With the latest global sanitary crisis leaving heavy impacts on the worldwide economy, the future of investments shall see major transformations in terms of the companies it gives a second chance and the concepts it shall support to bring change to the current situation. From the asset management, finance and investment perspectives, it's going to be a significant area of focus for the foreseeable future
Most of the properties in the hospitality sector have some kind of debt aspect to them or they've got investors that need to be paid and have an expectation of a certain return. This financial situation leads to a number of questions the companies face with regards to their properties. Should they be renovating? Should they be changing their concepts? What kind of operating services would they need to have post-crisis?
There are so many questions that are, at this stage, unknown and have a massive impact on the operations of hotels, the overall concepts, the investments and the cash flows. I believe there's going to be a revolution in the hotel industry in terms of rethinking about what we're actually doing as an industry.
With the dawn of this crisis there's going to be space for huge opportunities due to the need for solutions. This could mean a need for really positive thinking, financial ability, the ability to look at business plans and create scenarios and to look at investments and returns.
Then the other aspect that needs to be taken into account is cross-cultural travel. As an example, China, probably so far with the strictest hygiene standards that have been implemented, has consequently, led to a society and a culture that is now going to be used to extremely high standards. With these standards in Europe not to the same level, the cultural aspect is going to come into play, I think, in a significant way in terms of how the hotels need to adapt to welcome the travellers from further regions like China.
This will lead to segmentation probably based on what the expectations are of certain customer types for hygiene and other sanitary standards. With having to potentially implement company protocols in international corporations limiting travel to certain types of properties based on their size, for example, there will be a significant influence on investments in the future.
The investment in technology is going to be massive in terms of communication systems and monitoring systems. For the guests coming into the hotels, the companies need to think about virtual technology, for example, how can hotels give themselves up to maybe remotely connect with each other around the world and hold virtual conferences with local people in different hotels around the world, but then connect together? There is endless number of scenarios that will play out in terms of investment and in, my opinion, those that are prepared to invest in research and development, new experiences, new technology and new services, will be the winners, for sure.
In the light of the crisis, it is time to look at ways to improve and transform the services to best answer to the needs of the public. This is where the experiences side of hospitality shall see an increase in popularity and importance. A good example is Airbnb which has benefitted from their experience platform. From allowing to do tapas cooking with people in Spain live online, to making Chinese dishes with people in China live online, to taking guitar lessons with a Spanish guitar live online, they bring the user the live experience and it's all on their website. Obviously, during this crisis this option has been greatly booming as it allows connecting with local people and they've got a wide variety of experiences to offer.
Surprisingly such services come from Airbnb, and not from one of the hotel companies. At the end of the day, Airbnb started out as a provider of apartments by hosts, and this company has now shaken up the hospitality companies. Despite the global hotel companies dismissing these new services, Airbnb have launched a platform which is a great experience-based platform and it has got the potential to grow exponentially. Unfortunately, the hospitality companies haven’t yet come up with similar services and taken control of this, and they are staying behind even though they should be the ones providing the experiences.
I do think, however, many companies will follow this wave and platforms like this offering a wide range of very highly tailored mix experiences will become more numerous. There's going to be a whole revival in terms of concepts and for the area of alternative hospitality, it's really a good space.
Another aspect that has become very important since the beginning of the crisis is that of globalisation with the major question being whether people will want to be living in big cities. Maybe they want to live in the countryside and work from there? For some time now the world has stated the need for solutions to globalization with seven billion people being estimated by 2050 in globalized areas which is the same population as the planet today. Instead of just being focused on urbanized areas, the solutions need to be a rethinking about how the society works, lives and how the population behaves as it is important to take off the pressure of the cities. This will lead to emergence of new opportunities outside of the cities.
A great example is Soho House, a chain restaurant and group of private members' clubs, who has evolved by developing country retreats in the U.K. This approach, I think, a really great example of where concepts are going in the future and also where real estate opportunities exist in the future.
There will be always opportunities, but they have to be more highly differentiated and more thought-through about what the future consumer wants, in order to obtain funding. I think that there will be more funding for a highly specialized type of concepts that are clear and that are targeting the new mindset of what people are going to be having post-crisis.
I am an optimist and I also want the industry to move in a certain direction. Sadly, the banks are conservative and often tend to only lend money for companies with a big name brand on the door, and if the proposed concept was in a great location or a central location. Therefore, unusual or new concepts see it very hard to get financing. My hope is that in the new post-crisis word, it will become more apparent that it's as risky to provide financing on a standard hotel with very little innovation as it is to provide financing on something that is actually future proofed.
I think what's become really apparent during this crisis is the importance of community. With the latest developments there has been a rise in the sense of community, local community, and kind of more personal community, even the professional communities have been made stronger. Once the spread of the virus is contained, the current virtual communities will translate themselves to physical communities as the people will want to replicate their current connection in real life.
In my view keeping the sense of community is very important and the hotels and hospitality establishments have a really important role to play. Now more than ever they should be the hub of the community and act as the anchor where there is a full integration with the community and vice-versa where community is fully integrated within the hospitality establishment, which creates a symbiotic relationship. Hospitality has always been about creating communities. It just maybe hasn't been formalized on that basis, and the hotels only realized now how much they need this.
It is not the time to create just any concept, but to apply that creative thinking to helping others, providing some solutions for what's going on at the moment and also afterwards. The players of the hospitality industry should seek to stay authentic and keep things simple. By trying to build a community and, consequently, staying relevant. This in turn means staying relevant for their clients as well.
Despite the fact that the world has seen major struggles, it is very important to remain optimistic.
I believe it's in human nature to be positive and I think the world has taken time to reflect on what is important in the light of this sanitary crisis and that it shall be prioritized from now on. And I think that's where we have a role to play with hospitality.
Trends in Hospitality
Trends in Hospitality
Trends in Hospitality
