By the mid 1930's two factors would result in the first alteration of the Statler's public spaces. By that time the hotel was over twenty years old. It was beginning to look 'old fashioned' and worn out. Additionally the concept of fine dining was changing. The Statler's existing restaurants had been designed for the Edwardian era. During the Depression people sought glamorous entertainment in the form of night clubs. These created a need for change which the Statler had to address. The answer was the Terrace Room, opened in November of 1937.

The Terrace Room was part of a project undertaken at both the Detroit and Cleveland Statlers. Other elements of this undertaking included a matching Lounge Bar, new retail space, and new meeting rooms. Detroit's new rooms were installed in the lower portion of the 1916 addition. The Terrace Room taking up the west half and the Lounge Bar the east. In the renovations the old Grill and Men's Cafe were removed.

Statler's old interior decorator Louis Rorimer was still in business and thus was called to design the new facilities. For the Terrace Room he used a 'modified Empire' style. Rorimer gave the room brilliant colors of oyster white, ebony black, deep bluish green, gold, and "firecracker red."

The 6840 square foot room could accommodate 300 diners. On the north end of the room was an ebony black orchestra platform from which many of the great big bands would play. The center of the room could be cleared into a 770 square foot dance floor. This was described as a "brownish island of polished maple set in a bluish-green sea of carpet."

In keeping with Statler's technical innovations, special equipment was installed in the kitchens. This equipment included an automatic conveyor which could pick up 450 dishes a minute and carried them 80 feet to the dishwashers. This saved countless millions of employee steps "back stage."

The Terrace Room was well received. Michigan Governor Frank Murphy said "Detroit is very fortunate in having these beautiful rooms. They are a great tribute to the Statler management which has shown its fine faith in our city by providing these unexcelled entertainment facilities." It quickly became the hottest night spot in Detroit. Similar rooms were soon installed in the chain's other hotels.

Following the Second World War the Terrace Room was modernized. The "modified empire" decor gave way to a sleeker look. However, the quality of its service and its popularity remained. That would not last into the 1960's.

By 1963 the Terrace Room had outlived its usefulness. Such nightclubs had fallen out of the public's favor. The Hilton management felt the space would serve better as two modern restaurants. The northern portion of the old Terrace Room became the Candlelight Room, later renamed The Coffee House. This was a comfortable moderately priced dining room with table and counter service. Piped in music replaced the tunes of the likes of Desi Arnaz and Xavier Cugat.

South of the Candlelight Room was the Trophy Room, later the Beef Barron. This was an upscale steak house offering a rustic atmosphere of wood beams and rough stone walls.

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