Beyond the Building: Guest Experience Firms as Hotel Gamechanger

Before a single dollar is committed to a hotel development, the most important question is not about construction costs or projected room rates. It is about who is coming, why they are coming and what they expect when they arrive. That must be the starting point, Gatehouse Hospitality founder and managing director Arnaud Millecamps says. And he’d know—his firm covers the full lifecycle of hotel property, from pre-development viability studies to asset management and day-to-day operations. Understanding guest segmentation, he says, is what determines every major design and investment decision. “If you understand in the first place that you see an opportunity to fill a demand gap in the market—whether that is corporate, leisure, groups, meetings and functions—that feeds directly into your business case,” Millecamps tells The Urban Developer . “Your future guest segmentation defines your value proposition. It determines your optimal key count, whether you need a full food and beverage offering, wellness, function space, or none of the above.” Guest experience influencing design The implications for design are direct, he says. A corporate-focused hotel in an outer Brisbane business park has a very different brief to, say, a leisure property on the Queensland coast. The former needs a dedicated workspace in every room, easy breakfast service and function space capable of attracting midweek corporate demand on Sunday through Tuesday nights—the hardest nights to fill in any city market. Without those elements, occupancy suffers regardless of room quality. “Hotels that do not provide those features are struggling to attract corporate demand,” Millecamps says. “Wrong interior design—missing that—will have a huge impact on viability.” ▲ Gatehouse Hospitality founder and managing director Arnaud Millecamps. Design calculations for upscale and luxury properties shift from adequacy to immersion. Millecamps points to the design evolution underway across the global hotel industry, where the “rigid consistency” of major international brands has given way to lifestyle properties that flex to meet a guest who might be travelling for business on Monday and leisure on Tuesday. That shift has driven the rapid growth of design-led brands such as 25Hours and Ace, and the acquisition of independent operators by major groups—Hyatt’s purchase of Standard International being one example—as global chains chase the margin premium that differentiated product commands. “The combination of appropriately-designed properties with a strong sales and distribution engine behind can certainly contribute to higher margins and superior owner returns,” he says. The Calile Hotel in Brisbane’s Fortitude Valley is widely discussed as an example of experience-led development reshaping a precinct, Millecamps says. When it opened, James Street was a developing strip; today it is one of Brisbane’s most desirable retail and dining destinations, with the calibre of surrounding businesses rising alongside the hotel’s profile. Millecamps says it has become the benchmark developers most frequently reference—though he cautions that its success came with significant risk and took time to compound. Ace Hotel Sydney also shows what is achievable when experience compensates for a secondary location. Despite sitting in what Millecamps describes as a “tier-two position in the Sydney market”, the hotel has built a strong performance record through activated public areas, a curated food and beverage offering, and design that pulls guests seeking experience over convenience. ▲ The Calile Hotel has set a benchmark for experience-led hotel development and is credited with lifting the James Street retail and dining precinct. Beyond the build: operating with intelligence The owner-operator model is where experience-led development finds its clearest commercial expression—and where most third-party managers, operating across multiple owners and competing brands, cannot follow. Crystalbrook Collection chief financial officer Nigel Greenaway approaches guest experience from an ownership and capital perspective. The group operates, owns, and develops under a single brand, which has enabled investment in infrastructure most operators cannot build. Over three years, Crystalbrook has committed to full data warehousing, consolidating all guest-facing systems into a single database that captures preferences, spend patterns and behaviour across every property. “If a guest who stayed in Byron Bay is checking into Cairns, we know their experience in detail,” Greenaway tells The Urban Developer . “That is the level of personalisation we are working towards.” Physical and experiential capex are treated as equally non-negotiable. Different expressions of experience-led design within the Crystalbrook portfolio produce measurable revenue outcomes. Crystalbrook Vincent in Brisbane, built around an immersive presentation of Vincent Fantauzzo’s artwork, sits at or near the top of its competitive set for occupancy and ADR. Crystalbrook Riley in Cairns—developed with an oversized pool, beach, rooftop bar, and indoor-outdoor dining—consistently ranks number one in its competitive set for ADR. Little Albion at Surry Hills, a heritage convent conversion positioned between luxury hotel and boutique guesthouse, regularly achieves rates that exceed many Sydney CBD luxury properties. Delete These rankings aren’t purely anecdotal, Greenaway says. Performance across all three is tracked daily through Smith Travel Research benchmarking, which covers around 95 per cent of Australian hotels. Function, not just fashion Function space is where the financial case for experience-led development is clearest. Millecamps estimates function margins at around 40 per cent, against 10 to 12 per cent for restaurant operations. He says that hotels with integrated conference facilities tend to command an accommodation rate premium as well. Food and beverage are strategically important, but the margins are thin and the competitive environment in most Australian cities is unforgiving. Both operators argue that hotel dining must serve the surrounding community to be viable—drawing local patronage is the proof of concept that guest demand will follow. Leasing F&amp;B to a third-party risks fragmenting the total guest experience and, in Greenaway’s view, introduces an element not fully invested in a hotel’s brand culture. Should hotels be treated as infrastructure? Developers weighing long-term hold strategies will find the infrastructure argument increasingly relevant. Greenaway, drawing on experience across the GFC and pandemic recovery, says that hotels rebounded faster than other asset classes—not because they were insulated from demand shocks, but because daily repricing and the absence of long-term lease obligations allowed them to recover and capture new rate levels quickly. “We are not encumbered with long-term leases that kept an income stream going because of hardship,” he says. “We can bounce back quickly.” ▲ Crystalbrook Collection chief financial officer Nigel Greenaway: the hotel sector bounce back faster than other sectors. On exit yields, Greenaway cautions that hotel valuations still rely too heavily on cap rates derived from comparable sales—a methodology he considers poorly suited to assets as non-homogeneous as hotels. Valuers, he argues, need to go considerably deeper into the intangible performance drivers that underpin EBITDA before applying a rate. Guest experience beyond the hotel model Hospitality thinking is migrating well beyond the hotel sector. Build-to-rent operators are drawing on hotel amenity and service models. Office building front desks increasingly employ hospitality-trained staff. Retail precincts are learning from hotels how to build dwell-time and loyalty. “The lines are blurring between serviced asset classes,” Millecamps says. “At the end of the day, it is all about how you make someone feel when they arrive.” That observation points to something fundamental about hotel investment that developers sometimes underestimate. A hotel is not a building rented by the night—it is an operating business whose value is inseparable from the experience it delivers. At the point of sale, Greenaway says, an owner is not selling a structure that can be easily repurposed or converted. The guest experience is what separates a building’s construction value from its value as a going concern, and it is that gap where the real return is made. “We can build a hotel with the best brass and marble in the world,” Greenaway says. “But if you get the check-in wrong, the checkout wrong, the room was not cleaned or the account is incorrect, at the end of the day, your physical asset is worth nothing.”

Beyond the Building: Guest Experience Firms as Hotel Gamechanger

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