SalemNews.com, Salem, MA

Business

July 10, 2012

Skating rinks, yoga are latest ploys to increase hotel revenue

(Continued)

For new, full-service hotels in the midscale to high-end categories that opened from 2001 to 2005, "other income," such as sales from retail shops and other businesses not operated by the hotel, was almost 36 percent higher last year than for hotels built from 1980 to 1999, according to Boulder, Colo.- based STR Analytics, a unit of hotel-data provider STR Global.

"Newer hotels were built with more revenue efficiency in mind, and space that might have been wasted in earlier- constructed hotels was replaced in newer hotels by additional outlets and revenue-creating facilities," Carter Wilson, a director at STR Analytics, said in a telephone interview.

While rooftop bars have been around for decades, they only recently have become a significant source of additional income, particularly at urban hotels in such cities as New York, according to a December study by Jones Lang LaSalle Hotels, part of Chicago-based broker Jones Lang LaSalle.

In New York City, there are 35 properties ranging from midscale to luxury with a rooftop venue, many of which were recently added, Jones Lang said. Such businesses may produce revenue of as much as $120 per square foot in a month with high demand and "tend to be profitable venues," Jones Lang said in the report. That compares to $40 a square foot of room revenue during a peak-season month at an upscale hotel in a large city, according to Amelia Lim, a Jones Lang executive vice president.

"What we've been seeing in rooftop bars and other additional revenue-producing venues is the use of under-used real estate," she said in a telephone interview.

Hyatt's Andaz 5th Avenue boutique hotel at Bryant Park features a meeting venue on the second floor, called Apartment 2E, that resembles residential space with a fully equipped open kitchen in its center, a bar and an outdoor courtyard. During the day, its individual rooms are used for business meetings, and in the evening the entire space can be rented for private cooking parties.

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