Blog Category: Challenges

Early in 2013, we interviewed a selection of leading hotel brands on the state of the branded residence sector. 2009 through 2011 were challenging years, characterised by low transaction volumes and downward pressure on prices. However, 2012 has seen a resurgence in particular geographies (notably Asia), and even in North America built inventory began to sell once more. It was a strong year for new destination deals and the operators surveyed indicated a price premium over non-branded, high-end residential, of between 20 to 35 percent, with some prime urban locations significantly outperforming these ratios. One operator surveyed, observed that the branding of real estate by a premier hotel operator typically enhanced sales velocity by 20 to 30 percent, relative to unbranded residential real estate of a similar quantity. Emerging buyer markets included Russians, Brazilians, Arabs and, of course, South East Asians. Typical buyers lie between 40 to 60 years of age.

We asked the operators how the new economic environment would impact their future development plans and they were unanimous in stating that there is now a focus on exceptional sites in prime locations rather than in secondary or tertiary destinations. In some cases, greater scrutiny will be applied to the developer to ensure that they will be a suitable and financially stable partner.

There is greater emphasis, predictably on the more robust economies, notably China and South-East Asia (Indonesia, Philippines and Thailand were the most mentioned) but also Turkey, Morocco and hot spots in the Middle East (UAE and Saudi Arabia). Operator appetite is greater for urban, rather than resort locations, although exceptional resort sites will still be considered.

On average, urban branded residences are achieving annual sales absorption rates of around 50 to 80 units, although there are individual case studies of more robust sales rates in ‘hot’ emerging markets. In high-end resorts, operators historically expected sales to average between 20 and 40 units a year, although there is a strong relationship with price and this range can increase a little for those resorts where apartment products dominate the unit mix. However, these rates of sales velocity have not been achieved over the last four years in the resort market, with a few exceptions, and it remains to be seen what a typical level of sales absorption will constitute in the future.

Discussions generally indicated a rationalisation of unit sizes over the last two years. Pricing pressure makes it more attractive to develop slightly smaller units and maintain the average price per square metre. However, these are luxury products and will always need to be developed to a reasonable size in order to communicate the appropriate marketing message. In a resort context, all operators experienced an increased interest in furniture packages and resort rental pools in recent years, with up to 80 percent take up in longer haul markets.

In summary, ‘operators had a greater sense of optimism and excitement about 2013, with a strong sense that the North America market had bottomed out and emerging markets held strong potential for future growth.’

To obtain a free copy of the report, please fill in your name and email address in the comment section below (your information will not be posted).

This week, the US project teams are in Hong Kong for client meetings and are sharing space with the Hong Kong team in a tiny field office.

     The WATG Hong Kong Team: Perry Brown, Tom Fo, Mark Kowalski, Allen Hung, Aaron Ho, Delbert Ragland,
     and myself
     WATG Irvine: Greg Villegas, Sharmila Tankha, Matt Page
     WATG Honolulu: Harvey Maruya, Carlos Meyer, Tiffany Lee

Ron Van Pelt (WATG Singapore) and Margaret McMahon (Wimberly Interiors NYC) also graced us with their presence.

In all thirteen of us are sitting elblow to elbow in a tight, but comfortable work space.

 "It takes thirteen to build a village." - Harvey Maruya

Strip Appeal is an ideas design competition and traveling exhibit, intended to stimulate and showcase creative design proposals for the adaptive reuse of small-scale strip-malls. They asked designers to answer the question, "how might the small-scale strip be reinvented and redeveloped to local advantage?"

My submission focused on re-designing an existing strip mall in Minneapolis, introducing fresh food, public art and community green space to a neighborhood in need of these shared assets.

To view my official submission, click here.

If you go to another WATG office halfway around the world, what would be different? This was the context of my trip as I embarked to London on a four month exchange this summer. Earlier this year, WATG wanted to initiate a staff swap program to foster greater interaction between offices. I think it took me less than a minute to write my request after it was announced. The exchange was discussed and agreed between the Managing Directors and senior leaders of each office. Afterwards, Kirsty Rutherford, my partner in the swap, and I agreed on our exchange date and off we went.

