San Francisco-based Chartres Lodging Group (CLG) owns and manages 20,000 rooms in the United States and Japan. When the firm decides to invest in a property, it is often because it has discovered a hotel with unfulfilled potential. CLG views the undeveloped possibilities of a poorly designed or inadequately managed hotel as an opportunity to achieve phenomenal return on investment by concentrating on those unrealized aspects of the property, making them vital, and using them as an engine to drive revenue.

CLG Managing Partner and Co-founder Maki Nakamura Bara says, “Our M.O. is to look at properties that have a repositioning opportunity,” finding hotels that are “missing one last step cosmetically.” In many cases, F&B plays an integral role in taking that last step and optimizing the guest experience and the overall success of CLG’s holdings.

A $10 million renovation at the Allerton Hotel in Chicago (acquired by CLG in 2006) offers a prime example of using F&B outlets to enhance atmosphere, energy, and revenues. Bara says the group noticed a planning flaw in the layout at the 450-room hotel that allowed guests to arrive on the first floor and proceed to a lifeless check-in area on the third floor, completely bypassing the lively F&B outlets on the second floor. “Guests could potentially never see the F&B area,” Bara notes.

The remedy, the team decided, was a risky relocation, shoehorning the check-in desk into the second floor where arriving guests could see and feel the F&B energy. “Space was tight,” admits Bara, but the lobby lounge area has become “the heart of the hotel,” providing an enhanced check-in experience in a dynamic setting with an inviting “living room feel,” where guests gather or simply relax during a few minutes of downtime and where evening manager’s receptions are held.

Despite its close quarters, the space has taken on a vibrant life of its own and has garnered nominations for design awards.

Maintaining interest in the F&B options was key to the reinvigoration scheme. The restaurant itself was reconceived and reopened as M Avenue, a modern venue under Executive Chef Michael Fusano that has also received design nominations. Within M Avenue, CLG sought to preserve a constant energy throughout the three service period hours by “flexing the space” available to guests. Through innovative design features, the restaurant can open up available space for busy periods and hide unused areas for quieter times and more intimate service. “Nobody wants to sit in space that’s dead,” says Bara.

In the morning, the entire space is utilized for guest breakfast. During the day, shimmery curtains and other design elements can divide space for better usage. By evening, the outlet may have morphed into a smaller seating area with more lounge space where bar food is offered. Bara says passer-by business is a challenge for a second floor location, but guest capture for the evening hours has increased since the renovation.

An added benefit of the renovation is the extra square footage gained in the former check-in space on the third floor. “As real estate investors, we are committed to maximizing every square inch of a property,” Bara says. CLG converted the available area into a ballroom and more meeting space, which also contribute to the F&B bottom line and overall ROI.

CLG and its management arm, Kokua Hospitality, originally planned the Allerton’s juxtaposition of F&B outlets near check-in as a guest amenity and hoped to see a full return on investment in three to five years. But breaking even took far less time, somewhere between one and two years. Each of CLG’s lobby F&B implementations since then—at the Doubletree Hotel Chicago Magnificent Mile, the Inn of Chicago, and the Sir Francis Drake Hotel San Francisco—have proven that to be the rule.

Bara cites a 20 percent increase in revenues at M Avenue since the renovations—during a period of world-wide recession. Guest satisfaction with the changes, she reports, is also positive. Based on this string of successes, CLG has mandated the implementation of lobby F&B outlets at every property in its portfolio.

Denny Lewis is a six-year HOTEL F&B veteran and professional freelance writer.

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