Why hotel design directly affects the prices you can charge (And how redesigning one hotel increased ADR by 69%)

Martin Soler told me something that caught my attention: “In my opinion, hotel design is worth at least 40% of a property’s marketing value.” As he is someone who manages the marketing for some of the trendiest hotels in Europe, I value his opinion. In this guest article, Martin explains how he came to this conclusion.

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What are the main factors that increase your sales on the internet and how can you control them? Once you’ve mastered your occupancy what can you do to increase your revenues?

These are classic questions and there are several answers. Some of the first re-actions to increasing revenues (and specifically profits) is to look at how to reduce OTAs and other commissioned agencies. While this is often necessary, increasing the customer experience is sometimes more important.

Interior design may or may not affect occupancy (it can help but there are more factors to that) but it makes all the difference in the ADR.

When we strip it down a hotel is a room with a bed and a place to wash. Now the price someone will pay for that may be enough to pay the rent but that will be about it. The added value of any hotel rests on interior design as the only visual factor. The other factors of location and service do play an important role – but they’re not that easy to display on the internet.

There is a quote from Steve Jobs that I think quite applies to this (and no I am not an Apple fanboy) which may illustrate exactly that relationship between OTA and interior design.

“A lot of companies have chosen to downsize, and maybe that was the right thing for them. We chose a different path. Our belief was that if we kept putting great products in front of customers, they would continue to open their wallets.” - Steve Jobs

Now improving interior design doesn’t necessarily mean shutting down the hotel for two years, hiring a famous designer and spending 10 million dollars. (If you can do that however, I’d say do it!) Hotels like Hotel Albus in Amsterdam or Hotel Taylor in Paris have redone their interiors for much less money by refurbishing the rooms with new furniture, improving the floors, upgrading the bathrooms and that can be done entirely without shutting down the hotel and spending millions.

When I took over the management of Hotel Taylor in Paris several years ago the hotel was just wrapping up a complete refurbishment but spending less than 500,000 EUR for 37 rooms. The result on the ADR was immediate, because with great photos and a brand new website the hotel could present the rooms and show that an excellent experience.

The ADR went from 65 EUR to 110 EUR a night in about 12 months, and we kept the same occupancy rate over the year. Of course there are points like increasing the service, getting a great online reputation etc.

But with internet being the main channel for hotel distribution your biggest asset is images, each great photo of your hotel is worth 1000 words in text and that could even be an understatement.

Try to explain your amazing service in words on your website, it’s just not going to convince people to stay there. But a couple of great photos change everything.

So while you may not be able to pay for Christian Lacroix or Jacques Garcia to come redesign your hotel you most definitely can upgrade the hotel on a gradient, floor by floor and start selling at much better prices.

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Thanks, Martin!

You can see the original post on Martin’s hotel marketing blog.

[Top photo credit: HotelDesign.nu]