WATG just set up a new office in Fitzroy Square. A lot of moving in and construction noise going on but very impressive. The BT Tower makes for a great landmark and somewhat similar to the Aloha Tower outside the Honolulu office window.

There are two people in the Honolulu Planning team, compared to 16 in London. I think the multiplication factor worked equally in and out of the office. There are 7,825,200 in London, compared with 718,182 in Honolulu. The metropolitan area of London is equal in size to the entire island of Oahu which took some getting used to. Fortunately, all the signs are in English and the public transit system is quite good. My spare time was spent sightseeing; museums, shops, parks, etc. became a daily routine. Contrary to my predilection, I only used my umbrella a handful of times and I never had a bad meal.

Everyone in the London office welcomed me warmly and getting up and running was no problem with all the WATG conventions. Working on projects outside of my usual China projects was challenging but the place-making principles and WATG's philosophy of creating destinations that lift the spirit are very much the same. Also familiar is the great sense of exploration and yearning to discover new places and directions in design. I was fortunate enough to participate on trips to a private garden in Scotland and to Kenya, both of which were personally and professionally enriching. Missing my tropical mountains and ocean, I felt somewhat lost in the urbanity of London. Consequently, I grew to appreciate the open space of London's parks and squares. It made me realize how important open space in and urban environment is in terms of quality of life.

Now looking back at my trip, I still am amazed our global company shares so much in common. There is much to be for our unique locales but we all have a common desire for excellence in design, a curiosity of new and exotic places and a fellowship celebrating our labors at the end of the day over some drinks. And whether it's London, Honolulu, Singapore, Seattle, New York or Irvine, I think we all feel a little more at home with our WATG sign nearby. Much of what we do, we call differently, but there is much similarity both here in Honolulu and London and quite honestly wherever you go, and if we keep that in mind, it really is an incredible world we live in.

Many thanks to everyone who helped to make our staff swap possible: All the staff in the Honolulu and London Offices and Mike Seyle and Diana Stacey from Irvine.

Nearly 1000 industry leaders gathered in Las Vegas this week to discuss, debate and define some of the key issues facing the Travel & Tourism industry at this year's WTTC Global Travel & Tourism Summit.

The mood among delegates could be described as "tempered optimism." Conference speakers generally reported that travel and tourism in both developed and developing countries is significantly improved over 2009 and 2010, and will soon return to pre-recession levels. However, due to recent unrest in some countries, the "mix" of travel has changed significantly.

Travel and tourism demand drives hospitality development, requiring new and refreshed designs of places people visit, stay at, and enjoy. Ever since WATG's founder Pete Wimberly partnered with Pan Am Airlines in the 1950s to explore and develop new travel destinations around the Pacific Rim, our firm has specialized in the design of culturally-sensitive destinations around the globe. Some of the key points discussed at the 2011 WTTC Summit are particularly relevant to our business, as they underscore the importance of tourism as a driver of economic growth and acknowledge its impact on the hospitality industry:

Travel and Tourism accounts for 10% of the world's GDP, and is one of the major sources of new growth for both emerging and established destinations. A common refrain at WTTC was: "Travel and tourism equals exports." In other words, when people travel internationally, they spend money on foreign goods and services just as if they purchased foreign goods from home.

Travel and tourism is a relatively simple way to help offset the huge trade imbalance between the U.S. and China, particularly as Chinese travelers seek to travel beyond their country's borders. However, the biggest stumbling blocks to the growth of international travelers to the U.S. and to other destinations are the strict restrictions and limitations on travel visas and immigration imposed after 9/11. Even so, millions will travel outside their home countries in 2011 for the very first time. It is time for governments to create simple and straightforward travel visa processes to encourage travel and tourism.

The global hospitality industry is extremely fragmented and interdependent. Hotels cannot expand unless airlines and other forms of transportation continue to increase capacity and routes. Airlines cannot increase capacity and routes unless people can freely travel to destinations of their choice. People will not travel to a destination unless they have comfortable, safe, and welcoming lodging facilities.

There is more capital available for hospitality projects today than at any time in the past three years, and capital continues to flow into the hospitality sector.  However, the expectations of investors remains high and only projects with the right mix will be funded.

