Page 14B—
COLORADO REAL ESTATE JOURNAL
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April 20-May 3, 2016
T
he U.S. luxury
hospitality market is
the strongest it has
been in years and is showing
room for continued growth
ahead. This is evidenced by
record-breaking transactions
such at New York’s Waldorf
Astoria and the Montage
Laguna Beach – both selling
at roughly $1.4 million per
key – and all-time highs for
room demand, average daily
rate and RevPAR increases.
It is anticipated that demand
will continue to outpace new
rooms supply. Couple that with
historically low interest rates,
and the strength of the U.S.
economy attracting continued
interest from foreign investors
(especially China), and it
should come as no surprise that
investors have been purchasing
existing luxury properties at a
record pace.
According to JLL, hotel
transaction volumes worldwide
hit the second-highest year on
record in 2015, eclipsing $85
billion at a 50 percent growth
clip. The U.S. proved the “most
liquid country,” with transaction
volumes totaling over $40
billion. This is due to the fact
that few hotels have been
built because of high financial
and regulatory barriers to
developers, and the significantly
lower cost of purchasing and
rebranding an existing property.
As a result, buyers and sellers
are seeing significant value
in renovation. This is more
obvious on the sale side, where
physical updates and location
directly drive the highest sale
price. Historically, new owners
have not hesitated to invest
in interior renovations to
rebrand the property and make
improvements to meet the
current demands of travelers.
But now the industry is investing
at record rates in the exterior
environments as a method
to improve the overall guest
experience while capturing
more revenue and increasing
property valuations. These
factors are contributing greatly
to some of the recent high
transaction values.
We have seen this firsthand
as owners and developers have
invested in improvements to
their new properties to reinforce
their brand identity and increase
revenue. Whether it’s investing
in direct revenue-producing
infrastructure – such as poolside
dining, spas, rentable cabanas or
event spaces – or less measurable
improvements such as lighting,
signage and wayfinding, and
landscape improvements,
they all directly contribute to
the visitor experience. As the
high-end market becomes
increasingly competitive,
creating that unique experience,
including finding additional
ways to offer popular programs
(yoga, wine tastings, cooking
demonstrations, art classes, etc.),
is more important in building
loyalty.
One particular example
is the Four Seasons Maui at
Wailea. With the growing
trend on wellness and a guest
population seeking more spa-
like experiences, the Four
Seasons opted to take a rather
unusable hillside site and create
a quiet alternative to the main
pool area and the beach at the
resort. A “serenity pool” concept
was developed to take advantage
of an ocean view with a sweeping
edge-infinity pool. One side of
the pool offers water lounging
alcoves. The other side is lined
with oversized cabanas with
luxurious interiors. A swim-up
pool bar allows users to enjoy
cocktails in the pool while taking
in the view. The result is a new
resort amenity that provides
additional revenue through
food/beverage, cabana and
“casabella” rentals, and spa
services, all of which reinforce
the Four Seasons brand
expectation.
These types of investments
are applicable at a much larger
scale. Take the 2,000-room
Gaylord National in Washington,
D.C. The hotel and conference
center wanted an outdoor event
space that could accommodate
groups of up to 3,000 people
for cocktails, dinner or concerts.
We created distinct outdoor
spaces for varying sizes that
provide maximum flexibility of
use and allow multiple events
to occur simultaneously. New
revenues generated by the use
of the space paid for the cost
of improvements within 18
months.
Another growing trend is the
move away from traditional
cookie-cutter hotels to a more
authentic, local experience.
Landscape improvements are
a much lower cost mechanism
than other interior retrofits to
make those connections in the
luxury market. For example,
LodgeWorks project – the
Archer New York created a
rooftop lounge (Spyglass)
for its guests’ use and private
rentals. It was an investment in
otherwise unused space that is
creating value for the property
and providing a more personal,
exclusive escape from the city. It
also supports travelers’ desires to
be in open, social spaces instead
of their rooms or the more
traditional hotel bar.
As the market continues
to adapt to the influence
of the growing millennial
and baby boomer traveler
populations, we increasingly
will see the hospitality industry
invest in “place” to remain
competitive. Although the
luxury market is somewhat
insulated, it too will be looking
for new and innovative ways
to maintain loyalty. Creating
that unique guest experience
is a fundamental part of that
equation.
Kate Douglas Kestyn
Associate, BrightView Design Group
(formerly ValleyCrest Design Group),
Denver
Da i r y B l o c k
ho s p i t a l i t y | o f f i c e | r e s t a u r a n t | r e t a i l
| 3 0 3 . 6 9 9 . 9 0 0 0
The industry is
investing at record
rates in the exterior
environments
as a method to
improve the overall
guest experience
while capturing
more revenue and
increasing property
valuations.
