News for the Hospitality Executive
|By Suzanne Marta, The Dallas Morning News
Knight Ridder/Tribune Business News
Nov. 5, 2003 - The crown moldings that accent one of the model rooms at Dallas/Fort Worth International Airport's Grand Hyatt hotel may come off.
Same goes for the cream-colored wood paneling under the sinks in the bathrooms.
Getting the details right will be key – particularly since D/FW will own the hotel that is expected to become an important symbol of the airport's revenue strategy.
The airport already gets about $1.1 million in revenue through its lease with the Hyatt Regency DFW. But by the end of its second year of operations, the Grand Hyatt will contribute more than $6.3 million, the airport expects.
Granted, the 298-room hotel won't open for more than year – and it won't garner anywhere near the $68.3 million that comes from parking – but airport officials want to be sure they've made the right decisions.
"Are all these rooms going to have high-speed Internet access?" asked airport board member Ricardo Medrano while touring the two model rooms Tuesday morning and doing his own critique.
"Yes, that's right over here," said Pat Gleason, the airport's vice president of revenue management, directing him to the jacks on top of the desk.
With hotel ownership comes the responsibility of bringing customers in the door – no small feat during the sluggish economy of the last two years. And the hotel is an example of how airports can earn more revenue on existing businesses by taking a more active role.
"The guests are captive, so all the revenue goes to the airport," said Seth Young, a professor specializing in airport management for Embry-Riddle Aeronautical University.
As the airline industry struggles to regain profitability, D/FW officials have spent the last two years looking for opportunities – such as the hotel deal – to boost nonaviation related revenue.
The airport took a similar approach last year when it revamped its parking program – which is the airport's largest nonaviation revenue source. The business struggled during the spring due to the war-related downturn in travel.
But business has improved during the last few months. Parking revenue from express lots, for example, is up 20 percent since Labor Day.
In the case of the hotel, grabbing that extra revenue potential won't come cheap. The Grand Hyatt, which will reach eight stories above the new international terminal, carries a $58.7 million price tag.
And for that price, airport officials want to be sure everything is just right.
They conducted focus groups among business travelers and frequent-flier groups over the last year to bounce ideas and gain feedback. The results: upgraded room amenities, such as higher quality linens and mattresses.
Earlier this year, the airport board boosted the budget by more than $1 million for further upgrades to the guest rooms, which were designed by Dallas-based Wilson & Associates Inc. The smallest rooms will be 450 square feet – 12 percent larger than a typical room. Showers and tubs will be separate, similar to setups in other upscale properties.
"It's becoming the trend for hotels and we think it will give us a competitive advantage against hotels in the area," Mr. Gleason said.
The Grand Hyatt is scheduled to open in January 2005 with an upscale restaurant and bar, 18,000 square feet of meeting space, and a rooftop day spa and pool with a view of the Dallas, Fort Worth and Las Colinas skylines. Average room rates will be $174 – a step above the Hyatt Regency, whose rates range from $79 to $179.
Most major airports have hotels on the same property, but few are connected to a terminal, as the Grand Hyatt will be.
The Hyatt Regency DFW, owned by a partnership between Hunt Realty Corp. and Hyatt Corp., opened 30 years ago with 558 rooms. In 1980, the hotel added an east tower and 811 rooms. The west tower was imploded in 2001 to make room for Terminal D.
The Hyatt Regency is also undergoing a renovation – at a cost of $32 million – to add meeting space and upgrade guest rooms. Upon completion, the Hyatt will have 92,000 square-feet of meeting rooms and ballrooms, which it hopes will attract larger groups, said Tom Smith, general manager. The Grand Hyatt would be used for overflow guests.
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(c) 2003, The Dallas Morning News. Distributed by Knight Ridder/Tribune Business News.