GLOBAL REPORT—Before a recent night on the town, Robert Habeeb swung by Roof, the rooftop bar atop theWit – A DoubleTree Hotel in downtown Chicago.
He does this often. As president and COO of First Hospitality Group, he likes to keep tabs on one of the crowned jewels of his management company’s portfolio. But he also enjoys a fine cocktail.
The space is transformational, Habeeb said. A given night could see white-collar professionals, followed by millennials followed by yuppies. The space welcomes all people, he said. It just happens that the vast majority are locals.
Habeeb didn’t conceive of Roof this way. For that he credits Scott Greenberg, CEO of ECD Company, which owns and developed theWit and its various outlets, Roof included.
“He envisioned the space and believed it would drive local traffic,” Habeeb said. Five years after opening, Roof draws 90% of its guests from the local community.
“Historically, hotels don’t do that.”
That’s all changing, however, as hoteliers begin to target non-guests for their restaurants, business centers and fitness facilities in a bid to drive ancillary revenue.
A the 250-room Ritz Carlton Lodge, Reynolds Plantation in remote Greensboro, Georgia, GM Ralph Vick leans heavily on the 3,500 members of Reynolds Plantation residential community that surround it.
“Our customer base from outside the hotel guest is extraordinarily limited, and it’s almost predominantly Reynolds members,” he said.
The property has three restaurants on site, two of which routinely see half their covers from diners not staying in the hotel.
Beyond F&B
Food-and-beverage outlets such as restaurants and bars are typically the best targets for locals, sources said.
First Hospitality Group routinely partners with popular chains and chefs to fill its hotels, Habeeb said. The Holiday Inn Hotel & Suites Chicago-O’Hare, for example, houses a Harry Caray’s Italian Steakhouse that contributes a significant share of total revenue.
“We’ve developed a number of hotels that we partner with high-power restaurants. … Consumers really identify with the high-power restaurants,” he said.
But there exist other opportunities to drive ancillary revenue.
And Marriott International has rolled out Workspace on Demand in 35 hotels in the United States. The program takes previously unused public spaces and transforms them into de facto meeting rooms bookable by the hour for groups of one to 12 people.
“It’s about the individual worker, the mobile worker. Operations are reducing office space, entrepreneurs are on the rise … and more people need alternatives or third spaces in which to work. …” said Peggy Roe, VP of global operations services for Marriott. “What we see is increasingly people needing third spaces to work.”
The necessary equipment is installed by partner LiquidSpace, which takes a commission of each booking fee. Hoteliers are required only to pay for marketing materials up front, the costs of which are recouped in two to three bookings, said Katie Tyson, business lead for Workspace on Demand by Marriott.
“From an owners’ perspective, there’s not a lot of risk, and there’s an opportunity to drive some incremental revenue,” she said.
“Most hotels, lobbies and boardrooms, a lot of them sit empty during the day. Why not allow people to come in during the day and allow them to use our space? It creates awareness, generates food-and-beverage sales—all types of things,” Roe said.
Marriott expects to have introduced the Workspace concept into as many as 400 hotels by year end, Tyson said.
Rewards … and risks
Driving incremental revenue from local residents and businesspeople can provide a boon to the bottom line, provided it does not come at the expense of paying guests, sources said.
“It’s occasionally a bit of sticky wicket when you’re in a resort environment that’s part of a large membership base. Occasionally you’ll take a little criticism from the members that we’re tailoring to the guest and we’re not paying enough attention to them. On the flip side you’ve got the resort guest who’s saying, ‘I’m paying $400 a night,’” Vick said.
The marketing team at the Ritz-Carlton Lodge works around those conflicts by targeting locals for slower periods. During the off season, for example, the property will offer heavily discounted spa packages to entice residents to fill the void left by guests.
Marriott’s associates managed Workspace in a similar fashion, Tyson said. The spaces are only bookable during certain low-usage periods—never during the high-traffic morning check-in or during happy hour at on-property bars.
Associates need to be trained to address the needs of guests and non-guests alike, Hardt said.
“Our highly trained ladies and gentlemen understand the needs of each and every guest and member and cater to it with efficiency and perfection,” she said. “It is important for us to listen to our guests and to be at the pulse in order to know their needs, preferences and demands, and to consistently improve our services and facilities.”
The mixing of locals and guests is not always a bad thing, Habeeb said. The crowds at Roof give the venue more energy and credibility with guests.
The latter is especially crucial, said Michelle Russo, president of asset-management company hotelAVE. As guests continue to seek more authentic experiences during their hotel stay, they often look to locals for guidance.
“With hotel restaurants you want to maximize your local capture to generate more revenue,” she said. “In-house guests like to go to restaurants that are more popular with the locals.”