The following is a guest post from Robert Walters, chief investment officer at Global Asset Solutions. Opinions are the author’s own.
If you’re looking for some free press, you can do worse than install a truly outrageous suite. Column inches are guaranteed if, like The Empathy Suite at the Palms Casino Resort in Las Vegas for example, you are offering 9,000 square feet designed by artist Damien Hirst, at a reported $100,000 per night. For that you have two king bedrooms, a private pool and terrace, featuring columns decorated with Hirst’s trademark colored dots, but not, thankfully, his trademark formaldehyde shark.
The coverage you will achieve is not free, of course. Hirst knows his value and no doubt charges an appropriate fee. You will also find yourself in an arms race of shock and awe, competing with the likes of The Muraka suite at the Conrad Maldives Rangali, the world’s first underwater hotel suite.
Suites are growing in popularity as the number of travelers seeking an extraordinary experience grows alongside the number of those guests who can afford a room with living space and an optional butler.
Suites have typically been the domain of either the wealthy tourist or well-heeled and expensed business traveler, but we are now seeing them spread into the realm of the merely affluent. This means that, if you are considering building a luxury hotel with one of the brands, you will be factoring in a decent number of suites. Whereas in the past these suites might have been kept empty a lot of the time, or occasionally given as an upgrade to VIPs, they are now expected to pay their way as a key addition to the revenue manager’s toolkit.
Suite talk
Previously, suites may have lacked full rate potential due to not being positioned properly. But now, effective revenue managers will use them to attract much higher rates against strong demand, contributing both to an ADR increase and helping hotels to improve their revenue generating index, or RGI. Simply, suites are capable of attracting a much higher rate than average rooms.
As upper luxury rates have begun to almost routinely exceed $1,000 per night in the most in-demand locations, guests expectations are also on the rise. Offering a larger space is not enough; there must be a significant benefit to the higher spend. Historically, much of the motivation has been around privacy, particularly when traveling as a family group, but with a growing number of hotels and serviced apartment brands offering private space with the benefits of a hotel, this is no longer reason enough.
Creating a unique and memorable stay is driving current development and also much higher costs in the development phase (not to mention subsequent capital expenditures). Developers will be expected to allow for a room mix likely including up to 30% suites, and higher in resort settings, to maximize their potential. At the very highest end of luxury, many hotels will seek to be 100% suites.
Considering the room-to-suite mix is important and it is essential that the operator works closely with the developer in agreeing on inventory.
It is not merely a matter of installing your marble bar, bespoke art or indoor ski slope and waiting for the money to roll in. As with the rest of the hotel, you must understand your guests when creating a suite that will deliver an increase in value they’re willing to pay for.
At Disney — which has a reputation for experience others can only follow — styling and photo shoots with the Disney character of your choice are delivered with unique views over Cinderella’s castle.
For those of us without access to a princess, the suite must nonetheless be fit for one, with high-end fixtures and fittings, overlaid with personalized service and the complete attention of your concierge, if you want to achieve the best rate.
Pricing power
This understanding extends to sales and revenue teams, particularly those with a range of room types and high suite count at their disposal. They can only fully exploit the opportunity if they understand their product and how to position the hotel. Some teams at luxury hotels regard suites as simply a larger room and add a percentage premium on the rate without understanding the unique difference in the offering.
On the plus side, suites, as part of a mixed rooms product, enable greater flexibility in rates at peak times and the ability to target higher value guests.
If you’re reading this and are tempted to knock through a few rooms and install a few grand pianos, there may well be opportunities for conversions or repositioning existing hotels, but bear in mind that this may require reducing your key count.
It is important to do a thorough market analysis before increasing the number of suites in your hotel; to understand whether there is, or will be, demand for the product; and know the mix of suite types and sizes most likely to be in demand. An understanding of your property, the market and a strong cost-benefit analysis will help avoid sinking cash into a room mix that misses the mark.
The right suite can increase a property’s prestige if backed up by right design, as it can attract the influencers and celebrities capable of adding cache and desirability. Ultimately though, the most wonderful suites must also be matched by a service level deserving of the price tag and specifically designed to exceed a demanding guest’s highest expectations.
The luxury sector is getting more luxurious all the time, requiring a greater depth of knowledge to achieve the best results for your property, so be well-informed and well-advised before you put in your order for pickled sharks.
