Acres of Welcome

Judith Davidsen, Laura Girmscheid, and Wing Leung -- Interior Design, 10/1/2007 12:00:00 AM

After earning a grand total of $472,514,501, the 75 current Interior Design Giants in hospitality did 24.4 percent better than in the 2006 report. Six firms reported fee increases ranging from double to more than triple.

Total fixtures, furnishings, and construction came in at $16,237,752,993, just over 21 percent more than in 2006 and 13 percent more than the hospitality Giants themselves anticipated. Together, they installed 160,518,911 square feet—that's 3,685 acres—up 24.5 percent. (These are not hard-and-fast numbers, unfortunately, since a third of the respondents declined to provide the relevant information. They should be ashamed of themselves.)

With 402 projects encompassing 81,792,886 square feet, luxury hotels led the job pack: They accounted for 35 percent of the reported fees, down less than 1 point from last year. Luxury hotels combined with the boutique, mid-priced, and economy categories to garner 49.1 percent of all hospitality Giant fees; that's also down a fraction of a point. Boutique is the only hotel segment expected to increase: 3 percent.

Gaming rose almost 2 points to account for 10 percent of fees. Cruise ships more than tripled their share of fees but nevertheless continue to make up a very small fraction of hospitality earnings. That may change somewhat, as an August report from the Cruise Lines International Association indicates that 30 ships with 80,000 berths should come onstream by 2012.

Since the year 2000, hospitality has risen from 16 percent to 24 percent of the work performed by the top 100 and second 100 Giants together. In fiscal 2007, hospitality accounted for 42 percent of the total earnings of all the hospitality Giants. It's the sole specialty of 19 firms, the same as last year. For 21 firms, hospitality accounted for less than 50 percent of commissions.

Over a five-year period, median salaries rose 24 percent for principals and partners, 13.3 percent for project managers, 13.6 percent for designers, and 6.25 percent for other billable staff. The median salary increase for principals and partners exactly matches the increase in the rate at which they were billed out. The billing rate for project managers rose 20 percent, the rate for designers 23.7 percent, and the rate for others 25 percent.

Design staffs for the hospitality Giants are 16 percent larger than last year. Earnings per employee average $133,202, up 33 percent over a five-year period and closing in on pre-9/11 figures. This year's high was $604,333; the low was $16,020.

Two hospitality Giants worked solely outside the U.S., while nine did at least half their work abroad. Asia racked up 97 mentions, with the Middle East responsible for 40 of those. Latin America, including the Caribbean, was cited 54 times, Europe 29. Canada was mentioned 12 times, Africa seven. Only a third of the firms polled worked on U.S. projects exclusively.

The hospitality Giants believe that, over the next two years, the greatest opportunities for growth will be found in the U.S. West, followed by the Northeast, China, the South, the Middle East, the Caribbean, India, Mexico, Western Europe, the Midwest, Eastern Europe, South America, Canada, and Africa. These projections include less prominence for the United Arab Emirates and more for India. Additional offices are expected to open in Philadelphia, Chicago, and Las Vegas as well as China, Hong Kong, Dubayy, Qatar, and Nicaragua.

On the sustainability front, the clients of hospitality Giants are more likely (26 percent) to initiate discussions about green design than are the clients of the top 100 Giants (14.7 percent) or the second 100 Giants (18.4 percent). It's generally up to the firms to introduce the topic, though. To seal the deal, most say they need to provide hard data on return-on-investment, life-cycle cost/benefit analyses, tax implications, market studies, and product case studies.

Increased media coverage of green topics is a big help when it comes to persuading reluctant clients. If this year's stepped-up TV and print attention is any indication, they should all be ready to take on more responsibility right about now. After all, what would they say if Robert Redford asked them what part they've played in the war on global warming?