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Can redesigned lobbies drive increased profits?

September 30th, 2014 | Posted by Haley Jackson in Uncategorized

Hotel lobbies are no longer simply for checking in. Hotels are encouraging guests to enjoy their morning coffee, midday lunch, or an evening drink through new offerings in the lobby. Increasingly, leading hotels, like Marriott and Sheraton, are transforming their lobbies into multi-functional, revenue-generating spaces. Now commonplace in hotel lobbies, restaurants, bars, coffee shops, and business centers provide a more complete experience for guests and create potential opportunities to increase guest spend during a stay. However, before revamping their lobbies, hotels should consider the possible implications of these expensive changes, such as:

  • Which additions (e.g., coffee shop, bar, business center, etc.) should be added to a particular lobby? How does this vary by hotel and by market?  Is it more effective to operate these establishments internally or to franchise national brands? Which brands are most successful?

  • What is the optimal amount of space to allocate to these additional lobby features, especially if they take space away from guest rooms?
  • With additions to lobbies such as communal business centers, will removing some traditional guest room staples (e.g., large desk furniture) have an impact on overall customer satisfaction? How does this vary by brand and by location?

Experimenting with different hotel layouts in select locations before applying the change to the entire network enables executives to reduce the risk of major capital expenditures. The variation in lobby redesigns across a network presents an opportunity for a tailored rollout strategy based on drivers of performance (e.g., hotel characteristics, market demographics, etc.). For instance, in-market testing may reveal that a large overhaul is ideal for some hotels, while the most economical choice in other hotels may be to make small lobby changes or no change at all. By testing on a small scale first, executives can confidently determine the optimal lobby upgrade approach for each location.

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