The pluses of carving out a chunk of a hotel to create a
separately branded, smaller hotel include higher room rates, a wider spectrum
of guests and the chance for a hotelier to try out a new concept without
remodeling hundreds of rooms.
After listing the perks, Dave Kaplan also noted a downside
to a “hotel within a hotel”: “It’s a complicated partnership,” said Kaplan,
whose company operates the Rooms at the Walker Inn, which occupies a floor of
the Hotel Normandie in Los Angeles.
While the concept of a hotel within a hotel was inaugurated
more than a decade ago at MGM Resorts International’s Mandalay Bay, September was one of the first times the idea had made its way beyond Sin City. At the
beginning of the month, the 10-room Rooms at the Walker Inn opened, featuring
vintage decor and a secret hallway to the Walker Inn, a downstairs bar that
targets craft-cocktail aficionados.
More telling was the Miami debut in September of Nobu
Hospitality’s latest hotel headed by celebrity chef Nobu Matsuhisa, which
opened its first hotel within a hotel at Las Vegas’ Caesars Palace in 2013.
With Nobu Hospitality overseeing everything from the hotel’s design,
furnishings and in-room menu, right down to its scent, the 181-room Vegas hotel
offers its guests additional amenities such as preferential seating at the
property’s Nobu restaurant as well as VIP access to Caesars Palace’s Omnia
Nightclub.
The Nobu Hotel Miami Beach is a 206-room hotel fully
contained within the 61-year-old Eden Roc Miami Beach. The Nobu hotel is built
inside a tower designed by noted Miami architect Morris Lapidus and features a
Japanese motif as well as a 24-hour, in-room dining menu specially created for
its guests. It eventually is slated to have a private pool.
While room rates for the Eden Roc range from $279 to $579 a
night for late-October stays, Nobu Hotel’s rates start at $429 a night and work
up to $829 for the Nobu Zen Suite. Nobu Hospitality’s investors include actor
Robert DeNiro and Australian developer James Packer.
“It’s about trying to maximize the real estate value and
bringing a higher [average daily room rate] to a floor or two,” said Jan
Freitag, senior vice president at hotel-industry research firm STR. “You’re
taking a large property and carving it up.”
The concept was originated in 1999, when Las Vegas’s
3,015-room Mandalay Bay Resort and Casino opened. That property dedicated its
top five floors to a 424-room luxury hotel that is branded and managed by Four
Seasons. Four years later, Mandalay Bay added a 1,122-room tower that housed
what was called TheHotel at Mandalay Bay.
The hotel within a hotel concept migrated to South Florida in 2010 when Marriott opened the luxury Hotel Beaux Arts on the 39th floor of the JW Marriott Marquis in downtown Miami. Hotel Beaux Arts has 44 rooms compared with 313 at the Marriott Marquis.
Then, two years ago, owner MGM Resorts renovated the tower
and reached a licensing agreement with lifestyle hotelier Morgans Hotel Group
to re-flag the property under Morgans’ Delano brand, bringing what MGM Resorts
vice president of sales Stephanie Glanzer calls “a South Beach feel to the
desert.”
“Because it’s an all-suites property, we’re obviously going
after a different audience” than the rest of Mandalay Bay, Glanzer said. “We’re
looking for guests who don’t want all of the bells and whistles of Las Vegas
but want more of a private hideaway.”
Further evidence that the concept might slowly be gaining
popularity is that the two most recent examples of hotels within hotels aren’t
being carved out of behemoth properties. While Caesars Palace and Mandalay Bay
each offer more than 3,000 rooms, Miami’s Eden Roc has 631 rooms, and Hotel
Normandie has just 94.
Both the smaller hotels are looking to replicate the success
that hotels within hotels have achieved in Las Vegas. While Caesars
Entertainment does not disclose occupancy or room-rate figures for the Nobu
Hotel at Caesars Palace, rates for late-October stays start at $419 a night, or
about $10 more than rooms in the larger hotel.
“Nobu Hotel Caesars Palace has consistently been recognized
as one of the best luxury hotels in Las Vegas, with some of the highest room
rates and occupancy levels within the city,” said Nobu Hospitality CEO Trevor
Horwell.
Meanwhile, down the Strip, Glanzer estimated that MGM
Resorts charges $20 to $50 a night more for the Delano than it does for rooms
in Mandalay Bay proper. And while Four Seasons representatives declined to
respond to a request for comment, Glanzer described the hotel as “a very high
performer, financially.”
This article has been updated to include information on the Hotel Beaux Arts in Miami, which opened in 2010.