The Sky's the Limit for Maximizing Hotel Revenue in Manhattan | Jones Lang LaSalle Hotels Survey

Jones Lang LaSalle Hotels released its research study Manhattan Hotel Rooftop Bars and Penthouses – December 2011, which reveals fascinating insights into the impact rooftop bars can have on hotels in the Big Apple. The report is based on a series of interviews with dominant players in the field and firm data, and details the operational upside that rooftop bars and penthouses can provide hotel owners.

The bar climbs higher Thirty-five hotels totaling 9,600 rooms in New York City feature a rooftop bar, representing 12 percent of New York City's total hotel room supply. Lifestyle boutique hotels are still the most prevalent properties offering rooftop bars; however, international hotel chains have entered the rooftop bar arena, representing nearly a third of the total number of rooms.

"In recent years, hotel owners and developers have begun to embrace the rooftop bar strategy en masse," said Amelia Lim, Executive Vice President of Jones Lang LaSalle Hotels. "New York continues to be at the forefront with its ever-expanding and active rooftop bar scene. The concept has caught on in other U.S. gateway markets like Miami, Chicago, Washington, DC and Los Angeles, as well as international hubs."

Rooftops can be a balance sheet booster Rooftop bars have proven to be highly profitable venues, using what is typically non-revenue producing space. Revenues can reach up to $120 per square foot per month in peak season, with departmental profit potential of up to 50 percent.

"Rooftop bars and lounges have become a game changer and an iconic feature for hotels in densely built-up markets. They often represent a substantial profit center, delivering a high return on investment," added Lim. "Situated high above the hustle and bustle, rooftop bars consistently draw in a crowd because they are simply a great place to escape, enjoy the view and have a drink and a bite."

Creating an urban sanctuary Development capacity constraints are a hallmark of high barrier-to-entry markets. Rooftop bars are a creative way to maximize the development capacity of a site or an existing building within such markets. With more than 42 percent of the rooftop bars in New York constructed atop pre-war buildings, conversion of flat roofs or programming space into a ground-up project is becoming increasingly popular. When thinking about constructing a rooftop bar, keep in mind that not all markets can sustain this type of development.

"In any real estate development, careful planning for accessibility, design, security and zoning weighs in as a major factor, but this is especially true for rooftop bars," said Pete Dordick, Vice President of Project and Development Services for Jones Lang LaSalle. "We expect to see an uptick in rooftop developments and surprising concepts enter the market, as boutique and independent operators continue to be incentivized to push the envelope and test the boundaries on existing concepts."