Hoteliers base need for pools on market, guest demand
 
Hoteliers base need for pools on market, guest demand
10 AUGUST 2017 8:24 AM

In some markets, hotel swimming pools remain a core amenity. In others, they’re disappearing as brand standards have relaxed.

REPORT FROM THE U.S.—While the venerable swimming pool remains a staple amenity in countless hotels worldwide, a growing number of hoteliers are now rethinking their properties’ aquatic offerings in response to expensive regulatory measures and lofty equipment costs. Hotel pools are also being abandoned to put that premium space to a better use that yields greater returns.

For some brands and locations, pools are a pricey budget-breaker, destined for only minimal use.

Few will argue that it’s cheap to build and maintain a hotel swimming pool. But opinions differ on whether that expense is worthwhile.

“Pools are very popular with families and children, but many times hotel pools sit empty and are not in use. So you’re seeing some brands that are no longer requiring pools and are letting the owner choose whether to put them in or not,” said David Sangree, president of Hotel & Leisure Advisors, a consultancy which focuses significantly on waterparks. “It’s a difficult quandary, because when you don’t have a pool, there are people who will not choose you because of that. It’s hard to quantify the number of occupancy points you gain by having a pool.”

The expense
In a new hotel development, the costs associated with putting in an indoor pool will include from tens to perhaps hundreds of thousands of dollars for dehumidification equipment and wheelchair lifts.

For both new and existing hotels, there are also ongoing monthly expenses, such as chemicals, water, power and maintenance. Outdoor pools tend to be more inexpensive to run (no HVAC needed), but may get less year-round use, and associated FF&E costs will be higher due to exposure to the elements. Either way, some hoteliers are happy to spend it.

“Day-to-day operations are not very expensive. The benefit outweighs that cost quite easily,” Kirk Wright, VP of operations for Banyan Investment Group, said. “With leisure hotels, the more amenities you have, the better opportunities you have for sales. You cross a wider cross-section of the population and people’s desires …. Whether guests use it or not, for the people who book (the hotel), it’s an added incentive for coming. It does definitely influence pricing of your hotel, and it influences decision-making.”

In some cases, however, it no longer makes sense, especially at hotels with marginal leisure demand, sources said. For example, in some urban locations where business and group demand dominate—and spaces is limited—creating added fitness facilities, banquet space or an food-and-beverage venue may prove more lucrative. If the brand standards allow it, the owners of these hotels may decide to skip having a pool entirely.

“If I have Courtyard-type hotels in places like Pittsburgh, I’m converting those pools because they’re never used, because they’re in a very heavy business area. You have to really understand your demographics,” said Matt McClelland, EVP of operations and development at Concord Hospitality Enterprises, which is no longer including pools in its new urban hotels.

“Pools are not overly expensive to fill-in and turn into revenue-producing spaces. We have one we’re turning into a rooftop bar, one we’re turning into a banquet space, and I’d expect to see a lot more of that in the future. It’s pretty easy to run an ROI to see the banquet space is going to produce a lot more revenue at a higher margin than a swimming pool.”

Middle ground
Other hoteliers find a happy medium when it comes to pool spaces.

The Westin Austin Downtown’s award-winning rooftop pool, Azul, takes center stage amid the hotel’s amenities. But pairing the 21st-floor oasis with inventive poolside F&B offerings and buzz-worthy events is what has truly pushed the space’s profit potential over the top, hotel GM Kris Carlson said.

“What works well for us is creating the restaurant around it, and then creating the energy and programming of it. We’ve turned it into usable, sellable space,” he said. “We’ve turned it not only into a revenue-generating space on its own, but we’ve been able to market it as a differentiator to the rest of our competitive set. For us, it’s a big-time differentiator.”

Effect of regulations
Pools became a somewhat costlier proposition in May 2012, when government regulations took effect mandating the installation of permanent wheelchair lifts in all hotel pools and hot tubs. The price per lift—generally several thousand dollars apiece for parts and installation—wasn’t untenable for most properties, so operators either paid for retrofits, or built lifts into plans for future new-build hotels. Fortunately, the lifts have been mostly a one-time expense so far.

“Anytime we have a regulation, it hits your pocketbook,” said Navin Shah, president of Royal Hotel Investment. “I have never seen anybody using the chair lift, but we all need to comply 100%. Apart from that, once you install it, the cost of maintaining it is not very expensive.”

The mandate for wheelchair lifts did, however, have an adverse effect on hotel hot tubs, which are also required to offer the safety equipment. For some hoteliers, hot tubs already were considered an expensive, infrequently used amenity; and rather than pay to install the lifts, they simply removed the hot tubs.

“We’re not doing hot tubs anywhere. Not only have we removed them, but we’re not programming them in anymore,” McClelland said. “Going back and retrofitting the lifts certainly made some decisions for us to get rid of hot tubs, because it was about the same cost to just close it in. It’s also extremely expensive in terms of maintaining that perfect temperature and chemical use. That’s why America’s seeing them disappear from most hotels.”

Pools may or may not follow, depending on the location and owner.

“If brands don’t require a swimming pool, I would do it anyway on my own,” Shah said. “If you are the only hotel that doesn’t have a swimming pool, you’re in big trouble.”

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