Increased use of wheeled suitcases reduced the need for bellmen and the space they occupied. The lobby became a place to swipe a credit card, get a room key and leave. By the 1980s, they resembled bunkers, with low ceilings and few windows.
"The industry really failed by letting the lobbies get hollow," says Marriott CEO Arne Sorenson.
Then in 1984, Ian Schrager and his business partner Steve Rubell — the men behind the famed 1970s nightclub Studio 54 — opened the Morgans Hotel in New York. The rooms were tiny. But its stylized lobby redefined the industry.
Robert Mapplethorpe photographs were commissioned for the walls. Nightclub music blared. When it first opened, locals waited behind red velvet ropes to enter.
"The lobby established the pricing of the hotel," says NYU's Hanson.
It would take more than a decade for chains to catch on. Then, in 1998, Starwood opened the W New York. The lobby became the "living room." Forget food. The emphasis was on drinks with higher profit margins. Guests clamored at the bar to buy $14 cosmopolitans and sour apple martinis.
Other hotel chains eventually followed with their own boutique brands, including Hyatt's Andaz and InterContinental's Indigo. Marriott partnered with Schrager to launch its own "lifestyle" brand. But traditional convention, airport and city center hotels were largely ignored until now.
Revamping lobbies is a delicate balancing act: attract younger road warriors but don't turn away baby boomers with loud, thumping music.
Sheraton's first lobby modernization came in 2006 when it partnered with Microsoft to provide free computers. Soon it was selling Starbucks to lingering guests.
"As people spent more time in the lobby, they were more willing to purchase food and beverages," says Hoyt Harper, the senior vice president in charge of Sheraton.
Nearly 15.1 million — or half of — Sheraton guests use the computers each year. Just 5.8 million use the gym.
Pushing through costly renovations isn't easy. Most chain hotels are owned by smaller companies that must meet the larger brand's standards in exchange for using the Sheraton, Marriott or Hyatt name. Some need convincing to understand the benefits of spending millions on a lobby revamp.
For proof that the investment works, look no further than Destination Hotels and the $26 million renovation of its seaside L'Auberge Del Mar resort in Southern California. Its new living room-style lobby features large doors that open out to the ocean, allowing the breeze to flow through. A fireplace warms guests on cold days as they enjoy $25 charcuterie plates and $12 hibiscus margaritas.
Prior to the renovation, the hotel sold $450,000 worth of food and drinks in its lobby each year. Today, it sells more than double that.
"If they are comfortable in the space and surrounded by others, they will stay and spend more money," says Destination's Slosser. "They become not concerned about the price. They're much more interested in staying there and enjoying their life."