Money

A group of 35 from India are in the process of checking in to the Strand Palace hotel in London and, to put it diplomatically, things are a bit hectic. Luggage is everywhere and people seem to be milling aimlessly around the lobby. General manager Sally Brady stresses that this is an unusual situation, and gives assurances that calm will return within a short while.

She is right. Within 15 minutes, the lobby is back to how it usually looks. There is a steady flow of people in and out of the hotel, and some of the seats in the central area are occupied with people waiting for friends to arrive.

All may be quiet, but this does not satisfy Brady. Like a number of hoteliers around the UK, she sees in the scene before her missed opportunities to earn revenue - and that is something she intends to rectify quickly. Within weeks, the group check-in desk which had created the bottleneck is to be moved and replaced by a café bar operated in partnership with coffee company Kenco.

Rationale

The rationale for introducing a café to the lobby is simple, as Brady explains. "There is no café in the lobby now," she says, "but every time you walk through the lobby, there are people waiting for other people, or reading their newspapers, or you get the leisure guests sitting in the lobby rather than their bedroom planning what they want to see during their visit to London. A good number would like a nice coffee while they are waiting.

"There are also tremendous opportunities to sell coffee to groups arriving and departing," she adds.

Initially, the Strand Palace will open a small coffee bar, branded Café Express, at a modest cost of £17,000. The £2.5m revamp of the entire lobby area, which is to start in December, will include room for an even larger café area as well as a mezzanine cocktail lounge.

If the hotel needs proof that opening this type of retail operation in the lobby works, it need look no further than sister hotel the Cumberland in Marble Arch, where the Café Express concept was born a year ago. Then, the hotel's concierge desk was moved and replaced with a counter selling coffee and freshly baked Danish pastries and doughnuts 24 hours a day. The Café Express brand, now a Forte trademark, was devised in-house.

Healthy income

From the start it was a success. Residents and non-residents alike use the counter to grab a quick snack which they can carry to one of about 60 nearby seats. According to general manager Paul Schnepper, this simple idea to generate revenue from the 1,600 people or so who move in and out of the lobby daily is now contributing healthy income. The café brings in £8,000 a week in sales, and gross operating profit is about 65p for every £1 of sale.

Schnepper is delighted with the success of the idea, and proud that it is one that is to be rolled out throughout the Forte portfolio in Posthouse hotels. "We live in a day and age where we look at every square metre to see how we can utilise the space," he says. "The lobby was obviously screaming at us. Before, it was a clear lounge area and therefore wasted space. Now we have a very good retail area."

While others in the Forte group, such as the Strand Palace, are following the Cumberland's example, Schnepper feels that all hoteliers should be looking at ways to generate income from lobby areas. "You need to be of the opinion that every metre costs money," he says. "If you look at a company like Marks & Spencer, they occupy every square inch of space, so why not the hotel and catering business?"

Earning capacity

Aside from refreshments, visitors to the Cumberland's lobby will also find a First Call ticketing booth, where guests can buy theatre tickets. "That money used to go into the porter's pocket," says Schnepper. "Now, it is part of the hotel's earning capacity. The facility to sell tickets is computer link-driven, so any hotel can do it. All a hotel needs is a PC and printer."

In another area of the Cumberland's lobby, the hotel, in conjunction with BT, has created a mini-business centre by arranging seating near a bank of fax, modem and pay telephones. The psychology is simple, says Schnepper: "If people have a desk and a seat, they use the telephone longer, therefore our commission increases."

His attitude is that encouraging people to come into the hotel by enhancing the range of services available in the lobby makes good business. "Why should I mind people coming in to make a telephone call?" he asks. "This is a public place. For every human being who walks through the lobby of the Cumberland, stops and spends 25p on a phone call, then has a cup of coffee, progresses to the Chinese restaurant and ends up having a drink in Callaghan's bar, I am £100 better off."

His views are echoed by Bill Gosling, sales and marketing director at Greenalls Hotels and Leisure, which is currently reviewing the best ways of using space in the lobbies of its De Vere and Village Leisure Hotels properties. The only revenue the group now makes from lobby space is through the traditional route of renting out display cases.

Gosling says this can work well as long as hoteliers control the quality of the goods on display; if they don't, the image of the hotel can be dented. "As hoteliers," he says, "we have to look at all income streams, and the lobby area is certainly one where things can be improved. The important thing for hoteliers is that the business is not just about selling bedrooms any more. You need to get all the incremental revenue you can get, but you need to do it by providing the services customers want."

It is early days yet, but Gosling says the group is looking at the possibility of opening brasserie-style restaurants which spill over into the lobby area.

Possibilities

Regal Hotels is also looking at the possibilities of developing coffee and snack areas in its lobbies as part of its £80m makeover of its entire portfolio. Obviously, this option is only open to hotels which have the space to create a café area, but even in smaller hotels the lobby space offers commercial possibilities.

At the Jarvis Hotel in Chichester, for example, general manager Nicola Tregenza is pursuing the idea of using space in the lobby to highlight the nearby Body Shop factory, which is open for tours. In return for the publicity, Tregenza is looking for concessions on tour admission tickets for her guests, which she could use to encourage leisure break bookings.

"We are at a very early stage of our discussions, but we are hopeful that it will come about," Tregenza says. Whether it does or not, she is unequivocal about the need to use the lobby to best effect. As she notes: "It's the first and last thing everyone sees."