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.

Coming up in March 2018...

Human Resources: Value Creation

Businesses must evolve to stay competitive and this is also true of employment positions within those organizations. In the hotel industry, for example, the role that HR professionals perform continues to broaden and expand. Today, they are generally responsible for five key areas - government compliance; payroll and benefits; employee acquisition and retention; training and development; and organizational structure and culture. In this enlarged capacity, HR professionals are no longer seen as part of an administrative cost center, but rather as a member of the leadership team that creates strategic value within their organization. HR professionals help to define company policies and plans; enact and enforce systems of accountability; and utilize definable metrics to measure and justify outcomes. Of course, there are always new issues for HR professionals to address. Though seemingly safe for the moment, will the Affordable Care Act ultimately be repealed and replaced and, if so, what will the ramifications be? There are issues pertaining to Millennials in the workforce and women in leadership roles, as well as determining the appropriate use of social media within the organization. There are new onboarding processes and e-learning training platforms to evaluate, in addition to keeping abreast of political issues like the minimum wage hike movement, or the re-evaluation of overtime rules. Finally, there are genuine immigration and deportation issues that affect HR professionals, especially if they are located in Dreamer Cities, or employ a workforce that could be adversely impacted by federal government policies. The March Hotel Business Review will take a look at some of the issues, strategies and techniques that HR professionals are employing to create and sustain value in their organization.