Travel and tourism in the post-coronavirus world will certainly look different and many businesses in hospitality have to adapt dramatically to stay alive. Travellers are more scared, not convinced that their rooms will be virus-free and many will limit their holidays for the year to their country. Nicolas Vigier, co-founder of BNB Real Estate, manages 60 Airbnb apartments in France with his agency and mentioned that “before the crisis, our clients were 90-95% foreigners. We had very few French people booking our apartments”. The statistics have now changed and according to Airbnb, domestic bookings in the Netherlands and Denmark have increased respectively by 80% and 90%, compared to April 2019.
Many hotels had to shut down partially or completely for a long period, with generous cancellation policies and full refunds to non-refundable reservations. STR, a hotel data benchmarking firm, predicts that the worldwide occupancy in hotels that are still open is less than 30%. In Europe, the occupancy amounts to only 10% compared to the same period last year. Great revenue losses, combined with uncertainty about what the future will hold are the main reasons why the hotel industry needs to adapt. Given all the necessary hygiene measures that hotels will need to implement, starting to think about innovative solutions to reposition themselves will be necessary to attract guests in such unprecedented times. In this article, we will focus on the steps that you should take into consideration if you are looking to repurpose your hotel assets into a more sustainable model for the future.
In order to adjust to the market needs, it is necessary to identify the specific target groups that COVID-19 will not significantly affect. Two great examples are students and young professionals. The reasons rely on the fact that many universities already started to run properly and a great percentage of students will be required to attend classes from the start of the upcoming academic year.
Taking the example of the Netherlands, where big cities are characterised by a housing shortage, it is quite a common phenomenon to meet people that struggled or are struggling a lot to find accommodation. The cost of housing increases due to high demand and younger generations do not have the affordability to rent their own studio or apartment in the current market, but they often need to split the cost (and their privacy) with other roommates. Therefore, it could be an extremely wise move for hotel managers to start thinking of repurposing their hotel assets into a living model that can guarantee a more stable revenue in the upcoming years, as the population of students and the mobility of young professionals is projected to continue to grow.
Moreover, people are coming back to their offices and the crisis will give a new boost to international mobility for young professionals looking for a better economic scenario. What is certain is that both of them are not going to prefer the option to stay for a short period in a hotel or short-term accommodation while finding something suitable, but they will try to directly search for a mid or long-term housing contract to minimise interpersonal contacts.
The target group is clearly influenced by the location of the property, which was already crucial, but is now more important than ever as people will look to go more local and prefer shorter distances when they have the chance to choose. Taking into consideration the local environment and thinking about its future development is crucial to reach successful results. If you have a hotel near a business park, for example, it may be interesting to offer mid to long term stay for professionals that come to work from another city every day. This would reduce commuting time and make it possible for these people to even separate the work in shifts at the company office. Another scenario presents if your hotel is situated in a secondary city, which is a location that will grow in attractiveness as students and young professionals will still be looking to get out of home, but cannot afford to move to a primary city yet.
As the target group changes, it is important to have in mind that the planning process is completely different from the one of a normal hotel. Young generations are looking for something that will fulfil their needs, in a good location and at an affordable price. Depending on the location, budgeting, analysis of the target, available space, proximity to universities or business hubs you could be choosing to convert your hotel assets into a PBSL (Purpose Built Shared Living), or a PBSA (Purpose Built Student Accommodation), or a serviced living model (a hybrid between hospitality and mid/long term accommodation). Another idea could be to create different packages for different needs and targets including both a longer accommodation and other services such as gym membership, a half-board meal service (lunch or dinner) or access to a specific professional network. Without a doubt, a serviced living building needs to provide a seamless living experience. As pioneers in the field of emerging Real Estate, we would like to share with you some steps that might be wise to take into consideration before repurposing your hotel assets.
