffee shop.
Steve Carvell, associate dean for academic affairs at Cornell University’s School of Hotel Administration, says younger guests “very much want that sense of not feeling alone, even though they are.”
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, Inc. 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 Inc. – the company behind trendy W Hotels – 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, says 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.
Grand old luxury hotels, like New York’s Plaza and Chicago’s Drake, have long relied on their public spaces to help distinguish themselves.
But as hotel chains developed in the 1960s, designs became standardized and bland. Guests no longer selected hotels by the looks of the lobby but on the brand’s reputation.
A brief lobby renaissance kicked off in 1967 with the Hyatt Regency Atlanta. The hotel’s 22-story atrium and rooftop revolving restaurant made it a tourist destination. Similar hotels soon popped up in San Francisco, Houston, Detroit and Los Angeles. But the oil crises of 1973 and 1979 made heating and cooling giant atriums impractical.
Increased use of wheeled suitcases reduced the need for bellmen and the space they occupied. The lobby became a place to swipe a credit card, get a room key and leave. By the 1980s, they resembled bunkers, with low ceilings and few windows.
“The industry really failed by letting the lobbies get hollow,” says Marriott CEO Arne Sorenson.
Then in 1984, Ian Schrager and his business partner Steve Rubell – the men behind the famed 1970s nightclub Studio 54 – opened the Morgans Hotel in New York. The rooms were tiny. But its stylized lobby redefined the industry.
Robert Mapplethorpe photographs were commissioned for the walls. Nightclub music blared. When it first opened, locals waited behind red velvet ropes to enter.
“The lobby established the pricing of the hotel,” says NYU’s Hanson.
It would take more than a decade for chains to catch on. Then, in 1998, Starwood opened the W New York. The lobby became the “living room.” Forget food. The emphasis was on drinks with higher profit margins. Guests clamored at the bar to buy $14 cosmopolitans and sour apple martinis.
Other hotel chains eventually followed with their own boutique brands, including Hyatt’s Andaz and InterContinental’s Indigo. Marriott partnered with Schrager to launch its own “lifestyle” brand. But traditional convention, airport and city center hotels were largely ignored until now.
Revamping lobbies is a delicate balancing act: attract younger road warriors but don’t turn away baby boomers with loud, thumping music.
Sheraton’s first lobby modernization came in 2006 when it partnered with Microsoft to provide free computers. Soon it was selling Starbucks to lingering guests.
“As people spent more time in the lobby, they were more willing to purchase food and beverages,” says Hoyt Harper, the senior vice president in charge of Sheraton.
Nearly 15.1 million – or half of – Sheraton guests use the computers each year. Just 5.8 million use the gym.
Pushing through costly renovations isn’t easy. Most chain hotels are owned by smaller companies that must meet the larger brand’s standards in exchange for using the Sheraton, Marriott or Hyatt name. Some need convincing to understand the benefits of spending millions on a lobby revamp.
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.
“If they are comfortable in the space and surrounded by others, they will stay and spend more money,” says Destination’s Slosser. “They become not concerned about the price. They’re much more interested in staying there and enjoying their life.”
Scott Mayerowitz can be reached at http://twitter.com/GlobeTrotScott.