Suite Success

Hotel work leads a surge in business at 75 top firms

Judith Davidsen, Laura Girmscheid, and Candice Lee -- Interior Design, 10/1/2006 12:00:00 AM

Hospitality designers won't leave well enough alone. In 2005, after years of complacently reporting 50 hospitality firms worthy of the name Interior Design Giant, we were forced by a surge in work and fees to increase the ranks of leaders from 50 to 65. Now, all of a sudden, there are 75 of them—it's been more than a decade since anything like this has happened.

As we pointed out last year, clients are becoming more aware that profitable hospitality is no longer a simple matter of glamour. More important are service, convenience, efficiency, technology, and an appreciation of guests' needs (and fantasies)—all the things to which interior designers have dedicated themselves since the profession began.

This year's 75 hospitality Giants earned a total of $379,984,481, which is not merely 38.3 percent more than last year's earnings. (You would, after all, expect an increase in the number of firms to result in an increase in reported earnings.) The statistic of consequence here is the average 20 percent more that those 75 firms earned over the average for last year's 65. These Giants are experiencing a serious upswing. Eight, in fact, reported hospitality fee increases that range from 108 to 199 percent.

All the expansion has created volatility among the hospitality Giants, with 23 firms newly inducted into the ranks and nine zooming straight into the top 50. Only eight of the newcomers can be found among the top 100 or 200 Giants, but we noted our suspicions last July that some of the second 100 Giants were preparing to muscle in on the hospitality Giants. Sure enough, five of the second 100 did—with three moving straight into the top 50 for hospitality.

Hotels were the greatest moneymakers, accounting for 49.2 percent of design fees, and luxury hotels were responsible for almost three quarters of that. Resorts came in second, with 12.1 percent of income, restaurants third at a round 10 percent, down from last year's 14.

For 21 hospitality Giants, or almost a third, hospitality is their only work. For another 11, the sector accounts for 95 percent or more of income, with office, retail, and residential taking up most of the slack. Half the hospitality Giants expect increasing opportunities to arise from an intensifying crossover between hospitality and health care.

The hospitality Giants installed work valued at a total of $13,413,768,251 for an average of $222,357,360, up 64 percent from last year's average. Area installed totaled 128,960,302 square feet or an average of 2,049,979 square feet, up 10.8 percent. These figures seem to indicate quite a bit more spending per square foot than during the previous study period. The average hospitality fee earned per design employee was $126,118, up 16.7 percent.

Sustainability is becoming integral to the design philosophy of 85 percent of the hospitality Giants, but only 69 percent report that clients are signing on. A wag of the finger to some of those companies—but a tip of the hat to our Giants.