Originally seen HERE.
Though room bookings account for the majority of an average hotel’s revenue, many hotels rely on revenue from other sources, including food and beverage, parking, events and more. This is especially important in an era when building costs are significantly higher than they were even five years ago, and labor costs have not come down. With this in mind, today’s forward-thinking hoteliers are looking for ways to monetize other areas of the hotel, particularly underutilized sections.
Converting inactive or dead space in your hotel can simultaneously yield additional revenue as well as enhance the guest experience. Transforming space in a hotel can also be aesthetically appealing and draw in the public.
Repurposing Space: Making Use of the Lobby
The Embassy Suites in Greenville, S.C., had an area in the lobby reserved for complimentary breakfast in the morning, as well as drinks and snacks in the evening. When it was not in use, it was dark and vacant. “We brought in a local roaster and coffee shop that put in a pop-up coffee experience for the guest,” said Ben Campbell, president and CEO with Hospitality America. Though Campbell said that the hotel does make some money from that, taking a percentage of sales from the roaster, the value is more on the guest experience side. “We felt like it was a low cost to entry and a good upside reward for us as well,” he added.
At another Hospitality America property in Greenville, Campbell said that they are looking at making a low-use, lobby-based business center more inviting by offering it up for an hourly rental for corporate meetings or making business calls. The idea is to utilize the room via a QR code rather than having to go through the hotel’s sales team.
Other hotels have taken small spaces in the lobby or closed out underutilized business meeting rooms and turned them into markets, or have turned pools into fitness rooms that appeal to corporate clients.
At the Super 8 in Gardiner, Mont., Mike Mueller, SVP, owner engagement and president, Super 8, said an owner converted an unused area into a mini retail market, stocking it with high-demand items like phone chargers, travel essentials and snacks. “Not only did it fill a need for travelers, but it also became a source of additional revenue. And we’re seeing more and more owners do the same—looking at their hotels, identifying space they can monetize, and turning those areas into revenue-generating opportunities. At the end of the day, it’s all about giving guests more choices while helping hotels maximize their potential,” he said.
Repurposing Space: Gathering Areas
Even a longstanding property can be reconfigured without spoiling the building’s historic integrity. In order to evolve with today’s guest being interested in larger spaces for gatherings, the owners of the Wentworth Hotel in Jackson, N.H., revisited the formerly chopped up space to make it more relevant and a place where people can gather, said Eric Churchill, chief operating officer at Meyer Jabara Hotels. “We opened up spaces and repurposed a back porch, and relocated the bar area to that location. That led to an outdoor patio area that really brings the outside in and inside out.” This reinvention of how to better utilize the hotel’s footprint enabled it to host larger events and bring more life into the property, as well as a better connection with the outdoors. “We have had a very significant increase in revenue and in guest satisfaction,” Churchill said, adding that in the past two years, over 50 percent of customers were first-time customers, and that the property was sold out a year in advance for large-scale events.
Another example at a Meyer Jabara property was transforming a concierge lounge into three separate guestrooms and relocating the concierge lounge into the lobby area by repurposing portions of the restaurant that was underutilized. This brought the footprint of the guest into the lobby, and from an efficiency point of view, guests could use the food and beverage spot located next to the restaurant instead of having to bring food and beverage up to the former concierge floor.
Several properties under Essex Hotel Management’s portfolio have modified several spaces to become more useful, some with a direct ROI intent, and others more from a value-add standpoint. One hotel in Lake Placid had dead space in the lobby designated for breakfast seating that was in an awkward location. The general manger started offering beer and wine selections, which brought guests down into the lobby to sit around the fire pit. The hotel eventually hired a contractor to retrofit an actual bar into the space to make it look like it was part of the original construction and added some pendant lighting. “Over the course of the following year, it gained a lot of traction,” said John Kattato, SVP of operations. “We were able to do all that for less than 25,000, and created this permanent bar structure that otherwise had been dead space. It looks like it had been designed in when we built the hotel. It generates around $100,000 a year in beer/wine sales, but more importantly, it was a value add for our guests, a way to get them down into public space, using the fire element in the hotel.”
Repurposing Space: Drawing in the Public
Attracting customers who were not hotel guests was part of the reason that the Pennyweight Hotel Boston, part of the Curio Collection by Hilton, renovated an existing hotel lobby during the conversion of one brand to another. Led by the Boston-based JCJ Architecture, the team converted a loading and receiving zone that had a garage door but was not connected to the lobby. Ultimately, the area was converted into a small café off the lobby that had a separate entry from the street as well as outdoor seating. “It has its own identity and gets street and hotel traffic,” said Carrie Nielsen, NCIDQ, ASID, senior project designer. The neighborhood has gotten very active as it is near major sports stadiums so it was important to get foot traffic into the restaurant, which can be accessed from the street, separately from the hotel entrance.
