What’s it like to build a hotel for the first time? Architects always remembers their breakthrough venture. Like Sherpas assisting mountain climbers to the summit, architects assist these brave developers attempting to develop their first hotel property. Seeing them safely reach their goal, though, has revealed a “death zone” where they can see the summit is close, but oxygen is thin and conditions are not right: The numbers don’t add up. The concept has gotten off track and the risk is great.
That’s where experience is essential. The virgin hotelier needs to reach out to trusted advisers and helpers—confident, experienced “Sherpas” to help them pierce the fog of those last hundred yards so they, too, may plant their flag on the summit.
As a guideline, there are a few rules of engagement worth considering. While these rules are linked to design, ultimately, they’re guideposts for every step of the journey.
1. Let the marketplace drive the project. The market is usually correct. While clients can often get fixated on elaborate design ideas and unique amenities, savvy teams test those against comps and preference studies of tourists and business travelers. Each move has potential ROI if the owner-developer starts with market need and market intelligence. Then, the team translates the opportunity into the hotel program—which comes before design—and aligns with product, costs, operations and achievable rates.
As for architecture and design moves, it’s critical to design for the current market while also thinking about what your ideas could look like 20 years from now. With that in mind, watch trends—but don’t be trendy. Study enough to know how the market evolves. Allow flexibility, and for every design choice, try to be restrained. Successful properties engage the guest emotionally and prove to be memorable and special.
2. Engage a team that knows the numbers and business behind hotels. This raises a related concern: New hoteliers, who desire to be super creative and innovative, must match their ingenuity with advisers, builders, market analysts or other support players who need to know intuitively what makes sense and what doesn’t for a hotel project. The architect, for example, should be the rare breed who knows operations cold and can follow the numbers behind hotels—while knowing how square footages play a factor in construction costs and where added value can be achieved in design.
As the smart money says, before wisdom comes understanding, and
the same holds true for design wisdom. First, understand the data landscape, agree on it with every team member, and then you can tackle design successfully.
3. Truly achievable rates drive everything. As a corollary to Rule 2, rates are the touchstone for every programmatic, design and operational decision. Zooming out, ADRs prove up the construction budget; zooming in, room rates offer a way to test the feasibility of design features, dedicated square footages and interior aesthetic. There needs to be critical thought as to how to drive ADR five years down the road. For example, when designing the Peninsula in Beverly Hills on a very urban site, our firm and the client creatively figured out how to place villa suites on the site, recognizing the opportunity with these 16 keys to drive a higher ADR for years beyond the opening, and fostering an urban resort image.
4. Every square foot needs to generate revenue. First-time hotel teams often see their projects in black and white, with revenue spaces and non-revenue spaces. That’s a formula for disappointment: The hotelier’s goal is to translate every design move and every program element into monetary terms. Whether it’s a plus or minus for revenue, each detail should be factored into the overall operations scheme and the achievable room rates, F&B or ancillary revenues, to increase overall profitability.
Creativity is the key to many success stories. And often, the market shows that smaller is better. So, we often say, build it smaller, better and apply dollars more thoughtfully on the interiors for a successful guest experience.
5. Filter the developer mentality through design. For any new hotel—and especially boutiques—the developer mindset is vital to every design decision. But the hotel design is also a counterweight, bringing new ideas to the development strategy. Filtering the developer’s vision through the design process leads to breakthrough experiences and innovative operations strategies. This can be especially true when working with first-time hoteliers. While it might seem challenging to work with first-time hotel investor-developers, novice owners can often end up busting the mold, shaking the local market and revolutionizing the national hospitality scene.
As one real estate broker at Grubb & Ellis famously said, “Hotels are at the top of the heap in terms of risk.” But for the design-savvy developers who’ve taken on the arduous climb to the top of the boutique hotel mountain, the risk has been worth the significant potential of their vision. They succeed because once they know the rules and have met all the initial criteria, they’re willing to break some of those rules and ignore the conventional wisdom—and even take a bigger risk than the competition.
For the first-timer, it’s essential to find an architect “Sherpa” who really knows how these adventurous developers think. And for more seasoned hoteliers and developers, sometimes just thinking like a first-time climber will help you succeed, even if it’s your hundredth time climbing that big mountain.
Gary Koerner, AIA, NCARB, is a principal and founding partner of three, an architecture practice headquartered in Dallas. Involved in hospitality architecture globally for more than three decades, his firm national portfolio includes hotels such as Hotel Emma in San Antonio, TX; Rosewood Mansion on Turtle Creek in Dallas; Mandarin Oriental in St. Kitts; and the Peninsula in Beverly Hills; as well as senior living and luxury residential projects.
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