The Great Recession has affected every business sector, hotels and resorts included. The number of new properties being built has decreased significantly as the lack of available financing and continued economic uncertainty remain major obstacles. “New room supply growth will remain muted for the overall industry in the coming years,” says Vail Brown, vice president of global sales and marketing at STR, a global hotel research company.
What has not decreased is the number of renovations, restaurant and spa build-outs, and amenity upgrades underway at existing properties, which means those in charge of executing meetings can expect refreshed and rejuvenated spaces.
“Today, meeting and program managers are seeking ways to create an experience for their attendees that goes beyond traditional learning and networking. Enhancements must include more than the standard hard- and soft-goods renovation, down comforters, and rain showers,” says Emogene Mitchell, president and CEO of Mitchell’s Meetings and Events, based in Arlington, VA. “Offering unique food and beverage and bringing lifestyle into the hotel and meeting experience can help resorts rebound. This, in turn, will give planners the value-adds that they need to make the value proposition to book resorts.”
In 2008, the U.S. lodging industry spent $5.5 billion on capital projects, according to Dr. Bjorn Hanson, divisional dean of the New York University Preston Robert Tisch Center for Hospitality, Tourism, and Sports Management. “That number dropped to a low in 2010 to $2.7 billion. That amount falls below the necessary level to just maintain facilities. Part of what we’re seeing now is catch-up on amounts that need to be spent before there’s further deterioration to the point that guests start to notice, which causes shifting in market share. I have a 2011 forecast of $3.5 billion being spent, which is not enough to recover from the low level of expenditures in 2009 and 2010.”
Not enough for a recovery, but a marked improvement. And those dollars will be spent primarily on projects that visitors will notice—“guest-facing” improvements, according to Hanson. Upgrades are being targeted at spas, fitness centers, and restaurants as opposed to computer systems, kitchens, storage areas, or employee parking. Even lobbies are being transformed into multi-use spaces where groups can eat, drink, work, socialize, and, sometimes, take in museum-quality artwork.
World-class artwork is at the forefront of the 1,306-room Grand Hyatt New York’s recently completed $130 million renovation. The hotel commissioned artists and designers to re-animate and re-energize the public spaces of the hotel. Multiple works by sculptor Jaume Plensa, known for his monumental public projects in Madison Square Park in New York City and Millennium Park in Chicago, are positioned in the hotel lobby and serve as the area’s centerpiece.
Spas and Fitness Centers
Many hotels and resorts have introduced name-brand fitness centers and spas as a way to differentiate themselves and to bump up offerings while offloading the bulk of the investment on a partner. Hotels are pairing up with brands like Exhale, Core Performance, DavidBartonGym, and SoulCycle.
“Hotels are now trying to create a lifestyle for their guests,” says Julia Sutton, chief operating officer of Exhale Enterprises, which runs 18 spas in the U.S. and the Caribbean, half of which are in partnership with hotel projects. “Hotels can no longer get away with putting a gym in or a regular spa.”
Annbeth Eschbach, president and CEO of Exhale Enterprises, notes of a trend toward branded spas with a wellness model that draws business from the local community while also offering the fitness facilities, classes, and spa services of interest to transient guests and meeting attendees. Eschbach attributes this to the fact that it is not enough to offer just a spa and fitness center. The appeal must be broader than that—healthy living—and the quality has to be on par with the best freestanding brands. Hotel operators are not spa and fitness experts and therefore usually end up losing money running their own spas or gyms. Also, those hotels that have developed in-house yoga or fitness programs do not get the traction an established brand does.
“When looking for properties for our events, we would not consider a venue that did not have an incredible spa and fitness center that offered yoga and fitness programs,” says Marni Vasquez, who is the senior executive coordinator for the NCMIC Group, an Iowa-based insurance organization. Spas are so important to her group that during the site inspection, she meets the spa coordinator and tours the space. “Our attendees are looking for that incredible experience in not only the spa and fitness center, but at the restaurants on property, and our guests definitely would be lured by brand and a celebrity experience throughout the venue.”
Signature Restaurants
In response to the demand from groups like Vasquez’s, hotel and resorts operators have been adding celebrity-chef restaurants at an unprecedented rate. Joseph McInerney, president and CEO of the American Hotel and Lodging Association in Washington, DC, reports that during the International Hotel, Motel and Restaurant Show, held in November at the Jacob K. Javits Convention Center in New York, over 500 attendees came to the keynote luncheon, “Thought for Food: How Celebrity Chefs Cook Up Business.” Panelists included famed chefs Daniel Boulud of Restaurant Daniel and the Dinex Group; Floyd Cardoz, executive chef and partner of the North End Grill; and Dan Kluger, executive chef of ABC Kitchen.