Investors are looking for established brands and knowledgeable teams who know how to make hospitality developments successful.

Over the next 20 years, industry analysts expect business travel to continue to drive global economic growth.

Technology, it is widely agreed, will never replace the need of people to meet face-to-face in order to do business. A key to success in hospitality is a focus on the guest experience. Give visitors what they want; make them feel welcome; and offer an authentic experience that caters to their particular needs.

Next year's World Travel and Tourism Council Summit will be held in Tokyo in April.  Hopefully, by that time the U.S. and other governments of the world will have solved the travel visa bottleneck problem, allowing travel and tourism to continue to drive economic growth and prosperity.

I'm at the Global Spa Summit in Bali supporting our two Cornell Hotel Management students Sarah Widjaja and Saurabh Sud in the 'Profitable Spa Student Challenge' Four teams of students from Asian hotel schools are paired with design firms to submit entries. This year the theme was centred on profitability after previous years of 'fantasy' designs. Sarah and Suarab made a great presentation of their 'Theaven' spa concept, aimed at a younger market in the shopping malls of China's emerging cities. They created quite a buzz amongst the Spa professionals attending the summit.

The Seattle office recently put together two submissions for the annual HEADLINES 2011 traveling exhibition sponsored by the University of Washington Architecture PAC (Professional Advisory Council). This exhibition features projects from firms all over the Pacific Northwest region and will be on public display at the Gould Hall Court at the University of Washington, the Architecture Institute of British Columbia in Vancouver Canada, Washington State University - Pullman and Spokane, Montana State University, Portland State University, the University of Oregon, and more. Other firms in the exhibition include Olsen Kundig Architects, Bassetti Architects, LMN Architects, Mithun, NBBJ, Miller Hull, DLR Group, Mulvanny G2, VIA Architecture, NAC Architecture, Weber Thompson, ZGF, SHKS Architects.

The HEADLINES exhibit has always been about showcasing ideas and un-built work. It gives us the opportunity to share projects with architecture students and the general public that have never been seen outside of the studio. This year, we submitted the Mosaic project by Larry Rocha, Raj Chandnani, and Krystal Solorzano from the Irvine office as an example of an unrealized ideal and a creative approach to hospitality by juxtaposing basic needs with exotic luxury. We also submitted the Urban Oasis Shaza Hotel project by Cynthia Jacobs, Jin Koyama, Michael Brown and Jon Guerechit from the Seattle Office, which represents a project that may yet still be realized in the near future as a landmark icon in Cairo's skyline.

Schedule of HEADLINES exhibition:

April 15th to April 30th - University of Washington, Gould Hall Court
TBD – Architecture Institute of British Columbia, Vancouver
TBD - Washington State University, Pullman
TBD - Washington State University, Spokane
TBD – Montana State University
TBD – Portland State University
TBD – University of Oregon

WATG's Honolulu office is in the midst of a very special partnership with a non-profit community organization, Te Taki Tokelau, Inc. Our role has been to take the first steps toward helping the group build or acquire a permanent community center and language school.

Tokelau is comprised of four coral atolls north of Samoa with a total land area of 3.9 square miles. While there are only about 10,000 Tokelauans in the world, about 1,000 live in Hawai'i.  The majority of them are here because of their forcible removal in 1953.  With no right of return to their homeland, the Tokelauan community in Hawai'i is committed to preserving its culture and language and needs a dedicated space for their operations.

Members of WATG's Honolulu office began  by helping the community start to imagine exactly what was needed.  Since most funders want to see what will be built before they award money, WATG was asked to produce initial concepts, rough building plans, and a sense of the architectural character.

While the designers at WATG are masters of creating projects that heighten the experience of a unique location, this process was different. Our challenge was to imagine a building that could transport people from an environment in Hawaii to a remote coral atoll in the middle of the Pacific where life is wholly dependent on the ocean and reef networks and whose highest point is a mere 2 meters above sea level.  In the islands of Tokelau the concepts of sustainability and community are not buzzwords; they are about survival.

We had 23 people donate their lunch hour for an in-house charrette. The schemes ranged from large-scale complexes to small, movable buildings (one even included a volcano).

