Hotels diversify their revenue streams

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A new breed of hotel is opening its amenities to the public to bring in a varied mix of customers. And as asset owners are diversifying their portfolios, developments are seeing the residential and hotel offerings being combined.

Hoteliers are starting to realise they don’t need the waterside location and expensive overheads associated with traditional luxury hotels to create something special. By opening the amenities of hotels – breakfast lounge, bar and restaurant – to the public, and by blending hotels with residential, the space can be made to work harder and revenue streams can be diversified.

Workplace designers have been talking about the third space – not the workplace and not the home – where people can just as easily meet a friend for lunch as have a productive work meeting. To meet these requirements the space must: be free to occupy; offer food and drink; be accessible and proximate to users; and provide free wi-fi. Hoteliers are starting to use this design thinking to create similar spaces.

“We call it the universal welcome,” says Woods Bagot principal Wade Little. “During a recent trip to LA, I visited The Line Hotel. Its selling point is the huge lobby, where the boundaries of café, bar and lounge are non-existent. This means it’s perfect for co-mingling people at work meetings, or meeting with a friend for lunch.”

This co-work offering allows anyone to come into the space. In contrast, the lifestyle offering is less about anyone being welcome in the space and more about mixing residential and hotel.

In Sydney the hotel market has been focused on smaller offerings – not because the market is weak, but because there is a high overhead for developing larger hotels. A smarter option is to take the residual value of the land, create a small hotel and put a residential tower on top of it.

Because of SEPP 65 regulations stating that residential spaces must receive two hours of sunlight (a stricture that doesn’t apply to hotels), there are benefits to creating a hotel on the lower levels and placing residential above. That boost in height provided by the hotel allows the apartments to access light above the neighbouring buildings.

“It’s a delicate balance,” says Little. “Without the hotel providing that height, you may not get the residential. But too many hotel rooms and you might not maximise the potential of residential.”

The restaurant or lobby is often the space that pulls mixed-use developments together. At the Greenland Centre in Sydney’s Pitt Street, the Greenland Primus Hotel has provided an opportunity to make use of the impressive heritage interiors of the original Sydney Metropolitan Sewerage and Drainage Board offices, with the residential tower above, while the restaurant brings in all three types of customer – the resident, the guest and the general public.

“Leveraging this lifestyle offering to the apartment purchaser means residents of the tower can walk out the front door and there’s a restaurant,” says Little. “It’s about diversity of offering and venue consolidation. We want to create a choreographed customer experience.”

For more information, visit: http://www.woodsbagot.com/project/greenland-hotel-sydney-australia