“I see this kind of wider trend really coming from retail, which I suppose would be called hyper-personalization. And I see that having quite an important role, certainly in the hospitality space, and certainly the luxury space over the next five to 10 years with a move from guests being told what luxury means to them to guests telling hotels.”
– Richard Gaunt, Principal, Hotels and hospitality at Avison Young
"a move from guests being told what luxury means to them to guests telling hotels."
In this episode
It’s time to book a ticket, travel through time and space, and check into a hotel room… Or is it?
As the world reopens and intrepid travels set out for the four corners of the globe, the world of hotels has changed across the board. What does it mean to stay at a resort? Has business travel transformed the hotel sector without realizing it? Or has the hotel market become so fragmented from super luxury resorts to roadside motels that it will now mean different things to different people?
Come with us as we walk into the lobby, ring the bell, and discover what awaits you as hotels battle back.
Join host Mariam Sobh as she talks to experts Richard Gaunt, Principal, Hotels and hospitality at Avison Young and Paul Wells, Partner at architecture firm Dexter Moren Associates about the current state and future of hotels, travel and all things hospitality.
05:00 Richard Gaunt discusses how hotels satisfying different stakeholders while maintaining viability.
15:44 Paul Wells talks about changes within different types of travel, as seen in the U.K.
22:46 Paul Wells highlights the diverse marketplace in hotel consumerism.
Click here to expand transcript
Speaker 1[00:18] Are you staying in a hotel in this holiday season?
Speaker 3[00:20] Yeah, we're actually seeing in a hotel and an Airbnb over this vacation. And, you know, we don't live in the area. So there's not a lot of places for us to really go, outside of that. So I we chose to stay at the hotel just because I have so many points because I'm a consultant and stay at a hotel four days a week, generally,
Speaker 2[00:38] We came down for Metallica's 40th anniversary. So a couple concerts.
Speaker 1[00:42] I actually heard about that. It was sold out, I was going to check out one but it was too late.
Speaker 2[00:45] Yeah, it was very cool. So yeah, 12 hours from home, got to stay somewhere, so.
Speaker 4[00:49] Oh, yes, we're staying in a hotel. This is a- we are here for a couple days for an annual get to-gether that we have with a group of friends.
Speaker 5[01:00] Yeah, and we always come in for two nights. Stay at the same place over here on Columbus Ave.
Speaker 4[01:06] Have dinner.
Speaker 5[01:07] Go after a couple of dinners.
Speaker 4[01:08] Enjoy the enjoy the wharf and the pier and the area.
Speaker 6[01:13] Yeah, we're both without kids. And so we're able to just enjoy vacation together.
Speaker 4[01:18] I'm staying at Argonaut Hotel for one night. We're traveling. We're originally from Singapore. And we decided to take a road trip here in the US. Yeah. So, stay tonight in San Francisco. We've been here a couple of times before. We really liked this area. So you know, traveling with kids, we tried to make everything convenient.
Speaker 8[01:38] We just wanted to stay at a nice place downtown. So we figured a hotel is going to be the best choice for us.
Speaker 9[01:44] Oh, we chose to stay in a hotel because we're on a family vacation. And we're just- we chose that hotel because it was a central location.
Speaker 10[01:59] We drove up from Southern California up to here just to see a concert and we needed a place to sleep. That's about it.
Mariam Sobh[02:05] Welcome to Changing Places, brought to you by Avison Young. In Changing Places, we explore our continuing and complex relationships with the built world around us. I'm your host, Miriam Sobh. What is the first thing you think about when you hear the word 'hotel'? Is it a grand hotel from the Belle Époque? Or does your mind drift to an all-inclusive resort in the mountains of Swit-zerland or the beaches of Brazil? Whatever comes to mind, I think it's safe to say those resorts and hotels currently miss you more than you've missed them. Or maybe you miss them too be-cause I certainly do. As the world begins to grapple with our new reality, the hotel sector is faced with challenges on all fronts. According to the American Hotel and Lodging Association, half of all hotel rooms remain vacant. The AHLA notes that business travel is down 85 percent overall in 2021, with only 56 percent of consumers saying they expect to travel for leisure anytime soon. Forbes Business Insights states that the luxury hotel sector fell 60 percent in 2020 and the IMARC group, I-M-A-R-C Group, predicts that even with fewer travelers, the luxury market will grow at a compound annual growth rate of approximately six percent between 2021 to 2026. With all of that to consider, what does the future hold as we begin to stay in hotels for the first time in nearly two years? Who are the hotels targeting? Which aspects of the travel market are thriving, while others falter? And, could a new model for hotels rooted in our new reality alter our long-held expectations with hotels, and maybe even change the way we interact with them on an as needed basis? I'll discuss these issues and more with my guests Paul Wells, partner at Dex-ter Moren Associates, and Richard Gaunt, Avison Young's Principal for Hotels in London. We'll get their views on the current challenges of the hotel sector which affect not only hotels, but land-lords and hotel guests like you and me. We're asking what are the current needs, wants, and requirements for hotels to not only succeed, but thrive in the new world? What's it going to take for our love affair with hotels to get back on track? Before we begin today's show, be sure to fol-low Changing Places and be sure to tell your friends about us. While you're at it, give a rating and review, too. We'd love to hear from you. Richard Gaunt, welcome to Changing Places. Richard, in the last year and a half, the hotel sector has been one of the hardest hit by lockdowns and re-strictions across the globe. But from your point of view, how have hotels adapted to their new reality when it comes to satisfying all the stakeholders involved in keeping a hotel open and via-ble?
