Hospitality checks in to mixed-use

Hotels have become a vital component of successful mixed use retail properties, something Robert Habeeb knows a lot about given his role as president and CEO of First Hospitality Group.



Rosemont, Ill.-based First Hospitality Group (FHG), has been involved in the development, ownership, and management of hotels since 1985. FHG’s portfolio of more than 43 hotels consists primarily of Hilton and Marriott affiliated assets, but the company maintains ownership interests and manages hotels affiliated with InterContinental, Hyatt, and Carlson. Robert Habeeb has 25 years of management experience with high profile, multi-unit hotel, resort and food and beverage properties.



He spoke with Chain Store Age about effective strategies and mutually beneficial advantages for successfully integrating hospitality into mixed-use projects.



CSA: So talk a little bit about what FHG sees as the positives about locating hotels in mixed-use projects?



RH: We love opportunities to include hotels in multi-use destinations–especially in today’s environment where people are prioritizing experiences. A hotel that anchors a multi function area–especially retail driven – is not only a demand generator, but a guest satisfier, too. Hotel guests really love the ability to simply walk out the front door of the hotel and go to a fun restaurant or spend some time in a dynamic and engaging retail and entertainment venue.



CSA: In situations where guests have access to a range of dining options, do you feel less pressure to have a robust food and beverage program in the hotel?



RH: I wouldn’t necessarily go that far, but I will say that–in select service hotels in particular–proximity to restaurant options is a big plus. And that’s arguably the best way to neutralize the disadvantage or limitations of select service properties. So while there might not be an in-house hotel restaurant for dinner, guests can find a popular restaurant option just a few steps from the hotel, which they actually tend to like that a lot more.



CSA: Are there a specific range of brands that work better than others in a mixed-use environment?



RH: I do think the select service brands work best, simply because they have the most crossover with retail. And we do really work hard to promote that synergy. In Ann Arbor, for example, we have a Hampton Inn with an enclosed walkway connector to an adjacent Applebee’s restaurant, and another Hampton property in downtown Chicago is directly attached to two restaurants through internal doors.



CSA: So if I’m a commercial developer working on a mixed-use project contemplating a hospitality component, how would you pitch me?



RH: The benefits of having a hotel as a user are significant. Your tenants really like it because it’s very convenient for them, especially when they have people from corporate visiting, or suppliers in from out of town. It also adds a new dimension to a shopping center by elevating its profile in the minds of visitors: people generally tend to view shopping centers with hotels as higher quality venues. The fact that a hotel can be built on an out-lot is also a selling point. Sometimes this is land that, but for the hotel, might not be used for anything–and would certainly be difficult to maximize value from. A hotel property is a great way to make out-lots and distant parts of the parcel more valuable. And, of course, a hotel is also a natural feeder for shopping and restaurants. It’s a built-in customer base that yields some significant commercial and experiential synergies.



CSA: Operationally speaking, what do you do take advantage of that synergy? Does the hotel offer any partnerships with retailers, specifically discounts or special promotions?



RH: We absolutely take advantage of that everywhere we can. In Kenosha, Wisconsin, for example, we operate a Radisson that is contiguous to an outlet center. We cross-promote with the outlets, and that dynamic is what drives our December business. They allow us to distribute some marketing materials in common areas, and conversely they provide us a discount card that allows hotel guests to go over and receive a discount from many of the merchants in the outlet center. That crossover, especially around the holidays, is huge for us.



CSA: So it’s safe to assume that mixed-use environments are going to continue to be a popular destination for new FHG properties going forward?



RH: No question. In fact, we have a 200+ room hotel in the works in Chicago’s Navy Pier redevelopment. It’s an exciting opportunity for us: positioning a hotel as part of a major tourist destination. And we expect that environment to be a huge demand generator, with a wide range of leisure activities, restaurants and active nightlife. Similarly, at McCormick Place, we’re locating a hotel on the site of the world’s largest convention center. Mixed-use is something that we’re going to continue to value–and it’s something I expect to see a lot more of across the industry in the years ahead.