Zach Demuth, global head of hotels research for JLL, the commercial real estate and investment management company, was at a luxury hotel in southern California recently where the rate for a standard room was $500 a night. On the club floor, the rate for a room was $1,500. Why the difference? “It is about exclusivity,” said Demuth, who prior to JLL held positions for more than nine years with Ritz-Carlton, a brand closely associated with the clubs and lounges that had been a staple at upper-upscale and luxury hotels for decades. But coming out of the pandemic, Demuth and others believe that these oases are being revisited and reimagined in the face of changing consumer demand.
Since the pandemic, three factors have had an impact on lounges, according to Kaushik Vardharajan, associate professor of the practice at Boston University School of Hotel Administration. One is guest loyalty, as the spaces became more crowded like their airport counterparts because they were open to guests holding co-branded credit cards and others not staying in club rooms. Some operators came to believe they were providing a service but not getting revenue. For guests, there was frustration in having to wait for food or services.
Second, operations. With the lounges open for extended periods—sometimes 24/7—staffing became an issue as it is more broadly throughout the hotel industry. “If you can’t find staff to clean rooms,” said Vardharajan, “how can you find them to clean a space that is not generating revenue?”
Finally, from a real estate perspective, some hotels have decided they can repurpose the spaces—even for guestrooms. In general, Vardharajan said, operators are looking for innovative ways to use these areas without incurring costs.
RETHINKING LOUNGES
One brand that is reevaluating these spaces is Signia by Hilton, where Teddy Berlin, senior director and brand leader,
said that post-pandemic, “The standard executive lounge isn’t cutting it anymore for owners or guests.” Owners are looking for ways to drive meaningful returns, he said, and customers are looking for exclusive, elevated and exceptional hospitality experiences. With this in mind, “We saw an opportunity to redefine what an elevated hospitality experience can be, taking the traditional lounge and rethinking how it works for both owners and guests,” Berlin said.
The Signia by Hilton Atlanta will be the first new build for the brand when it opens in early 2024 and any guest will
be able to upgrade to the very first Club Signia, regardless of loyalty status or membership, according to Berlin. This benefit is available to travelers who choose a Club Signia guestroom when booking. Hilton believes, he said, that this will be a great option not only for guests but also as a way to elevate meeting and event offerings for VIP and executive attendees. There will be a limit on the number of guests who can book the facility, Berlin said.
Club Signia is inspired by private membership clubs, noted Berlin, and will offer guests access to early check-in and late check-out, premium Wi-Fi and all-day food and beverage offerings that include “club-style” cocktail service, made-to-order snacks and small plates prepared with local ingredients.
The Club Signia experience will also offer benefits and amenities beyond the lounge, including club ambassadors, responsible for guest preferences and needs, even prior to arrival. They will dispense personalized welcome amenities, experiences and “thoughtful extras.” That could mean having a specialty tea in a guest’s room or, if the guest is arriving late after a long flight, ensuring that a small plate from the evening’s offering is waiting for them upon arrival.
Club Signia guests will also enjoy dedicated concierge services, priority access to exclusive programming and restaurant reservations, and use of private club meeting rooms and technology.
Hilton competitor Marriott continues to be a consistent provider of lounge-type facilities, but is adapting them to changing consumer tastes and interests, according to the company. Though The Ritz-Carlton Club continues to be a brand standard, with a dedicated concierge and accessible only to club floor guests, each space is distinctive depending on its location. For example, at The Ritz-Carlton New York, NoMad, guests can enjoy culinary offerings by celebrity chef José Andrés at the hotel’s Club Lounge, located on the 36th floor of the building and offering 180-degree views of downtown Manhattan and the Statue of Liberty.
Other upscale and luxury Marriott brands offer different versions of clubs and lounges. The M Club, available at select properties, is open to Marriott Bonvoy Members with Platinum Elite, Titanium, Elite and Ambassador Elite status. They are afforded complimentary access on every stay. Guests who are not Marriott Bonvoy members, or do not have that level of status, may inquire at the specific hotel to see if access may be offered for an additional fee.
Executive lounges are available for Marriott Bonvoy members at the Platinum Elite level. These facilities are generally found at Marriott premium or luxury brands, with some properties offering guests the option of paying a fee to gain access, even without having elite status. The JW Marriott Dallas Art District recently opened with a spacious executive lounge that is adaptable for large groups to gather for breakfast or cocktails.
At Hyatt, according to a spokesperson, club access is granted to World of Hyatt Globalist members and any registered guests in their room; guests who are staying as a Globalist member’s Guest of Honor; guests who book rooms on a club level floor; and World of Hyatt members who use a Milestone Reward. (Globalist is the highest level in the World of Hyatt loyalty program.)
SEEKING ALTERNATIVES
Rather than offering a lounge, operators are also looking at other ways to reward loyal guests and to use those spaces more productively. Vardharajan said he has seen some properties offer a F&B credit, for example. That encourages guests to spend on property— and probably more than the allotted amount.
Vanja Bogicevic, clinical associate professor at the SPS Jonathan M. Tisch Center of Hospitality at NYU, said some hotels are bringing communal areas down to lobbies, creating flexible, revenue-generating uses, such as the selling of food and beverage. Or, she said, those desirable locations on high floors can be converted to event or meeting spaces.
And, while the appeal or relevance of lounges in urban centers might be getting diluted, said Vardharajan, they are
still appealing for operators and guests at resorts, where complimentary food can be a distinct benefit for families. In addition, there tends to be more square footage to carve out a premium guest refuge.
REGIONAL DIFFERENCES
Lounges in the Middle East and Asia, said Vardharajan, tend to be “spectacular.” Bogicevic agreed, noting that in some countries in Asia, labor is more affordable, making lounges more viable. The same might be true in the Middle East,
she said, and even in some European destinations, such as Malta, where many employees are expatriates. In the Middle East and Asia, said Demuth, lounges “are routinely part of the conversation”—most notably in terms of taking them to the next level. JLL, said Demuth, is working on a project in Singapore that includes what is almost a “hotel within a hotel,” with a separate elevator bank. While that might be extreme, he said, the demand is clearly there.
Club lounges continue to be available at many Grand Hyatt and Hyatt Regency hotels, according to the spokesperson. The majority of them are in Europe, the Middle East and the Asia-Pacific region. In the Americas, availability and experience vary by hotel, and there are around 40, all told.
EXPERIMENTING WITH EXPERIENTIAL
Experiential has been a pervasive buzzword in travel in recent years, and that trend is extending to lounges, according to Demuth. For instance, the executive chef might demonstrate techniques or even offer cooking lessons. “Guests are asking what they are getting for that extra $700 a night,” he said.
At Club Signia, said Berlin, there will be cooking demonstrations during breakfast and dinner when patrons can observe a “live cooking” moment as the chef prepares, for example, shakshuka for breakfast. That kind of offering provides owners with another way of driving strong rates, margins and ultimately higher returns from their investment, Berlin said.
“Free coffee and pastries and eggs aren’t enough anymore,” said Demuth. “Even at the upper-upscale level, it needs to be something almost priceless.”
Story contributed by Harvey Chipkin.