Richard Gaunt[04:41] It's a pretty complicated question. And there's no real easy answer here, given the complexities of, I suppose the hotel space and ecosystem, really, with this kind of the multitude of stakehold-ers involved. But I suppose if I break it down into some key groups involved, it might be the best way to really get to the bottom of it. So I'll be starting with the most important really, which is the customers. I mean, what we've seen is huge cognitive measures rolled out, everything from misting to deep cleaning, the development and deployment now of quite high-quality, bespoke immunity-boosting products across the space. And actually, it's been really positive, certainly from a European perspective, I know from a North American perspective as well, to see and look at the data to see this kind of increase occupancy and performance coming back into the into the space. Looking at it from a different guise, I suppose from an operations point of view, staff are- the impact of staff has been a huge challenge. And we're gonna see, I suppose, continued pres-sure on that over the next 12 months, both retaining staff and getting staff, especially in Europe and particularly in the UK. You know, the height of the pandemic, there was pretty much univer-sal hotel closures. And maintaining your staff and getting them back, even with government sup-port has been has been has been a challenge. And they're really- operators have been quite in-teresting and quite innovative how they've pivoted the use of staff. Brands are an important fac-tor in this space. They've shown flexibility. You know, your big brands. Your Hilton's, your Mar-riott's, your IHG's, your Accors. And they've flexed, they've reduced their fees where they can. So that's been an area of a lot of challenge and I suppose rebooting as we come over it. If you shift your guise to really the owner and the funder side of the equation, I think really there's a re-alization out there now that stakeholders have to have a share in the upside as well as the downside. I think it's gonna be interesting to see how owners choose to react when it becomes rebooting in-or hospitality reboots over the course of this year and into next with how they start investing back into the fabric and the quality of their hotels again. It's going to be a fascinating 12 months. There's going to be pressure I suppose on a wide variety of those involved across the hotel ecosystem.
Mariam Sobh[07:00] When it comes to hotels in the, in the leisure sector, do you think there are going to be big changes coming ahead that have already been discussed to better accommodate travelers? Or is this kind of something where it's trial and error as we move forward?
Richard Gaunt[07:14] Bit of trial and error still to come, I think. The majority of the heavy lifting was done in the first three months of the pandemic where there was a huge resource deployed and focus across the chains. I think the fundamentals of of, I suppose, the cleanliness and hygiene agenda have been well deployed. I think, you know, the next phase, really, is how elements of automation, which were already in development pre-pandemic, are really being accelerated post-COVID. You saw self-service check-in's, self-service, you know, phone ordering becoming quite common, but it's gonna be interesting. It has to align with, with the guests' experience.
Mariam Sobh[08:00] I'm curious about- so with hotels being built, maybe there's new ones that are, that are supposed to be coming up, is that going to be really difficult to navigate? If numbers are already down in traditional hotel spaces, how are newer hotels going to be able to enter this space and be com-petitive?
Richard Gaunt[08:16] It's a good point. At the moment, there's no two ways about it. The development sphere and de-veloping new new hotels is challenged. At the moment, there's a lot of pause in terms of any de-velopment that wasn't underway. What we've seen in the past 10 or 15 years is a dramatic change in what customers are after. Their engagement, you know, the importance of design, the importance of change in the fabric of a hotel. And I think that really drives a good opportunity for new hotels to come into the market. And when they do come into a market, they tend to be very successful if they're, if they are aligned to what the market and the guest is after. And they tend to outperform tired hotels, even if they're undergoing light touch refurbs in a space. So there is a compelling market advantage for new hotels coming into into space.
