The ROI of Good Design
By Roger G. Hill Chief Executive Officer & Chairman, The Gettys Group Inc. | October 28, 2008
This year, we've seen the pendulum swing on the stock market. Hotel owners are feeling bearish and wondering whether they should exercise caution as we approach 2008. It's easy to understand why. According to PricewaterhouseCoopers LLP, the tie between the economy and the hospitality industry is extremely high. The correlation between lodging demand and the U.S. Real GDP was 1.2 for 24 consecutive years from 1967 through 1991. If the economy grew by one percent, then the lodging demand would increase by 1.2 percent. If the economy sees growth, the hospitality industry is up, but if the economy is in a slump, the hospitality industry slides as well.
It's clear why the overall economy and hospitality industry are so strongly correlated - a struggling economy stops many people from consuming luxuries. Extended vacations are among the first expenses consumers cut. Corporations also are decreasing travel budgets, as they tighten belts in uncertain economic times.
Rather than trying to predict the market, hoteliers can look into the future and make investments that set the stage for explosive growth when the economy takes off. Instead of reacting to today's economy, hotel owners can prepare for tomorrow's.
Today's marketplace offers hotel owners a perfect opportunity to work on projects they put on the back burner early, as contractors and suppliers lower building costs in response to dwindling demand for their services. The cost of labor and materials decreases right in line with the economy. As an hotelier, you can take advantage of the economics of an uncertain market.
A hotel owner benefits from redesigning space and offering guests a more luxurious, convenient, and modern experience. Even small upgrades affect a guest's experience at your hotel - and large-scale remodeling gives your brand a fresh, modern feel. Positive reviews come in, and your property sees an increase of bookings. Before you know you it, you're reaping the rewards of investing in good design.
First, hotel owners, especially franchisees, should consider infusing their brands with unique touches typically associated with boutique hotels. Design and interior architecture differentiate a hotel in its marketplace. The redevelopment of Hotel Cass - Mag Mile on Wabash Avenue in Chicago is a perfect example of the positive effects of merging an established brand, Holiday Inn Express, with the features of an historic hotel. Hotel Cass - Mag Mile, which originally opened in 1927, recently underwent a complete transformation. Molded after the Beaux arts feel of the original structure, the hotel is a modern reinvention of a historic property. Design elements, such as luxury bedding, hi-tech lighting, 32" flat panel televisions, and complimentary Internet give Hotel Cass - Mag Mile an upscale feel and launch the hotel as a major competitor in the Chicago hotel market. The result is a look and feel the average traveler wouldn't expect of a Holiday Inn Express, yet the standard of service that distinguishes the brand is uncompromised.