BDwest: Designers Talk ROI
Here’s how to advocate for design and budget.
Design isn’t just about making a hotel look pretty; it’s a business, too. Designers might feel like they’re walking a tightrope, trying to balance their creative vision and the client’s budget. Owners talk in terms of return on investment, and that means designers need to meet them there. So, how do seasoned experts navigate the act to justify why specific—often costly—design elements are essential to their clients’ properties?
“We really are about helping our clients make money. The bottom line is the bottom line for all of us,” said Deborah Lloyd Forrest, president of ForrestPerkins, during the panel discussion “ROI of Design: Convincing Clients to Invest in Your Vision” at BDwest. “We invest as a design team our passion and our experience, marrying the understanding of client’s goals to make money, to drive revenue and occupancy, as well as how do we make a true difference?”
She said that becomes particularly important in a renovation, when a property is being transformed into something fresh. For example, her firm worked on the Fairmont in Washington, D.C., which was converted from a Westin. The owner was an institutional one, likely to hold the hotel—and that’s key to know, she said.
“If the owner is going to hold onto properties, you can really have a strong conversation about ROI and operating return. When talking to a client who wants to flip, their ROI needs to be quicker. They are investing X to make double X,” she said.
The renovation was all about opening up public spaces to drive customers to certain revenue centers, such as the lobby bar, which was relocated and expanded to become a prominent fixture in the lobby. But it wasn’t just about making a bigger space to be seen—design elements needed to drive eyes there. White metalwork on ceilings was repainted a dark green to guide eyes past and into the property’s courtyard, where a contemporary seating area invited guests to stay awhile and have a drink. Since the renovation, Lloyd Forrest said revenues have gone up 40% for the hotel.
Panelists said the ROI conversation often comes down to creating a brand and/or staying on message. Sometimes owners need a little nudge in that direction.
That was the case for Margaret McMahon, senior vice president and global director of Wimberly Interiors, who was hired for a quick FF&E project at the Rosewood Baha Mar in the Bahamas, a hotel that had sat unattended for over a year due to financial hardships with its original owner. When the new owners came in, the hotel was built and FF&E was already purchased. McMahon and her team soon found that what was there wouldn’t be on brand for Rosewood. So, it was time to have a conversation.
“We had an $8 million budget and a year to get it done,” McMahon said. But they had to elevate the conversation with the owners and convince them that starting from square one was the best option in terms of ROI. So, they dipped into their tool box and “rendered like crazy,” she said. The goal was to come to meetings armed with the answers; the ability to show the client exactly what they needed. And that can be a tough sell when FF&E is already purchased and sitting in a warehouse, or bookshelves are already installed and an argument needs to be made as to why those should be ripped out.
“It is a constant negotiation, like a marriage,” McMahon said. “We got the pricing done quickly to flip the paradigm. Knowledge is power. We are not just designers, we are business people. We need to be able to talk about schedule and budgets as well.”
For Jennifer Johanson, ceo of EDG Interior Architecture + Design, brand research needs to happen at the get-go. Her firm recently was commissioned to renovate a 400-room Marriott in California’s Manhattan Beach into an Autograph Collection property. The task was to take orange-clad interiors and make it cool. But first, the team needed to determine just who they were making this chic property for—so they studied it out by digging into the comp set. They found it was time to move away from a clientele who could just as easily book an ordinary airport hotel and instead transformed this one into “California cool” with a nod to an East Coast vibe to pay homage to its Manhattan name.
“People in hospitality love stories and to make people happy, and people want to see a turnaround,” Johanson said. “If you as business owners or designers can tap into that passion, owners will be on your side.”
For Lauren Rottet, founding principal and president of Rottet Studio, it is also the story that sells it. If designers can get owners to buy into the story, it’s more likely they will buy into the design.
But it’s about picking your battles, she said. Rottet created The Surrey hotel’s story as a place of Coco Chanel. And while the owners bought into the story, they didn’t quite want to buy the expensive art that went with it. Rottet believed so much that the $200,000 art would round out the story that she offered to buy it herself and lease it back to the owners.
“When I said that, they said, ‘No, no, we’ll take it,’” she said. “Now that art is worth way more than what they paid for it.”
Andrea Dawson Sheehan, principal of Dawson Design Associates, said that targeting a specific market segment—and what rate it drives—is key. But also, hotels are filled with underutilized space that, with a little outside-the-box thinking, can amp up the cool factor and create revenue centers. Case in point: the game rooms at Viceroy’s Z properties in San Francisco. For instance, the group’s Hotel Zetta had a rarely used boardroom with 7-ft. ceilings that gave a closed-off feel. The space was opened up to 8-ft. ceilings, exposing mechanical, and transformed into a game room that now drives $50,000 a month in revenue. The Hotel Zephyr, a converted Radisson, had a pool in the middle of a concrete jungle in a location that was always foggy. It didn’t make sense for the location nor the clientele, so the solution was to make the space a venue that can be rented to groups of up to 1,000, what she describes as a playground for both adults and kids, and one that appeals to the nearby tech crowd as well.
“For us, it’s about knowing the client’s goals. As a designer, we have an obligation to deliver goals financially,” Dawson Sheehan said. “They don’t spend money; they invest money. Our job is to help them invest their money wisely.”
Photo, from left to right: Lauren Rottet, Rottet Studio; Andrea Dawson Sheehan, Dawson Design Associates; Margaret McMahon, Wimberly Interiors; Jennifer Johanson, EDG; Deborah Lloyd Forrest, ForrestPerkins; Mary Scoviak, Boutique Design. (Photo credit: Alicia Hoisington)