Hotel lawyer in Beverly Hills at the ULI "Reinventing Retail and Mixed-Use" program, the Beverly Hilton, Beverly Hills, California, February 4-5, 2009. The Urban Land Institute’s big retail conference is underway and one of the lead off panels had some great information about why hotels are being added to retail mixed-use projects.
"Hotel Mixed-Use" is the Key — It makes every element of the project better
The panel had a lot of great examples of why hotel mixed-use will be the future of successful retail reinvention. On the economic front, the panel reported that hotel mixed-use makes every component of the project better.
Better hotel performance
For instance, where hotels are adjacent to retail and hotel mixed-use projects, the hotels regularly accomplished RevPAR premiums of 30 to 40%, and at the Santana Row project in San Jose, the Valencia Hotel accomplished RevPAR penetrations ranging from 160% to 185% — phenomenal performance.
Better retail sales
But the retail component also does better in hotel mixed-use projects. Perhaps the reason is that 32% of US domestic leisure travelers report that "shopping" is their number one purpose for the trip and 81% of all US domestic trips are leisure.
Over the last 20 years, it has been documented that the leisure guest spends 5 times the amount per day as a normal guest at restaurants retail and entertainment in hotel mixed-use projects.
The business traveler spends more than 6 times the normal average per day.
No wonder hotel mixed-use projects produce superior results bringing leisure and business travelers in close proximity to their shopping targets.
Better residential and office
Similarly, where residential or office component’s are part of the hotel mixed-use project premiums of 25 to 35% are regularly accomplished. In the retail and office space arena, rents and sales usually range 25 to 40% more were hotel is an integral part of the mixed-use project.
We may be in difficult times, but the retailers at ULI’s conference in Beverly Hills are clearly getting the message on the importance of adding hotel, residential, entertainment, and other component to their projects. The future belongs to "hotel mixed-use."