And bringing in more people off the street can lead to a potential new guest down the road.
Perhaps one of the most unique uses of space in a hotel for the purposes of generating revenue is at the Motto by Hilton in Bentonville, Ark. During the design of the property, the owners constructed a 14-foot-by-14-foot Listening Room in the lobby, a space that was initially conceived as a valet storage area. Campbell described this room as having a very ‘feng shui’ feeling, containing wraparound bench seating. “We put acoustical sound barriers in there to make it a music experience, so we have a record player in there, thousands of records spread out across the lobby. People can go into this room and enjoy the records privately. We sell that space quite routinely to small groups; we curate the space for whatever the client wants.”
As a bonus, the space is located right near the bar, so much of the business at that bar comes from not just guests but it draws in the public to experience the hotel. The listening room and the surrounding lobby have become a lively gathering spot and has had a positive economic impact.
MAH Hotel in Belgium sees many guests that need the flexibility of booking day use spaces. “To capitalize on this demand, MAH Hotel successfully reconfigured its space to generate ancillary revenue by offering day-use bookings and introducing co-working spaces. Since launching these options, MAH Hotel has seen hundreds of day-use reservations in 2022, an 8.3 percent increase in booking engine conversion rate, and a 9 percent higher average value for direct bookings,” said Mark Legge, senior product marketing manager with Mews Spaces. “By introducing co-working spaces, hotels can attract a broader audience, including remote workers, business travelers and locals looking for flexible work environments. This diversification helps increase foot traffic, food and beverage sales and overall occupancy, especially during off-peak hours,” he added.
Why Repurpose Space
Repurposing space can be a good idea financially, as it makes sense to have an ancillary revenue stream apart from bookings, but the idea behind many of these projects are also customer driven. “Things are changing with customers. What they are looking for is not just a typical meeting room. They are looking for meeting rooms that look like you’re in a living room or in a coffee shop; something unique about the space that makes them feel like it is not just in a classroom style meeting,” Campbell said.
“Historically, hotels have relied on food and beverage and rooms for revenue streams, but as those become stagnant, you have to look for new ways to improve revenue stream to keep up with rising costs and demands,” Churchill added.
Besides income generation, another main reason is to have people be more engaged with each other in some of those front of house spaces. Hoteliers may even try to do pop up event planning in their spaces, like a karaoke night or another reason to gather. “Creating those Instagrammable moments will create more traffic on social media, which will create more interest in the hotel and more ROI,” Nielsen said.
Tips for Repurposing Space
Your footprint is your footprint, and not every property can be expanded. Still, Campbell advises to look at your hotel from the perspective of the guest and understand what they may want, while challenging yourself to be creative. For example, he said, “If you put very unique, comfortable, inviting furniture, you can turn that space into something that is attractive to your guest and potentially something from which you can make money.”
Churchill agrees with seeing potential changes from the customer’s point of view. “You have to look at what the market can bear and really take a look at the customer and who you are trying to attract. When you become stagnant, you can lose your position in the marketplace. How do you stay fresh and relevant to today’s customer?” he said.
Of course, some brand requirements provide guidelines as to what must be incorporated, but finding a value-added opportunity is something that should be reassessed regularly. The perfect marriage is maximizing space that results in revenue. “You try to assess yourself against your competition and ask if there are ways you can attract clients, if there are things they are offering we are not,” Kattato said. “We look at it, constantly trying to self-scout, to see if there is a way to improve to see if space is being underutilized and make it better from a guest experience standpoint, and hopefully it results in a little more return.”
The key is to experiment by keeping the guest’s needs in mind, perhaps conducting market research. It is also important to consider the long-term implications of any changes. “Don’t be afraid to get creative! Start by truly understanding your guests and the community around you. Walk through your hotel with fresh eyes, and challenge the status quo. What spaces are underutilized? What unique experiences can you offer that resonate with your brand and your audience? Forget the ‘standard’ hotel amenities for a moment and think outside the box. Could that unused corner become a pop-up art gallery? Could your breakfast area transform into a local artisan market on weekends? Could your underused conference room become a high-tech gaming lounge?” Legge said.
