Can integrating hospitality increase ROI?

Explor­ing the syn­er­gy between hos­pi­tal­i­ty and real estate 

The arti­cle rep­re­sents sub­jec­tive opin­ions of Hines Inter­ests Lim­it­ed Part­ner­ship (“Hines”), the spon­sor of invest­ment vehi­cles offered by Hines Secu­ri­ties, Inc. (“Hines Secu­ri­ties”). Oth­er mar­ket par­tic­i­pants may rea­son­ably have dif­fer­ing opinions. 

Hos­pi­tal­i­ty and real estate are two sep­a­rate indus­tries, but in recent years, Hines has seen the two come togeth­er to cre­ate spaces where peo­ple work, live, and play. This blend has led to the cre­ation of (what Hines believes are) vibrant and dynam­ic prop­er­ties and com­mu­ni­ties that offer a dif­fer­en­ti­at­ed expe­ri­ence to ten­ants and vis­i­tors alike. From lux­u­ry hotels to mixed-use devel­op­ments, the inte­gra­tion of hos­pi­tal­i­ty into real estate has changed how the indus­try thinks about these spaces and has estab­lished a new stan­dard in the ser­vices provided.

Hines and Union Square Hos­pi­tal­i­ty Group share a strong belief in pri­or­i­tiz­ing employ­ees as the most valu­able asset. Both strive to pro­vide an excep­tion­al expe­ri­ence for cus­tomers, dri­ven by the prin­ci­ple of putting peo­ple first. This approach is seen as a dif­fer­en­tia­tor for the busi­ness­es and the impact on deliv­er­ing great expe­ri­ences has been clear.

Whit­ney Burns, Hines vice pres­i­dent of glob­al client strat­e­gy, and Dan­ny Mey­er, founder of Union Square Hos­pi­tal­i­ty Group and win­ner of numer­ous acco­lades includ­ing the James Beard Award and Miche­lin Stars, sat down to dis­cuss how cre­at­ing an expe­ri­ence that is unique to occu­piers is more than just a good meal.

• Whit­ney Burns (WB): What are some of the inno­v­a­tive con­cepts you’ve cre­at­ed in your career?
• Dan­ny Mey­er (DM): I was raised in St. Louis where hos­pi­tal­i­ty and restau­rants were the high­lights of the town. How­ev­er, the food was­n’t any­thing extra­or­di­nary. When I moved to New York City, I was fas­ci­nat­ed by the incred­i­ble food but felt the lack of hos­pi­tal­i­ty. So, I decid­ed to open a restau­rant that com­bined the best of both worlds — the hos­pi­tal­i­ty from my home­town and the deli­cious food of NYC.
  
  The Zagat Sur­vey (a way for cus­tomers to give feed­back on restau­rants) asked about food, décor, and ser­vice. I real­ized that the sur­vey was miss­ing a cru­cial aspect — hos­pi­tal­i­ty. Ser­vice was a tech­ni­cal deliv­ery of what we do in the restau­rant indus­try, but hos­pi­tal­i­ty was about mak­ing peo­ple feel emo­tion­al­ly sat­is­fied. I fig­ured out the thing that I think has helped me in our restau­rants more than any­thing, which is that ser­vice is a real­ly cru­cial thing. I believe that hos­pi­tal­i­ty is what sets us apart from oth­ers and is applic­a­ble to every busi­ness. To this day, I firm­ly believe that pro­vid­ing good ser­vice is not enough. It is about mak­ing our cus­tomers feel that we are on their side, emotionally.
  
  
• WB: There is a cor­re­la­tion between excel­lent cus­tomer ser­vice and reten­tion. How does deliv­er­ing a remark­able and mem­o­rable cus­tomer expe­ri­ence dis­tin­guish a brand or com­pa­ny, regard­less of the indus­try in which it operates?
• DM: I believe that we’re liv­ing in a time where inno­va­tion has a short shelf life. It’s impor­tant to remem­ber that peo­ple will even­tu­al­ly for­get what you did and said, but they’ll always remem­ber how you made them feel.
  
  Nowa­days, every­one has a cam­era and can eas­i­ly share their expe­ri­ences with oth­ers. This means that any­thing that can be cap­tured in a pho­to is eas­i­ly copied. As a result, the last remain­ing dis­tinc­tion that com­pa­nies can have is the feel­ing they give their customers.
  
  This is why in our hos­pi­tal­i­ty busi­ness; we believe that the cus­tomer expe­ri­ence is a com­bi­na­tion of 49% per­for­mance and 51% hos­pi­tal­i­ty. A high score in per­for­mance is impor­tant, but it can nev­er over­come a lack of hos­pi­tal­i­ty. We believe that even if we make mis­takes, our hos­pi­tal­i­ty can over­come them.

• WB: Hos­pi­tal­i­ty is a pow­er­ful busi­ness prin­ci­ple. How does incor­po­rat­ing hos­pi­tal­i­ty as part of your busi­ness strat­e­gy, regard­less of the indus­try, lead to high­er returns and increased attention?
• DM: The proof of suc­cess can be mea­sured by the pop­u­lar­i­ty of a busi­ness among cus­tomers. I used to fol­low the Zagat sur­vey, and we had sev­er­al top-rat­ed restau­rants in New York City. Union Square Café moved up from Zagat’s 21^st most favorite restau­rant to even­tu­al­ly becom­ing New York’s sec­ond favorite restaurant.
  
  To me, being some­one’s favorite means that the busi­ness is not only good at what it does but also cre­ates a pos­i­tive expe­ri­ence for the cus­tomer. As a restau­rant gets to be more and more peo­ple’s favorite, guess what hap­pens? You get more and more rev­enue and then you’ve got to man­age your busi­ness the right way so that with addi­tion­al rev­enue, you’re keep­ing more and more of that rev­enue for your team.

When it comes to real estate, Hines believes incor­po­rat­ing hos­pi­tal­i­ty prin­ci­ples may increase a return on invest­ment by pro­vid­ing a mem­o­rable expe­ri­ence for ten­ants and vis­i­tors. This may lead to high­er occu­pan­cy rates, more favor­able leas­es, and increased cus­tomer loyalty.

As hos­pi­tal­i­ty stan­dards evolve, it is no won­der that many look to those at the top for inspi­ra­tion and guid­ance. Dan­ny and Union Square’s diverse ven­tures have added to the hos­pi­tal­i­ty dia­log in many contexts.