Ten days after this first charrette, six WATG designers and their families spent a Saturday afternoon with the students, teachers, and elders of the Te Taki community.  We were greeted with traditional song and dance and deep appreciation from the Tokelauan families.  We ultimately ended up with three different schemes that used pieces from many of the initial charrette ideas: a smaller, easily-phased building; a bigger, more iconic building; and a more expansive and ambitious master plan should Te Taki encounter a larger piece of land available for community groups.

Over the next few weeks we will provide Te Taki with more refined options as well as some rough cost estimates provided by a local cost estimating firm that has donated its services.  This will allow them to have an accurate starting point to begin looking at potential sites and funding. Hopefully, this is the beginning of a longer relationship and a way for us to give back to the broader Polynesian community whose home we share here in the middle of the Pacific.  For those of us involved, the experience deepened our understanding of what Aloha truly is. Stay tuned for more updates as this process moves forward.

So we're in St. Petersburg, Russia, working on the Chernomoritz Spa Hotel Resort in Sochi, Russia for the next winter Olympics in 2014. It's February. Let me fill you in on what that means exactly:
  •  Average temperatures of between -5° C and -10° C…  
  •  Ice and snow—everywhere...
  •  The main front door and windows at the local architects offices freeze shut from time to time...
  •  The Neva River (which is about 3 times the width of the Thames in London) resembles a large ice rink…
  •  Frostbitten fingers (OK, turns out they were just really cold). South Africa definitely wasn't the best breeding ground for these temperatures.

Seriously, this place does not take prisoners-the average London winter wardrobe doesn't quite cut it outside of the office or hotel.

Week 1 was all about acclimatisation...
Every morning started with a full spread for breakfast-excellent.  This was followed by a quick walk to the office; luckily, the hotel was right around the corner from the offices we were stationed at (thank you, admin staff). The hours were quite long but nothing outside the realm of normality for an architect. We got some quality work done and the project seemed to be under control (well, as much as a bull rider believes he is controlling the bull). We flew into the first weekend and, armed with my European Cities Guide Book (thank you, Angela Wareham, London Interiors), I headed off to the main site in St. Petersburg, the State Hermitage or Winter Palace. It is absolutely beautiful, and if you get a chance one day, you really should try to see it. The urban planning of St. Petersburg ties in so closely with the palace's planning, so it really is a pleasure to experience. The interiors are also quite a sight.

Week 2 flew by in a matter of heart beats. Two of my bosses flew down for meetings, and it was great to spend some time conversing solely in English. Before I knew it, it was the weekend again and, after finally realising that all the other people wearing jeans actually had thermals on underneath, we were off to the market. One of the local architects (Kirill Spirin, who is working hard on his English) took my colleague Diana Osman and me to see a few hidden gems. The first stop was the Russian military surplus store. What a perfect guy shop! Not sure if Diana will agree, but this was a highlight (I am still regretting not investing in a pair of night vision goggles). After that, we went to a lovely little cafe for lunch and then to the local market to buy the necessary winter wears. Towards evening it was definitely close to -20° C.

Week 3: Armed with my new and improved wardrobe, the temperatures this week aren't so bad. The first deadline is this Friday, so work is cranking up a notch, which is still enjoyable. It feels good to be performing such an integral role in such a high profile project. The queries are flying and I must thank the entire Sochi team back in London for their sterling work. The feedback has been fast and furious—you can really feel the presence of the large team back home as they exercise their full intellectual muscle.

So our return flights are booked and we have just a few days left here in St. Petersburg. It's been a steep learning curve and an amazing experience, so thank you WATG for this wonderful opportunity.

John Goldwyn, Lisya Sullam and I recently returned from a site visit in Montenegro. We were very impressed with the atmosphere, natural beauty and architectural heritage of this country as well as with the great site we have to develop. But the most incredible experience we had was conducting our design charrette in a car while driving at high speeds through sinuous mountains along the coast!

Upon arriving at our destination, we presented three sketches that we had produced during the drive, and everyone was really excited with the ideas we came up with. The combination of beautiful surroundings and the speed of our travel certainly inspired us and contributed to a very dynamic result.