Mariam Sobh[09:06] Earlier, you mentioned just with the hygiene and all of the things that have been put into play in the hotel space. And I think that's reassuring for a lot of folks who, you know, maybe in the past, they thought hotels weren't always the cleanest place. Now, it's like, we are assured that it's su-per sanitized. Do you think this is something that will continue even after the pandemic hopefully slows down or comes to an end that these hygiene measures will always be in place?
Richard Gaunt[09:30] I think it's, it's going to be one of the positive points coming out of it. The investment in it and, you know, the reassurance that it gives the guest is, is second to none in a lot, in a lot of experiences certainly I've had as a guest in hotel, so fingers, fingers crossed the horror stories and the, the Instagram photos will be greatly reduced. You can never get rid of all them, but hopefully they'll be greatly reduced. And it's a, it's an important part of consumer confidence, I think, to get back into the spaces.
Mariam Sobh[09:58] Well, before we wrap up, are there any trends good or bad you're seeing in the hotel space which may be with us for the next five years or so?
Richard Gaunt[10:06] It's a big question. I think there's the the immediacy of the next 12 months. I see this drive and continuation, really, of the the design lead our guest experience being new norm. This move away from- we've all seen it- the homogenized hotel. You know, when I'm looking at other, other cultural norms, I see this kind of wider trend really coming from retail, which I suppose would be called hyper-personalization. And I see that having quite an important role, certainly in the hospi-tality space, and certainly the luxury space over the next five to 10 years with a move from guests being told what luxury means to them to guests telling hotels. And that will be everything from them telling, telling the hotel what they would like to eat, rather than it being produced on a menu for them. The fourth kind of area I suppose would be a design-lead response. You can see certain hotels developing, you know, there's your best classic- best in class examples, you know, your park Royal Hotel in Singapore, you know, which is basically a hotel located within an urban garden where you have this kind of elements of biophilic design, I suppose the best way to call it, maximizing natural lights, planting, how you deal with heating and cooling in a hotel, going back to your earlier points of of hygiene, is important. And there's going to be an interesting trend moving forward. All the way down to, you know, the structural selection of building materials. There's going to be structural development in terms of products across certainly the EMA space. I know the US market and the Canadian market are more developed and slightly more mature, in terms of the range of hotels and hospitality products available. But I think we're under supplied in terms of apart-hotels. I'm not just talking about some of the brands that you'll be used to seeing in the states you know, your Residence Inns, your Stay Bridges, your Adagio's, that kind of- you know, the corporate travel apart hotel or the kind of the apart-hotel 1.0. But the rise of the kind of the hybrid 2.0 apart-hotel model where you have this kind of mashing together of co-working, co-living, health and fitness, food and beverage in one building. And I think that's that's an interesting development that certainly we're starting to see. You know, the hospitality space has an im-portant part to play in the rebooting of the urban realm as well.
Speaker 5[12:31] Do you ever use a hotel outside of its normal use like rec center or-
Speaker 11[12:38] We use hotels to flee the kids. That's how most used reason.
Speaker 12[12:44] We just had dinner in Vancouver a couple weeks ago at a hotel because it's a good restaurant before we went to a show and I've had to duck into hotels before to use their business center to get a little work done, so.
Speaker 14[12:56] Well, I've, I've gone to dinner in hotels. If they have a nice restaurant, I go to hotels for dining.
Speaker 6[13:02] No, I probably wouldn't use a hotel outside of its normal use. It just doesn't really pop up in my world.
Mariam Sobh[13:09] In just a moment, I'll be joined by Paul Wells, a chartered architect and partner at Dexter Moren Associates, with nearly two decades of experience in hotel and leisure, residential and healthcare design. But first, a quick reminder. You're listening to Changing Places, brought to you by Avison Young, a show that continues to explore and question our complex relationship with the built world around us. My name is Miriam Sobh. If you like what you're hearing, I encourage you to tell your friends about us. Or hey, maybe leave us a quick review. We'd love to hear from you. So listen, does the thought of sleeping in a hotel room that's been used by another person creeped you out a little bit these days? Or are you like, 'bring on those crisp white sheets'? Do you yearn to sip a pool drink by the pool as the cares of the world pass you by? Or would you rather have a staycation at home without all the hustle, bustle, and uncertainty involved with traveling? What would it take to make you feel safe at a hotel, or maybe you're already there? And finally doesn't make a difference to you whether we're talking about a luxury hotel or road-side motel? Our next guest is going to give us some information to help us weigh these kinds of questions and make decisions about staying in hotels going forward. He's also going to give us a snapshot of what's happening in the industry as a whole. Let's get into it. Paul Wells, welcome to Changing Places. Paul, in the last year and a half, we've seen the hotel industry up-ended with reopenings. It seems like they're starting and stopping. What do you think the hotel sector will look like once things resume to sort of the pre-pandemic era.
