Interior design in hospital

There are more than a few reasons for the top 75 Interior Design Giants in hospitality to be op­timistic as they slog out of the Great Recession. Although­ fees in the sector were down 21 percent compared to the previous reporting period, more projects were completed than were canceled or postponed. That added up to a net gain approaching $43 million. Currently, 69 percent of the firms are predicting that hospitality will soon stabilize or improve. That's especially good news, since more than half of these Giants reaped 90-plus percent of their fees from hospitality.



Growth may be less likely, however, to come from the category's mainstay, hotels. Merriam-Webster's Collegiate Dictionary added the word staycation in 2009, and the hospitality Giants have felt the effects of that trend. The travel business was down by 4 percent in fiscal year 2010, with luxury hotels taking the biggest hit. Casino operators also seem unwilling to roll the dice. Cruise lines appear more confident. Design fees for ships went up to 2 percent, a huge jump from 2006, when that segment barely made the list. Also on the bright side, res­taurant work is up-to 12 percent of income. Bars, lounges, and nightclubs are also on the rise.
No matter the project type, these Giants are doing more with less. Nearly a quarter of them report that at least 50 percent of their work is eco-friendly. Sustainable practices and materials have become an easier sell. As one firm's spokesman says, it's a reverse pitch: "Clients tell us how green they are willing to go." Two years ago, barely over 25 percent of hospitality projects were considered sustainable. And renovation, besides being environmentally friendly, is more consistent with the economic times than?new construction. For the first time since 2006, renovations beat out new construction in terms of the number of projects generated. Twice as many hospitality Giants worked exclusively in renovation than solely in new construction.
Other more-with-less areas are employees and salaries. With average fees per design staff member sliding down to 2007 levels, hospitality Giants are continuing to get leaner. Layoffs weren't as harsh as in the dark days of early 2009, but 7 percent of staffers got pink slips. Of those still on the payroll, principals and partners are feeling the most pain. Their salaries now average $140,000, which is $10,000 less than the year before. Only designer­-level employees are getting a little extra cash, with incomes­ ticking up $2,000.

Still, tumult has created opportunity. One Giant in the top 25 reports having leveraged the downturn by hiring from the larger talent pool: "We believe in the industry, so we are building the dream team during this time." Someone from a top-10 firm put it more bluntly: "We have recruited terrific new staff from competitors." In fact, it was a very year good for some. Of the top 75, 12 are new to the list-including Steelman Partners, which landed at number 14 with earnings of more than $6 million.

Overall, the hospitality Giants predicted that fees from the segment would be up 13 percent in the next reporting period, pushing combined income to $456 million. That's still a far cry from the $589 million two years ago. However, by exploring new areas of the business, building the brand, promoting green practices, and staying efficient, the hospitality Giants could be on the verge of climbing out of the hole that the credit crunch dug for them.