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Hotels In Mixed-Use Districts Reaping Benefits Of 'Bleisure' Trend

As more workers are taking business trips this year after nearly two years of telework, employees are increasingly bundling those trips with pleasure. 

The merging of business and leisure travel, which the industry has begun to call "bleisure" travel, has boosted demand for hotels in mixed-use environments replete with amenities, where guests have more things to do and places to eat as they mix work and play.

Peachtree Hotel Group's Greg Friedman highlights how hotels in mixed-use projects perform better, along with Legacy Ventures' David Marvin, Hotwire Communications' Wayne Thompson, Smallwood's Mike Murphy, Amara Capital's Mary Beth Cutshall and Brian Renshaw with Moore Colson CPAs and Advisors.

"Guests prefer to be in a situation where they have that walkability, and they prefer to pay for it,” Peachtree Hotel Group CEO Greg Friedman said on a panel at Bisnow's Atlanta hospitality, sports and entertainment summit last week at the Hilton Atlanta. “You get a much higher rate, and you're capturing a much larger piece of the demand. It shows up in the actual numbers.”

Leisure travel has been the primary driver of the hotel industry's recovery during the pandemic, as business travel has lagged. But hotel experts say increasingly, business travelers are coupling work trips with travel for personal reasons, especially as remote work becomes more entrenched in the corporate world.

A possible recession, along with the highest inflation in 40 years, means more workers will likely blend their personal travel with business travel in the coming month as a way to cap their personal costs, panelists said.

“They end up coming here on a Wednesday and they end up staying here until Sunday because they're visiting family members over the weekend and doing work Wednesday to Friday,” said Friedman, whose firm has $2.3B under management, according to the Atlanta Business Chronicle. "That is business that didn't necessarily exist before."

Smallwood's Mike Murphy and Amara Capital's Mary Beth Cutshall.

Atlanta's average daily room rate is projected rise to nearly $116 this year, a $14 increase from last year and just $2 less than in 2019, according to CBRE data reported by the ABC.

The focus on leisure travel leading the industry's recovery means new hotels are loading up on amenities. Panelists said restaurants and rooftop pools continue to be huge draws for new hotels.

Legacy Ventures President David Marvin said that his firm's Glenn Hotel in Downtown Atlanta was among the first hotels when it opened in 2006 to host a rooftop bar, which launched a trend that is in overdrive.

"Today you can't build a hotel without a rooftop bar,” Marvin said. 

The need for robust WiFi also is increasingly critical, Hotwire Communications Executive Vice President Wayne Thompson said, as more travelers seek to work from the facilities or stream movies and TV shows from their devices.

Hines' Starr Cumming, Nelson Worldwide's Lamar Wakefield, Impact Development's Jason Hughes, Braves Development Co.'s Lauren Abernethy and Transwestern's Clark Seydel.

“If the hotel is not upgraded with a robust WiFi system, most users don't even want to stay there,” he said. “What you're starting to see as they're checking into a hotel, they're bringing their own content.”

Amara Capital Managing Partner Mary Beth Cutshall said she expects business travel to continue to lag, especially with the dollar now at parity with the euro, hampering international travel into U.S. gateway markets like New York and San Francisco. Plus, the prospects of a recession will likely force companies to tighten expense belts, cutting back on corporate travel, Cutshall said.

“I think with where our economy is right now, with what the Fed is doing, it's going to put continued pressure on business travel because of the cost of debt,” she said. “I think many companies learn to do more with less and learn to do more with technology and remote work.”

Noble Investment Group CEO and Atlanta Hawks part-owner Mit Shah and the Hawks' Andrew Saltzman speak at Bisnow's sports, entertainment and hospitality event.

Other panelists said the desire for amenities is fueling the boom in stadium mixed-use developments as sports franchises invest in real estate oriented around serving fans for moments outside of games.

Lamar Wakefield, the national mixed-use practice leader for Nelson Worldwide, who helped design The Battery, said his firm is now consulting with teams such as the Arizona Diamondbacks, the Dallas Cowboys, the Tennessee Titans and the Los Angeles Angels about developing mixed-use projects around their stadiums.

"Everything is revolving around fan experience. How do you get the fan out of their seats?" said Jason Hughes, co-founder of Impact Development Management, whose firm is consulting with the Jacksonville Jaguars. “Every single sports team across the country is doing this live-work-play environment. Basically, they're all copying The Battery.”

The trend has much to do with how the younger generations are spending their disposable income, said Andrew Saltzman, the executive vice president for the Atlanta Hawks and State Farm Arena.

"People are coming back to the urban core, and because these young people, the Gen Z and young millennials, their life isn't, 'Hey I want a McMansion up in the suburbs,'" he said. "It's not about buying things. They want to spend their money [on] doing things. And our sports and entertainment venues have become the anchor tenants to what malls were 30 years ago."