Paul Wells[14:37] So in London, we're doing quite well where we're not far off pre-pandemic levels. Weekends, we're doing a lot of- we're seeing a lot of leisure travel. We're seeing less business travel, I think, during the week. And I do wonder to what extent that we're returning to pre-pandemic levels, I think there is a desire for travel. I think there's a desire for face-to-face meetings. And certainly, what I'm seeing in the hotel industry in London particularly is that people are using the hotels again. And we're using the front-of-house spaces in the way that we did pre-pandemic. And if anything, the only changes- maybe the buffets have gone. But it in the way that we use the space, it doesn't feel that different. And I think that's human nature that actually there is a desire to be where we are, where we were, and take that forward again.
Speaker 4[15:26] If I travel with a kid, I think if the room has some, you know, nice features, can attract kids. Like it can't, you know, little choice. I think that definitely will be my first choice. Yeah.
Mariam Sobh[15:37] Do you think things look different depending on the type of travel, for example, business or high-end, families with kids, etc?
Paul Wells[15:45] I do. Actually, I think, I think there's more likely to be domestic travel for families. So whereas people might have gone to Europe previously for weekend trips, they're now looking at UK desti-nations. And I'm not just talking London here, I'm saying talking sort of secondary and tertiary cities. I think that that is a trend that will continue. I think people will realize the UK is quite a great place for a weekend trip. You don't necessarily need to go abroad. Maybe it's just a sense, but I do feel like business travels tailed off a bit. And then you touch on luxury. Maybe luxury never really went away. I think there's a certain level of people that have continued to travel. And those hotels have, have retained their their custom.
Mariam Sobh[16:24] Where do you see hotels focusing their attention right now? Is there any sort of particular niche or or anything like that?
Paul Wells[16:30] There's been a diversification in the way the front-of-house spaces are used. I think there's less reliance on guests and sort of breakfast and service, for example. And they're starting to really encourage outside meetings to come in and workspace and use their spaces 24 hours a day, rather than just peak periods when there was checkout, particularly reception areas and lounge areas, which previously might have been a bit quiet at certain points of the day. And I think there is a desire as well with the way that people are working at home with having somewhere to break out to and hotels offer that.
Speaker 4[17:08] Yeah, yeah, that Grand Hyatt in San Francisco is connected to the airport. So when I have super late flights, I'll stop at that hotel, get a nice dinner, and then end up in the airport. So, I've also used it for workspaces. Like you can rent a room or location for the day only just to do some work. So those are all their uses at that hotel.
Mariam Sobh[17:28] Well, just when it seems like travel is back, we have another variant pop up and some folks may still be reluctant to get on an airplane. Have you seen an uptick in the hotel and leisure markets? I know you kind of mentioned that earlier that it seems like it's still at some points, even pre-pandemic levels of folks coming out. I guess, you know, I'm wondering how the regional spas or go-to destinations like Gleneagles in Scotland or Soho Farmhouse outside of London are tem-plates for the kind of local experiences people can have at hotels rather than going abroad?
Paul Wells[17:57] So actually, I think it was coming pre-pandemic, but the pandemic sort of speeded things up. And I think actually this, this idea that a UK resort, which is something that didn't really exist in the past other than maybe centre parks, that the idea that actually you go and you stay at a hotel, but actually you do all your activities there as well. So you might do outdoor pursuits like archery or falconry, alongside spa days and golf. And actually, you go for the weekend and you park up your car and you don't go anywhere. And that's definitely coming forward. I think we're seeing more of that.
Mariam Sobh[18:29] So are you seeing that as something that's going to be more popular in the area? Sort of an all-in-one, you just show up and the activities are planned and the food's there?
Paul Wells[18:39] Yeah, I think it will happen. And not, not in all hotels. Obviously there's still a market for for a base hotel, if you like where you, you travel and see the local area and embrace the neighborhood that you're in. And and that that's certainly true of city hotels. But I think some of these more rural lo-cations where you can go for a few days and just completely relax and rewind your- the stress-es of everyday life by not feeling that you have to get in your car all the time, I think that's very positive and I think that will happen.