“Everybody wanted to hear what these chefs had to say,” says McInerney. “They want to know what they can do in their own towns.”
There is no better example of the explosion of celebrity-chef driven restaurants than in Las Vegas. When Wolfgang Puck opened a second Spago in the Forum Shops at Caesars Palace in 1992, he was a pioneer. Since then, every high-end hotel opening in Vegas has featured at least one celebrity chef restaurant. Emeril Lagasse, Todd English, Mario Batali, Thomas Keller, Joel Robuchon, and Bobby Flay are just a few celebrity chefs with Las Vegas eateries in hotels.
“Signature restaurants in hotels are important to me and to the groups I book meetings for. For instance, the Ritz-Carlton in Puerto Rico is amazing: both Il Mulino and BLT Steak are there. New Yorkers love it,” says Norma McGrody of New York City-based Meeting Management Associates. “Although incentive programs usually go off-site on some nights, everyone appreciates fine dining within the hotel. And should the program be a sales meeting, advisory board, or user conference, the attendees often prefer dining in the hotel since meetings often continue throughout the evening.”
Having a restaurant with name recognition is a win-win for the hotel and the client, says Sims Foster, vice president of bars and restaurants for the Denihan Hospitality Group. The Denihan Hospitality Group owns and operates boutique hotels, many of which feature celebrity-chef driven restaurants and bars such as Geoffrey Zakarian’s The National Bar and Dining Room at The Benjamin in New York City, David Burke Kitchen at The James Hotel in New York City, Marcus Samuelsson’s C-House at the Affinia Chicago, and Art Smith’s Art and Soul at the Liaison Capitol Hill in Washington, DC.
“The days of food and beverage consisting of a lame hotel restaurant that is just an amenity to the hotel guest are over. Today, guests expect the restaurant to have a story, to reflect something local, to be a brand,” says Foster. “They are looking for an identity that matches with the hotel, an experience, not just the convenience of walking downstairs.”
Goods, Services, and Amenities
The Ritz-Carlton, Charlotte—already home to an outpost of Laurent Tourondel’s BLT Steak—has introduced some snazzy new services in preparation for the 2012 Democratic National Convention is to be held in the city. The 146-room hotel is offering complimentary transportation in a BMW 7 Series hybrid vehicle and has installed an electric vehicle charging station in addition to offering free parking for electric and hybrid vehicles. No-charge Trek bicycle rentals are also available via the hotel’s bike valet.
Many properties have added iPads to the free amenities they offer to guests. These are often pre-loaded with an app that allows guests to order food, browse hotel amenities and local attractions, request wake-up calls, schedule housekeeping, message hotel staffers or other guests, or arrange a car service. Wyndham has made iPads a brand standard, meaning all hotels are required to provide them for guests in the coming months. This is indicative of a larger trend to give people not just what they expect to have, but what they wish they had. “People want all the electronic gadgets that they have at home, plus more,” explains McInerney.
Another area of the hotel-resort experience that has received an upgrade is in-room amenities. In many cases, they can differentiate a brand. “It’s all about providing something above the competition; packing more into the experience to draw people in,” says Nima Samadi, a senior analyst who specializes in the hospitality industry for IBISWorld, a market research firm.
Fairmont Hotels & Resorts recently partnered with New York perfumer Le Labo to create a new amenity line featuring the scent Rose 31, which derives its name from the dominant note and the number of ingredients. Fairmont guest rooms will contain shampoo, conditioner, body wash, body lotion, and soap products with the Rose 31 scent.
Similarly, Affinia Hotels has announced a partnership with Philosophy—the first between the retail spa brand and a hotel company. Philosophy will provide bath and shower products for Affinia’s guest rooms, after being selected following guest-test programs last summer, which showed guests liked the brand recognition, ability to purchase the products in stores, and the fun messages on the bottles, which are emblazoned with sayings like “When Hope is Not Enough” or “Falling in Love.”
Affinia, with boutique hotels in New York City, Chicago, and Washington, DC, has also launched the Tender Loving Comfort (TLC) program—and named a chief comfort officer. The program allows guests to chat with hotel staff in the lobby during “comfort hours” and borrow items like a Nintendo DS, an iPod Touch, a Wii console, an XBOX Kinect, and yoga kits.
Whether they are small touches like iPads, gaming consoles, and high-end amenity products, or larger moves like major restaurant additions and spa build-outs, the upgrades keep coming for hotels and resorts, even if the number of new properties itself is stagnating. The investment shows a decisive interest in securing a competitive edge and can only benefit the groups looking to meet at these properties.