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Covid-19 Economy Impact
SmartRoomService

Creating smart hotels from limited resources during a pandemic

At the start of 2020 hotel, KPI’s were up year-on-year across the Middle East, with a positive year ahead filled with international events, reinforcing the region as a global tourist destination.

The pandemic though has now affected every sector across the globe, with the hotel industry amongst one of the hardest hit.

It appears that the impact of the pandemic has acted as a catalyst, enabling new technologies to be implemented much sooner than expected. Christopher Robson, from the CBRE Hospitality Advisory team commented, “Hotelefficient offers advice for hotel owners and operators on how to re-position their asset using sustainable approaches with the guest at the forefront, whilst keeping the asset open and maintaining value.”

CBRE has identified 4 key approaches:

  1. Optimisation: Increasing the effective use of an asset square meter by square meter.
  2. A sense of place: The relationship people have through attachments and place meanings.
  3. Community integration: The opportunity to stay within an area, with unique values and facilities.
  4. Talent attraction and retention: Finding and keeping people who fit with the culture and goals of an asset.

RoomControl

Optimisation

The opportunity for operators to be more flexible with the franchised or smaller owner/ operated hotels could see an emergence of owners able to streamline their costs more effectively. Alternatively, more leases entering a market, would allow capital flow to be provided by private equity and institutional investors looking for longer-term investments. These changes to operations will push brands to operate on a larger scale with management agreements, 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.

A sense of place

For the more traditional operators, smart hotel rooms have been in operation for several years, reducing the 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 sensory switches that turn off the air conditioning when an external door is opened. In the future we expect 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, highlight local points of interest and introduce hotel offers at the touch of a button.

AutomatedRoomlock

Community integration

Culture and events are two areas for focused growth in the region. Culture is important as it provides a unique identity to a region or place. For example, since the development of Sheikh Zayed Grand Mosque; The Louvre; and the opening of various protected nature reserves (such as Al Wathba), ALoS in Abu Dhabi has increased over the last 3 years, and with further demand, generators to be completed in the next 5 years, this growth is expected to continue.

One-off events have become a premium demand driver in the region, improving revenue per available room (RevPAR) for hotels in an origin city, such as the Formula 1 Grand Prix in Abu Dhabi, inaugurated in 2009, showing a 65% increase from the mean average annual RevPAR. Short-term domestic stays during the pandemic had a limited effect in propping up hotel cash flows. CBRE witnessed an increase in marketing and communication from third-party food & beverage (F&B) outlets in proximity to hotels distributing coupons for redemption during a stay, with increasing discounts linked to repeat visits, which aims to add to the community experience.

Talent attraction and retention

The hospitality real estate sector is changing faster than ever with outside pressure from other real estate sectors and technology-focused hospitality platforms. For this reason, it has never been more important to retain the right talent and ensure that the guest experience is a positive one. Fuelled by the growth of Online Travel Agencies (OTAs), International brands initially followed the online sales approach. However, due to OTA cost increase, international brands have reacted through a personal engagement approach providing a more bespoke service to the guest. This ideology has been tested by the ‘disruptor’ brands and the emergence of holiday homes. Hosted by business to consumer (B2C) technology platforms such as Airbnb.

The pandemic has tested hotels in a way that has previously not been experienced. However, hotels 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 decade ahead, market testing the ‘new’ normal, for our generation’s interpretation of hospitality. After all, bricks and mortar will always be available, it’s the business inside that adds the value.

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