The Money-Making Secrets Behind Hotel Design | WSJ Pro Perfected

Key Concepts

Shrinking hotel rooms, select-service hotels, profitability, guest satisfaction, space optimization, amenity reduction, public area enhancement, revenue generation, design strategies, competitive analysis, GSS (Guest Satisfaction Score), ITR (Intent to Recommend), demand generators.

Shrinking Hotel Rooms and Rising Profits

The video discusses the trend of shrinking hotel rooms, particularly in select-service hotels, as a strategy to increase profitability. Select-service hotels, which offer fewer amenities than full-service hotels, are outperforming them in terms of profits. Marriott's Moxy brand is highlighted as an example, with rooms that are half the size of the average American hotel room but generate up to 20% more revenue.

Space Optimization Strategies

To reduce room size, several strategies are employed:

• Closet Reduction: Replacing traditional closets with hanging hook systems or open-plan closets saves around seven square feet. Open-plan closets are also easier to clean and reduce the likelihood of guests forgetting items.
• Work Area Optimization: Replacing large fixed desks with fold-out desks and collapsible chairs saves approximately eight square feet.
• Minibar Removal: Eliminating the minibar saves 2.5 square feet and reduces labor costs associated with daily restocking. Minibars are described as labor-intensive.
• Bathroom Design: While the bathroom is considered a key indicator of guest satisfaction, space can be saved by using barn doors or moving the basin outside the bathroom. Moving the basin allows for better circulation from the entry.

These changes can save over 70 square feet per room and reduce costly amenities.

The Evolving Role of Hotel Ratings

Traditionally, guests relied on diamond and star ratings from organizations like AAA and Mobile. A four-star rating required a specific cubic footage of storage, typically three drawers. However, travelers now rely more on social media and ratings from sites like Google and TripAdvisor. This shift means that traditional design parameters based on star ratings are no longer as relevant.

Enhancing Public Areas for Revenue Generation

To compensate for smaller rooms and lower rates, hotels are focusing on enhancing public areas to improve guest satisfaction and generate revenue.

• Lobby Design: The lobby is designed to encourage guests to work, drink, or do laundry, prompting them to spend money.
• Grab and Go Stands: Replacing minibars with economical grab-and-go stands near the exit shortens the distance between restocking and purchasing. Marriott reports that the grab-and-go in its Moxy Hotel in Banff averages around $3,000 per month.
• Bar Optimization: Bars are a significant source of revenue due to low staffing requirements and high markup prices. Maximizing the number of seats is crucial, but designers must consider the labor costs associated with adding more seats. For example, adding one extra seat to a 52-seat bar might require an additional bartender.
• Creating a Busy Atmosphere: Lighting and design are used to create the illusion of a busy bar, validating guests' choice of hotel.
• Check-in at the Bar: Ditching the reception desk and having guests check in at the bar creates energy and improves staffing efficiency. The same person can check in guests and serve drinks.

Competitive Analysis and Demand Generation

Ron's team conducts thorough research to understand a hotel's position in the community. This includes:

• Mapping Competitors: Identifying rivals, their room sizes, and amenities.
• Evaluating Guest Satisfaction: Assessing GSS (Guest Satisfaction Score) and ITR (Intent to Recommend) scores. Competitors with ambitious ITR scores are closely monitored.
• Analyzing Local Businesses: Understanding the restaurants and bars in the area to identify opportunities for unique offerings.
• Identifying Demand Generators: Pinpointing museums, galleries, stadiums, transport hubs, and businesses that attract guests to the area.
• Understanding Guest Needs: Determining who the current guests are, where they are staying, and which services and amenities they are using most.

This analysis helps designers determine how much to invest in the hotel, where to allocate resources, and where there are lucrative gaps in the market. The goal is to "over-index" on areas that will attract guests and improve their experience.

Conclusion

Select-service hotels can achieve high GSS and ITR scores with smaller rooms by strategically optimizing space, reducing amenities, and enhancing public areas. However, the design of the hotel is only part of the equation. The management company and operator play a crucial role in delivering on the promise of hospitality and ensuring guest satisfaction.