Still aching from the recession, cash-strapped luxury hotels are increasingly looking to non-room revenue sources, such as yoga studios, multi-purpose event spaces and even skating rinks, Bloomberg reported. In 2009 the revenue per available room rate slumped 24 percent at high-end hotels and now “revenue efficiency” — making sure that every square foot of real estate is profit-generating — is the latest trend in hospitality.
The Pennsylvania-based REIT Hersha Hospitality Trust is currently developing six hotels with revenue efficiency in mind. Six months ago Hersha agreed to purchase the Hyatt Union Square, currently under construction at 13th Street and Fourth Avenue, for $104.1 million, or approximately $595,000 a room. It is adding multi-use rooms and a rooftop lounge, which can be rented and converted for special events. It will also be meticulously selecting retail tenants based on area demographics.
Hersha is developing Washington, D.C.’s Capitol Hill Hotel and Philadelphia’s Rittenhouse Hotel with the same efficiency model in mind. As a result, Hersha has seen its non-room revenue grow to about 7 percent of total revenue, up from about 2 percent three years ago.
The Chicago-based REIT Strategic Hotels & Resorts has been even more aggressive in its attempts to maximize profits. It has gone so far as to flood the lawns of a couple of its hotels — turning the outdoor spaces into an ice rink during the winter months. That way, the hotels can charge for skate rentals and lure more diners to its food venues. It also leases walls inside and outside its hotels for advertising and rents unused space on rooftops to telecommunications companies. [Bloomberg]