Every Square Foot Counts: How Hotels Turn “Dead Space” Into Revenue, Relevance, and Real Guest Value

In today’s hotel market, the biggest question is no longer “What else can we build?” but “How do we make better use of what we already have?” As competition intensifies and guest expectations rise, owners and operators are looking hard at terraces, rooftops, meeting rooms, corridors, and forgotten corners that have quietly been consuming CapEx without delivering much in return.

Across brands and segments, the mindset is shifting: instead of treating these areas as leftover square footage, hotels are starting to view them as strategic assets — tools to improve guest experience, streamline operations, and unlock new revenue streams.

From leftover space to strategic asset

H&LA reports a clear increase in interest from hotel owners, operators, and developers who want to maximize the value of underutilized areas. The goal is not necessarily to expand the building, but to reposition existing space:
- terraces and rooftops that sit empty outside of peak season;
- transitional corridors and landings;
- meeting rooms that rarely reach profitable utilization;
- obsolete business centers in a world where guests travel with their own mobile office.

This shift lines up with broader industry trends: the rise of hybrid work, demand for memorable social environments, sustainability pressure, and investor reluctance to fund unnecessary expansion. Instead of asking, “How do we add more square meters?”, many hotels now ask, “How do we make every square foot work harder?”

Hybrid, multi-use spaces instead of single-purpose rooms

One of the most visible post-pandemic changes is the complete rethinking of public space programming. A lobby can no longer afford to be just a pass-through or a static waiting room.

Over the course of a single day, the same space may:
- function as a co-working area in the morning;
- shift into a casual lunch and meeting zone mid-day;
- become a social hub, bar, or event space in the evening.

Traditional business centers, once marketed as a premium feature, have largely lost their relevance as “work from anywhere” has become standard. Many properties are converting them into grab-and-go outlets, café nooks, collaborative seating, or micro-retail.

The common thread is flexibility: spaces are designed to change function as guest behavior changes throughout the day, rather than sitting empty until the occasional group booking appears.

Sustainability and adaptive reuse: renovation over new build

Sustainability and capital discipline are pushing owners toward adaptive reuse instead of ground-up construction. Lodging Econometrics projects that 300,000–400,000 hotel rooms in the U.S. will be renovated or converted in 2025, reflecting a strong preference for reinvestment in existing stock.

Adaptive reuse offers several advantages:
- reduced demolition waste and a lower carbon footprint;
- shorter project timelines;
- preservation of distinctive architecture and historic features;
- ability to renovate in phases while keeping much of the property operational.

In other words, adaptive reuse is both an ESG strategy and a financial strategy: it allows owners to reposition a property without the full cost, risk, and downtime of building from scratch.

Technology as the backbone of new layouts

Technology upgrades are no longer a cosmetic upgrade at the end of a project; they are often the starting point that shapes the entire renovation plan:
- mobile check-in and digital key systems;
- smart room controls for lighting and HVAC;
- robust Wi-Fi and sufficient power access in public spaces;
- data-driven tools for staffing, maintenance, and personalization.

Guests increasingly expect to control their stay from their phone, which directly affects how lobbies, reception zones, and F&B spaces are laid out. The more processes move into digital channels, the less sense it makes to allocate prime real estate to long, underused front desks or closed-off back offices.

For many properties with aging infrastructure, the need to modernize technology effectively triggers a full rethinking of how space is arranged and used.

Smaller footprint, higher impact projects

Not every project has to be a $50 million repositioning. In fact, some of the most effective renovations are small, tightly targeted interventions:

refreshing patios or rooftops to support seasonal F&B and events;
- converting alcoves into grab-and-go or specialty coffee bars;
- transforming underused meeting rooms into lounges, bars, or boutique retail.

These modest projects frequently deliver:
- fast payback periods;
- increased on-property dwell time;
- incremental revenue without structural expansion.

In saturated markets, small, high-impact projects can be the most realistic way to differentiate a property and keep it relevant.

Public spaces and F&B as core revenue engines

Public areas and F&B outlets have shifted from “nice amenities” to core contributors to the P&L. Successful hotels treat lobbies, terraces, and bars as revenue platforms, not interior decoration.

Common directions include:
- lobby bars that partially replace or integrate check-in functions;
- flexible seating layouts that adapt to individual work, small groups, or events;
- active terraces and rooftops instead of passive outdoor space;
- semi-private alcoves for intimate events or premium seating;
- upgraded grab-and-go and beverage concepts;
- technology-enabled ordering and payment;
- F&B integrated into amenity spaces such as pools, co-working zones, or wellness areas.

