Pit has to go. Yes, you could take down the walls, but you still have a big drop into the middle of the room. It seems dangerous.

wow. you can create a pillow place

http://irindesign.wix.com/irindesign2#!projects/cson

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Do you find this area to be comfy & cozy? Do you use it? How high from the floor in the pit is the hearth of the fireplace? Best solution to me is to remove the pony walls & add floor joists up the the level either of the hearth of the fireplace or to one step down from the tile floor & install lovely hardwood floors in this square area. Do add an old reclaimed piece of wood above the fireplace as a mantle. What do you think?

Add a game table in the middle surrounded by chairs on casters Place the whole grouping on a lovely southwestern rug.

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love this would be great over the fireplace...thank you

No I never use the "pit" but when I bought the home (less than a year ago) that was my first thought also...to raise the floor to the level of the hearth. everyone that has been over says to keep it ....it "cozy" or it has "character". My husband also likes it. I like your ideas (love the Indian print). The floor I think the hardwood floor might stand out too much. I was thinking of getting the same color of tile and turning it at a angle ...and do a boarder like an area rug. then there's that cabinet on the left side of the fireplace. put in a new cabinet and glass shelves????? or an old rustic Spanish style cabinet> what do you think?

Great spot for leather seat cushions, plenty of tapestry/rug pillows, and furs. I don't think you really need the beam, but like the idea of artwork over the firelace.

Can't see the bottom, but would a navajo rug work there? And an organic coffee table over the top?

If budget would allow, some reclaimed limber to form a back for your seats might give a more attractive barrier - and allow you to attach cushions, if you like.

Ehm, I'd put wood in the area to the left! If that feels too exposed, you could add a grille door over the opening.

the floor, two stairs and benches along the two pony walls are carpeted in a badge carpet.

For your comparison, here is a pit even with the floor ( great lines, and I can't think how anyone would miss seeing it and fall in!)

Los Gatos - Afrormosia · More Info

vs. one that is built up. ( gear your height to desired seat back, and yours will likely be lower).

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I think you get a more inviting area by pulling out the beige, leaving wood for the steps, padding the seats and getting a kickass area rug at the bottom.

wow I like that a lot.....would the tile that is through the rest of the house look as nice as the wood flooring. I can't afforded to change the all flooring in the connecting rooms...thanks for the advise.

the rug runner you see in the picture ...I also have the same pattern (8X10) in the living room and the office space in the background. I am afraid it might bee too much?? would it?

Your tile is fine, and I think repeating the area rug would work as a unifying accent in your open space - but a closely complimentary, rather than matching, rug could work too. Both are good.