“Assuming that there are other components such as office and perhaps residential as well, hotels and retail facilities complement each other by fulfilling needs of travelers with a high degree of convenience,” says Peter Keim, vice president in the Atlanta office of PKF Consulting, a New York-based hotel consulting firm. “It's been proven that one of the most popular activities for visitors to an area staying in hotel facilities is shopping. If a mixed-use development does not offer quality retail, then the visitors will likely seek it out elsewhere. They may anyway, but by providing quality retail in a mixed-use project, the opportunities for visitors to go elsewhere are somewhat diminished.”
Geoffrey Booth, director of retail development at the Washington, D.C.-based Urban Land Institute, agrees. “People staying in the hotel have a whole shopping experience at their doorstep, whether it be for food, clothing or just to sit and watch the passing parade. Quite often it will include cinemas and destination retail that further expands the range of opportunities on offer,” says Booth.
If a project is done correctly, “The hotel provides relatively affluent patrons who are generally in a mood to spend their time and money in the retail center, thereby boosting its turnover. The retail center provides more choice from a range of enjoyable experiences for the patrons of the hotel. It's a win-win relationship,” says Booth.
As Walter Williams, vice president in PKF Consulting's Washington D.C., office says, “Shopping is an amenity for the hotel. Retail stores become an amenity, particularly for leisure travelers. Everybody knows that shopping is the No. 1 leisure activity for leisure travelers, so it's a great fit.”
Retail reaps the benefits
What's interesting is that the retail component of these projects appears to be benefiting to a greater extent than its hotel brethren.
“I suspect that retail benefits more from hotel guests than do hotels from retail facilities,” says Keim. “The intangibles relate to the marketability of a hotel in a mixed-use project including retail, as compared to a stand-alone hotel requiring guests to drive or seek transportation to area retail centers. Hotels certainly market their proximity and convenience with respect to retail facilities because of the popularity of shopping as an extra-curricular activity for visitors.”
But typically, retail facilities alone don't generate significant demand for hotel accommodations, says Keim. He does cite several large and notable exceptions: The Mall of the Americas in Minneapolis, Sawgrass Mills in Fort Lauderdale, Fla., Potomac Mills outside Washington D.C., and Opry Mills in Nashville, Tenn. Other major high-end retail centers such as Fifth Avenue in New York, Rodeo Drive in Beverly Hills, Newbury Street in Boston and North Michigan Avenue in Chicago, to mention only a few, attract out-of-town visitors for weekend shopping trips and also attract international visitors who stay in area hotels while visiting, says Keim.
In Boston, Keim points to Copley Place as the best example of a successful project that blends the attributes of hotel and retail components. Copley Place includes high-end retail, two full-service, convention-oriented hotels (an 873-room Westin and a 1,147-room Marriott), 700,000 sq. ft. of Class-A office space and condominiums. Developed in the early- to mid-1980s, the project owes its total success to a variety of elements, including "its location and access from the Mass Pike and Back Bay; proximity and direct connection to the Hynes Convention Center; the quality and size of the hotels; convenience of pedestrian access to Newbury and Boylston Streets; and the overall, ongoing strength of the Boston hotel, office, in-town residential and retail markets,” says Keim.
Obviously to every rule there is an exception, but in the land of mixed uses, most often it's the planning and the partnership that makes the difference.
Ben Johnson is an Atlanta-based freelance writer.