Well-executed F&B-driven renovations tend to improve capture rates, local engagement, dwell time, and event potential — all critical levers in markets where room revenue alone no longer guarantees strong performance.

Case studies: when “dead” space starts to perform

Waldorf Astoria – New York City
The roughly $2 billion restoration shows how adaptive reuse can combine heritage with modern demand. The historic Starlight Roof ballroom has been reimagined as the Starlight Pool and wellness retreat — transforming a low-frequency event venue into a high-frequency, high-margin wellness asset that aligns with contemporary luxury priorities.

Great Wolf Lodge Southern California – Garden Grove, CA
With a $40 million reinvestment, the resort focused on optimizing its entertainment mix. By replacing the high-maintenance, underperforming FlowRider surf machine with a bar, cabanas, and an expanded arcade, the property aligned its offerings with guest spending patterns. Backed by a revenue-share agreement with the City of Garden Grove, the project illustrates how targeted upgrades in specific zones can support both operator and municipality.

Holiday Inn / Candlewood Suites Cleveland South – Independence, OH
This dual-brand conversion turned 122 traditional rooms into 91 extended-stay suites under the Candlewood Suites flag, entering a growing long-stay segment without new construction. Shared amenities and operations across both brands improved labor efficiency and use of public space, leading to stronger year-round occupancy and profitability.

Quaker Square Hotel – Akron, OH
Once a dormant hotel inside historic grain silos, Quaker Square is being repositioned as a mixed-use destination combining residential, hospitality, dining, and recreation. By retaining its unique architecture while diversifying uses, developers are turning an underperforming single-purpose asset into a year-round urban hub with multiple revenue streams.

Hotel David Whitney – Detroit, MI
The $20 million renovation and repositioning under Marriott’s Autograph Collection demonstrate how reconfiguring public space can lift both brand and revenue. A traditional lobby bar was replaced with a combined reception area, library lounge, and patio, creating a seamless social environment. A meeting room was converted into a full-service restaurant, increasing F&B relevance and on-property spending.

Drury Hotels – multiple locations
Historically focused on complimentary F&B, Drury is converting underused meeting rooms into lounges with bar service, adding an incremental revenue layer without disrupting its core value proposition. This is a textbook example of the “smaller footprint, higher impact” philosophy: low-cost reprogramming of existing square footage that materially changes guest behavior and evening activation.

Challenges, trade-offs, and brand compliance

Reworking underutilized space is rarely simple. Operators face three main categories of challenges:

Operational realities
– changing guest flows and sightlines;
– acoustics and noise bleed between adjacent zones;
– staffing models that must adapt to new uses and dayparts.

Infrastructure and cost
– historic preservation limits what can be demolished or moved;
– new ventilation, drainage, fire separation, and accessibility enhancements can be expensive;
– in some cases, the required upgrades outweigh the revenue potential.

Brand standards and identity
– branded properties must align redesigns with chain-wide guidelines on layout, seating, signage, and materials;
– owners seek local differentiation, while brands seek consistency;
– dual-brand and soft-brand hotels must serve different guest types with the same shared spaces.

The most successful projects are those where design ambition and financial logic meet: the new use enhances brand perception, improves guest satisfaction, and delivers tangible improvements in occupancy, ADR, RevPAR, or ancillary revenue — not just social media buzz.

Not every square foot should become a bar

Experts at International Investment caution that the industry’s enthusiasm for “activating space” carries significant risks alongside its potential.

Some hotels are over-programming their properties, turning every corner into an F&B concept without sufficient demand, which leads to overcapacity, self-cannibalization, and margin erosion.

In other cases, design-driven projects prioritize aesthetics over economics: labor, maintenance, and CapEx grow faster than incremental revenue.

Copy-pasting flagship or luxury concepts into secondary markets without rigorous feasibility often produces beautiful but chronically underperforming spaces.

Our conclusion is deliberately conservative:

Every square foot of a hotel can be strategic — but only if renovation decisions are grounded in hard financial and market analysis.

Not every roof needs to be a rooftop bar; not every meeting room needs to become a lounge; not every historic ballroom can justify becoming a pool. Sustainable value comes from projects where owners first validate demand, economics, and operational feasibility, and only then commission renderings and furniture.

In a market defined by higher costs, shifting demand, and climate and technology pressures, the real competitive edge will belong to those who treat space optimization as an investment discipline, not a design trend.