Would you forego your fees to get a piece of the project action?
By Mary Scoviak
You know your firm's design work plays an essential role in creating the buzz that puts your clients' hospitality projects on everyone's bucket list. And, you're also aware that builds asset value for owners. But, when it comes to the dollars and cents, would you be willing to test out your thoughts on the importance of design by tradiing in the traditional fee structure for a performance-related return on your time/expertise investment?
Speaking as one of the honorees on the 2017 Boutique Design Up-and-Coming Hoteliers panel at BDwest in Los Angeles in April, Alexander Mirza, co-founder and ceo, Cachet Hospitality Group, pretty much silenced the SRO crowd attending the session when he brought up the idea of performance-linked payments for designers. While that was a rhetorical observation since Cachet uses only inhouse designers, Mirza's suggestion opened up some dynamic discussion. The current fee structure essentially means that designers live, eat, sleep and breath each project until opening day. Then, they can move on. But the client can't. Obviously, if designers' work didn't get good marks, they wouldn't get the references that grow portfolios.
Mary Scoviak, Boutique Design; Rob Blood, Lark Hotels; Alexander Mirza, Cachet Hospitality Group; and Mario Tricoci and Kevin Robinson, Aparium Hotel Group, at the Boutique Design Up-and-Coming Hoteliers panel at BDwest 2017. Photo: Harriet Lewis Pallette Photography
The problem is, what happens if a hotel, restaurant, spa, cruiseship, club or casino becomes wildly successful? Sure, the design firm gets the credit and a lot of visibility; but, the upside is not so big on the ongoing cash flow front.
Mirza's co-honorees, Mario Tricoci, co-founder and ceo, and Kevin Robinson, co-founder and coo, Aparium Hotel Group; Rob Blood, founder and ceo, Lark Hotels, and Vicki Poulos, senior global brand director, MOXY Hotels, had differing viewpoints. Tricoci and Robinson tried the performance-based model on a specific project that allowed for closer involvement with the designer. Generally, though, they'll be sticking to standard fee structures. Looking to keep a clear visual identity for Lark, Blood opted to bring design collaborator Rachel Reider on board as the young group's director of design (with a stake in the company) but still give her the freedom to head up her own eponymous design firm. However, Lark is unlikely to stray from the usual fee schedule for outside designers. Poulos doesn't see MOXY exploring any performance-based models.
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