Opening back into the ‘new’ normal hospitality sector
How hospitality assets are now finding themselves misaligned with the market reality
19 Oct 2020
As a result of COVID-19, hotel operators have been forced to make tough decisions, including the hardest one; whether to keep the lights on. The majority of hotels were required to close their doors briefly after municipal mandates were put in place and some have remained dormant due to lack of initial demand.
Opening into the ‘new’ normal market, a number of hospitality assets are now finding themselves misaligned with the market reality, with pressure on ADRs, profitability and increasing competition in the marketplace. Hotel owners and operators would benefit from re-positioning their asset using sustainable economic approaches with the guest at the forefront, whilst keeping the asset open and maintaining value.
Smart hotel rooms have been in operation for several years, reducing costs of operations. Examples are seen in many different guises, from high-tech in-room tablets controlling lights and curtains to more passive examples such as contact switches that turn off the air conditioning when an external door is opened. In the future CBRE expects to see a more guest orientated approach through technology, utilising the improvements that have been made in Artificial Intelligence (AI), with the introduction of contactless apps on mobile devices allowing a guest to check in, access the room, control the ambience and introduce in-room dining at the touch of a button.
Modern ‘disruptor’ brands have focused on variable expenses, optimising areas with a complete end-to-end package, such as Sonder, a US tech-based company, beginning to enter the Middle Eastern market, running a capex light business model and guaranteeing income for investors. Furthermore, a technology platform based out of India - OYO Hotels & Homes, is globally the fastest growing hospitality company, passing one million keys globally during 2019, operating either a leasing or franchise model, providing improved returns for an investor.
The opportunity for operators to be more flexible with franchised hotels, will provide a competent hotel owner with an opportunity to streamline their costs more effectively. These changes to operations will push the better-known ‘traditional’ brands to operate on a larger asset scale not smaller, with a new movement of ‘blended-living’ encapsulating whole communities within a brand, for living, working and recreational space. In the Middle East this may prove very popular, as masterplans continue to be developed with ever-increasing intrinsic community value. This provides scope to maintain the value of branded assets and differentiate from a ‘standard’ development.
The pandemic has tested hospitality assets in a way that has previously not been experienced. However, hospitality assets are typically developed or purchased as a long-term investment, over 10 to 15 years, therefore mitigating the short-term impact. It is certainly an interesting period ahead, market testing the ‘new’ normal, for our generation’s interpretation of hospitality.
For more information on how CBRE can help with your hotel assets, contact, Chris, or visit our website.
Opening into the ‘new’ normal market, a number of hospitality assets are now finding themselves misaligned with the market reality, with pressure on ADRs, profitability and increasing competition in the marketplace. Hotel owners and operators would benefit from re-positioning their asset using sustainable economic approaches with the guest at the forefront, whilst keeping the asset open and maintaining value.
Smart hotel rooms have been in operation for several years, reducing costs of operations. Examples are seen in many different guises, from high-tech in-room tablets controlling lights and curtains to more passive examples such as contact switches that turn off the air conditioning when an external door is opened. In the future CBRE expects to see a more guest orientated approach through technology, utilising the improvements that have been made in Artificial Intelligence (AI), with the introduction of contactless apps on mobile devices allowing a guest to check in, access the room, control the ambience and introduce in-room dining at the touch of a button.
Modern ‘disruptor’ brands have focused on variable expenses, optimising areas with a complete end-to-end package, such as Sonder, a US tech-based company, beginning to enter the Middle Eastern market, running a capex light business model and guaranteeing income for investors. Furthermore, a technology platform based out of India - OYO Hotels & Homes, is globally the fastest growing hospitality company, passing one million keys globally during 2019, operating either a leasing or franchise model, providing improved returns for an investor.
The opportunity for operators to be more flexible with franchised hotels, will provide a competent hotel owner with an opportunity to streamline their costs more effectively. These changes to operations will push the better-known ‘traditional’ brands to operate on a larger asset scale not smaller, with a new movement of ‘blended-living’ encapsulating whole communities within a brand, for living, working and recreational space. In the Middle East this may prove very popular, as masterplans continue to be developed with ever-increasing intrinsic community value. This provides scope to maintain the value of branded assets and differentiate from a ‘standard’ development.
The pandemic has tested hospitality assets in a way that has previously not been experienced. However, hospitality assets are typically developed or purchased as a long-term investment, over 10 to 15 years, therefore mitigating the short-term impact. It is certainly an interesting period ahead, market testing the ‘new’ normal, for our generation’s interpretation of hospitality.
For more information on how CBRE can help with your hotel assets, contact, Chris, or visit our website.