Hotel Brand Standards and Historic Buildings
By John Tess President & CEO, Heritage Consulting Group | June 09, 2019
For years, one of the barriers to redeveloping historic buildings into hotels was the specter of conflicts between the uniqueness of the building and the standardization of a hotel brand standards.
To avoid the problem, some property developers would forgo the benefits of the brand and create an independent. This approach has the advantage of allowing the developer to embrace the quirkiness of the site – sometimes with stunning results. An independent hotel however faces significant market challenges. The value of being affiliated with a brand is the built-in marketing program that includes a reservation system and a brand loyalty program.
Familiarity with the brand and the brand's reputation allows patrons the luxury of not needing to research the individual property. Affiliation with major nameplates as Marriott, Hilton or Hyatt brings instant credibility.
But for many years, hotel brands strongly embraced standardization. That standardization allowed operational efficiencies, a consistent guest experience, and the ability to create management metrics to measure market place success. First popularized by the absolute consistency of the Holiday Inns of the 1960s, brand standards can specify every aspect of the property, from the visual elements such as the monumental sign to the most mundane as the toilet paper holder. Large or small, each brand standard was established with a purpose.
Traditionally, the brands had the luxury of demanding rigorous commitment to their standards when negotiating with potential property owners. Market place drivers were suburban models where land was cheap and available. Vacation road trips placed a premium on parking and staying outside the city core. But these drivers have evolved as America has rediscovered its love for the big city experience and as big cities have worked hard to reinvent themselves into active, thriving destinations. A generation of travelers has emerged that embraces the urban world and has the sophistication to appreciate the nuances of varied regional, local and even neighborhood experiences.
Lodging corporations are not only becoming more flexible in applying their standards, some even "curate" their hotel experience to embrace a unique local vibe. Some of the roots for this lie with the success of the boutique hotels beginning in the 1980s. Some of this also is driven by the increasing segmentation of the marketplace. Also important is the increasing shortage of strategically located land in the urban cores.
Baton Rouge's Watermark Hotel
But how actually do the two sides connect?
According to Kirsten Vaselaar, Vice President of Development Management at HRI Properties, it is a bit of dance. HRI has been adapting historic building for modern use since 1982. In additional to historic properties (HRI is an abbreviation of Historic Restoration, Inc.), the company today owns and operates a number of ground-up projects. And while their portfolio includes a variety of building uses, a significant number of their projects are hotels, both in development and in management. They have worked and continue to work with a number the major hotel brands.
As hotel franchisors review proposed locations for new franchised hotels, according to Vaselaar, they are looking for properties that are in strong markets but also align with each brand's specific target market, design concept and values. This search includes both the physical asset and its location, whether in downtown or even in a specific neighborhood. An older or historic building may add value to a brand's entry into the market by virtue of its unique character and its prime location in a well-developed neighborhood.
Given its long history of working with hotel chains, HRI is a known quantity to many hotel franchisors. It is not unusual for them to reach out to HRI to see what properties they may have in the pipeline or to see if they have an interest in developing a property in a specific target area. HRI is national in its scope; companies such as Marriott also have regional and local connections. Nonetheless, it remains difficult for a franchisor to know if a specific historic property is in play or not.
The reverse is also true. It is very hard for a developer to know whether a brand may or may not be interested in a particular city or section of a city without reaching out directly to each potential franchisor. Particularly for newer brands that work more comfortably with historic properties, the challenge is on the developer to understand which flags are available and how their design and service concept might fit into a specific property.
At the end of the day, the matchmaking is more an art than science and it often comes down to phone calls and working professional connections.
It is always good to start early as possible. In the competitive hotel market, the window to capture a market niche is narrow and time is a luxury. Historic properties usually are attractive for the ability to be unique, but this varies according to the targeted marketplace. Economy-focused and luxury brands tend to be more proscriptive in their standards, where lifestyle properties have the most flexibility. These newer lifestyle brands also tend to be focused on the local flavor, and therefore are a good fit for an adaptive reuse project.
Some historic buildings are more amenable to adaptive reuse than others. Single use buildings, such as a fraternal lodge hall, are difficult. Office buildings are better candidates because they typically have experienced considerable change over time. For the development team, the property is best understood as a canvas that for the base to create the concept.
In past decades, conflicts between brand standards and historic design reviews were troublesome and perhaps deemed not worth the headache. While the issue has not disappeared entirely, the problem has become much less. Brand managers have more experience in working in historic properties and there are processes for addressing variances.
For the property developer, past hotel projects provide familiarity with brand goals and brand managers. Often a relationship has formed that allows honest discussion of priorities and goals to craft a successful solution. For neophyte developers without the experience of working with a brand, working with a knowledgeable hospitality architect, experienced interior designer, and a savvy historic consultant can mitigate the brain damage.