Assets often experience high initial revenue performance; they're new and shiny and they have a decent marketing budget for launch; the likes of hotels frequently delivering 60–80% of total revenue from room sales in their early operating years.

However, recent data highlights that 69% of UK hospitality businesses are operating below 85% of their required capacity; that's not 85% of their total rooms or covers, that's 85% of the rooms or covers they need to sell to stay in the black. The marketing budget dries up. They're no longer the new kid on the block and they're unable to build enough loyalty or narrative to see out year three, four and five. Instead, they're viewed in a pool of other operators, of several other hotels or restaurants to choose from.

That’s the trend we look to avoid. Treating launch-week as a single week instead of the benchmark for most weeks in the year.

The gap

The gap between what a development promises and what it delivers is usually invisible in the appraisal. It’s sometimes hard to spot within the development phase. Though it makes itself known in the P&L.

Revenue assumptions are often based on comp set analysis or market trend data. Cost assumptions are modelled against industry benchmarks. Both are reasonable starting points. What's rarely modelled is the execution gap: the difference between the revenue and cost assumptions built on the designed scheme and the revenue and cost outcomes of the scheme that actually gets built after VE, after contractor substitutions, after the brand brief arrives six months after planning has been approved and design development is well underway. Then there’s the operational and customer experience on top; the emotional, value-based reason for people to keep coming back.

This gap compounds. A slightly weaker F&B specification leads to slightly lower average spend. A slightly compromised communal space leads to slightly lower dwell time. Slightly lower dwell time leads to slightly lower secondary spend.

None of these are catastrophic individually. Together, they explain why so many hospitality and mixed-use assets deliver well below their potential.

People don’t just want to be served,
they also want to be involved.

Concept, narrative and legacy are the three commonalities found between neighbourhood bars, restaurants, members clubs and hotels that have become institutions in their own right.

Legacy is what you’re aiming for, but it’s time-based. There are no shortcuts here, however concept and narrative steer you towards achieving it.

Concept is tough. It requires a synergy between design and operation. It also requires clarity and consistency. It allows all subsequent decisions to be made with ease because they all stem from the concept; the identity behind the establishment. This is where the level and type of involvement is defined.

Narrative is where the concept becomes human. It’s the story people go home and tell their friends and families. It’s the feeling you leave people with.

Service is seamless, humble, subtle.
Involvement is dynamic, human, memorable.

The art gallery effect

The best art galleries do an incredible job of ensuring people show up, feel inspired to turn up, make the effort and be involved, on multiple occasions throughout the year. Swathes of people show up. Some for the free wine, some for the networking, some for the collection opportunities. Whatever the reason, it works.

They do it by interrogating their spatial programming and reaching beyond themselves as an institution, inviting people in who inevitably invite others, who invite others. The independent F&B scene and fashion industry have done this for decades; inviting guest chefs in, guest roasters. Brand alignment is played out perfectly when the brands know exactly who they are, what they stand for and what they’re there to create.

Final Thoughts

The key is twofold: [1] having a reason for people to turn up and [2] having an experience for people to come back for.

It is essential that both are designed and delivered with integrity and the earlier this is considered, the better – as the programming of the scheme will be integral to building the legacy.

It’s all in the stories people go home with..