AIRPORTS ARE SCENES of constant motion connecting one city to the world. Owning and operating a hotel in that environment requires a wide perspective, nimble management and a sharp focus on customer service. More so than in other markets, airport hotels face extra costs, such as the requirement to provide an airport shuttle service, as well as extra challenges, including guests who may already be extremely stressed out by their traveling experiences. That being said, there is also the opportunity for the right property to take flight.
Average occupancy rate is 77 percent in five top airport markets in the U.S. – Atlanta, Georgia; Washington, D.C.; San Francisco/San Mateo, California; Dallas, Texas; and Baltimore, Maryland, according to data from STR. Combined, ADR is $123.80 and RevPAR averages $95.50
“We are a very busy hotel. We’ve had 82 percent occupancy since we opened [in 2013],” said Michelle Strong, general manager of the Courtyard by Marriott and the TownePlace Suites by Marriott at Dallas Fort Worth International Airport. The dual-branded project that includes a conference center is owned and managed by NewcrestImage of Irving, Texas.
The key to business success at an airport hotel complex, Strong said, is a good beginning. “Do it right the first time,” she said. “If it’s not built right the first time, you’re always going to have challenges.” The DFW hotels are all steel construction and the local municipality requires at least 300 rooms for any new development. The hotels’ windows have an extra layer of glass to provide better soundproofing.
Most local municipalities stipulate that hotels near airports have soundproofing in place, said Vinay Patel, president and CEO of Fairbrook Hotels, which owns/operates a Country Inn & Suites and a Hampton Inn & Suites near Washington Dulles International Airport, as well as a Country Inn and Suites close to Baltimore/Washington International Thurgood Marshall Airport.
Vipul Dayal, president of VNR Management, has a unique approach in dealing with sound issues at his hotels near San Francisco International Airport – the Americas Best Value Inn in Pacifica and Days Inn in San Bruno. Front desk employees offer guests earplugs during check-in. The amenity is not always necessary, however. “For us, luckily, the flights usually come in from the bay so we don’t have too much noise,” he said. Plus, the hotels have quadruple-paned windows. VNR Management also has a La Quinta Inn & Suites in Bedford, Texas, near the DFW airport.
For airport hotels, many municipal zoning and planning boards ease requirements for parking as most guests do not have cars, Patel said. The hotels’ designs may differ slightly than their brand peers, featuring a large area to store luggage and outside porticos at the entrance that protect hotel-shuttle passengers from the elements.
When building in an airport area, developers need to be mindful of airspace restrictions, Strong said. “We probably would not host a drone convention,” she said. Airspace restrictions were a consideration when Neel Shah, president of Hotel Evolution in Atlanta, decided to build a 99-room Home2 Suites by Hilton near Hartsfield-Jackson Atlanta International Airport. “That’s one reason I only have 99 rooms [in the Home2 project],” Shah said. “I cannot go taller.” He expects to break ground on the project by summer.
Shah, whose company owns a 106-room Hampton Inn & Suites that has operated on Hartsfield-Jackson’s north side since 1999 and owned a Hilton Garden Inn in the same area until he sold it in 2014, has taken some extra steps to ensure the success of his airport properties.
Knowing the municipalities surrounding the airport historically did not work well together and wanting to do something about it, he joined the board of directors for the Aerotropolis Atlanta Community Improvement District that formed in 2013. The CID has invested in branding and infrastructure changes around Hartsfield-Jackson to promote tourism and improve security. “We are trying to raise as one unit the entire perception of the airport market,” Shah said. It includes representatives from large nearby businesses such as Chick-fil-A, Woodward Academy, Wells Fargo and Delta Airlines. “I just saw the caliber of those people and thought. ‘Something’s going to happen here,’” Shah said. The CID’s success influenced his decision to build the Home2. “I don’t feel like I’m going back into an area that’s declining.”
Once an airport hotel is built, the challenges continue, from marketing to operations. At the heart of it all, revenue management is of primary importance. Revenue management at an airport hotel is different from other types of properties because the hotel’s revenue manager has to have a global perspective, Strong said. Like the theory of a butterfly flapping its wings and starting a hurricane on the other side of the globe, airport hotel markets are connected in a very real way. “Revenue management is much more intense at an airport hotel,” Dayal said. “You can have things from all the way across the country affect your business.”
Flexibility is a must in handling guest traffic at an airport hotel. A snow storm on the East Coast can close airports that are the destinations of guests at NewcrestImage’s DFW hotels, forcing them to extend their stays. Sometimes guests will check out and leave for the airport, only to find their flight has been canceled. Other times you have many unexpected guests in need of accommodations. “It requires minute management of your inventory day to day when you’re in the middle of a crisis,” Strong said. “It is an orchestration of beautiful chaos.”
The vagaries of air travel lead to another complication for airport hotel owners: guests who come into the lobby still carrying an extra load of stress with their luggage….if they arrive with their bags. “We stock up on the physical [necessities, such as] toothbrushes, for guests whose luggage may be in China right now,” Strong said.
Strong and the other airport hoteliers agree providing excellent service to these weary travelers is the best way to separate your property from the competition. “You have to bring your A-game,” Shah said.
Most of the hotels mentioned here provide park-and-fly services, and they all have shuttles. “It would be bold move to build near an airport and not include that,” Shah said.
However, shuttle buses represent a major investment. “It tends to be expensive,” Patel said. “Just the shuttle costs us $70,000 a year extra.”
Strong, Patel, Dayal and Shah had similar advice for anybody planning to invest in an airport hotel: Provide great service and invest in tools that help you handily manage operations and in amenities that exceed guest expectations. “I would say invest in a STR report, it would be a good start,” Dayal said. The report shows operators the business performance of competing hotels in the same market, challenging managers to be creative in setting rate as well as marketing their hotels to a wide variety of travelers.
Successful airport hotels are continually in a development process. “We are one of the first Days Inns to offer mobile check-in. We invest in and upgrade our Wi-Fi on a constant basis,” Dayal said. “We recently spent almost a $1 million to completely remodel our hotel.”
It’s also smart to scout for the right location. “If you build in an airport area you have to remember most of your guests don’t have a car,” Patel said. “It’s very convenient to have a restaurant next door.”