When converting a hotel into a shared living space there are many things that you can take great advantage from the previous hospitality assets. Firstly, you can repurpose some areas into common spaces where tenants can interact with each other and perform multiple activities. Facilities play a significant role to keep the younger generation engaged within the building as they could save money for external memberships (for example for a coworking space or gym) and feel more comfortable in a homely environment. Hence, common areas can be upgraded into amenities such as gym, laundry room, coworking and studying spaces, but they can also include an entertainment room, a cinema and even a spa. The possibilities are endless and they depend on the availability of the space and chosen target. Moreover, you have to think about the Food & Beverage aspect: if you decide to provide tenants with meals, you should take into consideration promoting a multicultural environment and inclusion within the shared house. Consider offering a wide range of different flavours and preferences (vegetarian, vegan, gluten-free, etc.). Another option could be to implement kitchenettes inside each room and let residents cook for themselves. Lastly, you should make sure to provide a high-speed Internet connection in the building and take care of other daily needs.
One of the main issues in converting your hotel into a shared living space is the fast-moving nature of this industry. A hot topic that will help to attract more residents and boost the reputation of the business is sustainability. Considering the damages that we are causing to the environment, a great percentage of people – mainly younger generations – decided to live a sustainable lifestyle and this fact influences their brand choice. Since space is a precious resource, repurposing your hotel assets is already a sustainable step, but it should consider implementing eco-friendly solutions such as installing energy-efficient light bulbs, installing solar panels, promoting sustainable products, recycling or growing a communal garden. Possibilities are endless and is key to aware tenants of your environmental behaviour and encourage them to follow the same lifestyle.
The last step before entering the market is to have a proper strategy in place to properly advertise the new space, highlight its unique aspects and attract like-minded tenants from a diverse spectrum of backgrounds. In the beginning, you can craft a re-opening campaign in order to position your brand into a different marketplace and make people aware of it. Furthermore, building and keeping an online presence on social media channels must be taken into consideration since everything is going digital, especially after the virus outbreak. A successful content marketing strategy can be achieved through high-quality images and videos and with the implementation of storytelling elements to attract a wider audience. If you would like to learn more about how you can efficiently build an online community check out our previous article: Unpacking Online Community Building.
The branding efforts have also to be translated into the spatial design to reinforce the brand image and loyalty, which will add value and awareness to the offer. An emotional connection can be achieved through purposeful use of lighting, colours, patterns, posters, signage and the choice of furniture. Spatial branding can be functional to the brand promise and enhances the messages of the company. Learn more about this topic in our previous article Unpacking Spatial Branding: How Can Brands Enter the Space? Lastly, do not overlook the traditional ways of promotion such as WOM (Word-Of-Mouth) since people are more likely to trust their friends or family’s recommendations. There are many possibilities to realise your ideas if you have clear goals!
You may have already certain fame within the hospitality industry. Nevertheless, standards change here and your property has to attract more residents now. Shared and serviced living models are projected to be among the safest alternative assets in real estate since the interest is growing and the market is characterised by a housing shortage. After coronavirus, long-term accommodations will often be chosen primarily instead of looking for a hotel stay first. But how can you easily adjust your hotel assets into a shared living experience? Having a creative, innovative and feasible idea, a draft plan and ensuring the necessary support for the different aspects of the repurposing.
As creative partners in business, we understand that the new generations desire comfort, flexibility but also safety and wellness. Our design thinking methodology provides a solution-based approach to support flexibility and the willingness to adapt to this rapidly changing world. Design thinking is not a linear process. By thinking outside of the box, ideating, prototyping and testing, knowledge is constantly under questioning and alternative strategies will come up to help redefine the problem and solutions along the way. Check out our article entitled Unpacking Design Thinking: What it means, why it matters and its relevance to branding to learn more about our design-based methodology. Equipped with expertise and passion for what we do, we are here to help you create and develop your brand’s needs with growth-driven solutions. Having great ‘partners in crime’ in this crucial decision will lead you to success.
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