Mariam Sobh[19:10] Do you think that there's going to be a greater shift in the way traditional hotels are used? For example, in in Chicago, the Seneca hotel is now a European style apartment building.
Paul Wells[19:21] So we're looking at a number of service departments. Game service departments have per-formed very well during the lockdown. Many of them have been talking to a lot of the owners and operators of those. We've been looking at a lot of deal-branded opportunities. So they- there might be a standard hotel that can share operations in front of house facilities with a longer stay model that's part of the same building. I think that hotels will move in that direction of how can they meet people stay longer, particularly as they move away from that more transient business model. So how do they get people to stay for a month or two, when they move to a city or, or are only visiting for two or three weeks?
Speaker 7[20:00] I yeah, I guess having cafe type situation where it's open, and maybe things that are kid friendly if you're going to hang out briefly. I haven't really thought about that.
Mariam Sobh[20:12] What do you think stakeholders in hotels have to do to sort of remain a place, a go-to place for folks? Not just a night out or a meal, but a real, full complete experience,
Paul Wells[20:23] So something we've been looking at in the office, or we've been talking about for a number of years, is that sense of neighborhood story and placemaking. Actually creating a place and a sense of where you're staying is really important. So that when you visit London, you feel like you're in London, or if you go to Manchester, or Birmingham or whichever city you're in, it's not just a continuity of, of the same story. And actually, I think hotels need to do that in every aspect of what they do. So whether that's their front of house spaces or their, or their bedrooms, I think creating a neighborhood environment and almost like a community help. It's really important.
Speaker 4[21:04] I think, like events or something that, 'Hey, we're doing this for Christmas, or we're going to do this thing on this night,' you know, like social gatherings, if you will. And also, what's really im-portant for us as out-of-town travelers is like, okay, where do we go? What do we do? Who do- you know, what's the, what's the favorites around here? Just kind of have that like that go-to person. Yeah.
Mariam Sobh[21:25] I have to say, I do enjoy that. I traveled recently, and I could see the difference. You know, when you use your phone to check into your room and all this stuff. It just- I feel like it speeds up the process. But also, I don't know, it's just, it's an easier experience than waiting in line. But with all of these changes that have been happening, are these due to customers who want, you know, the new technology or these changes or shifts? Or is this more from from the corporate side?
Paul Wells[21:51] I think it's both. And you know, certainly big corporate buyers are interested in how they can keep their team safe while they're traveling. I don't think travels happening at quite the level it was like we've seen with business travel. I think we do have to be careful that obviously there's there's a spectrum of travelers out there and not everybody has a spot for particularly independ-ent travelers and an older travelers. I think like you say, there's there's a variation of travelers, and we need to make sure that we accommodate them all. So families are, I think, less likely to use a phone. If you're trying to manage children and check in and open doors and do everything maybe, maybe it's nice to have somebody carrying your bags. But maybe an independent busi-ness traveler is more likely to say no, I just want to straight streamlined with my phone. I've used it for the airline ticket, used it for my bus ticket, I want to use it for, for my room as well.
Mariam Sobh[22:41] Do you think that hotels can be all things to all people? Or should each hotel focus on something that it does really well?
Paul Wells[22:47] It'd be nice to be all-inclusive. But there's always brands that will attract certain types of travel-ers, you know, so there's certainly younger brands in the market, which are seen maybe to be a bit cooler, a bit more edgy, and that have more of an offering based around activities and, and whether that's a funky bar or a music room or a speakeasy bar hidden in the basement, you know, compared to the more traditional hotel where where people just know what they're going to get. And there's, there's a marketplace for all of them. I don't think one hotel could be all things to all people for them. But I think that like equally, you know, you should be as inclusive and as en-compassing as you can.
Speaker 6[23:30] For me, it'd be like, unique partnerships to like get me out to go do things. Like I don't want a partnership with something like an Applebee's that's a chain. But if it's a partnership with like, 'Hey, this is something that's unique to the town. You stay with us, we'll make sure you have a reservation or a discount or whatever it may look like.' That way, you really get to experience the place you're in.
Mariam Sobh[23:51] What about with the trends in this area? What are you seeing in the next five years or so that may affect hotels and how we interact with them?
Paul Wells[23:59] So I do think there'll be a shift away from that hard reception desk in the lobby. I think we'll see that is is gradually phasing out anyway. But I think the next five years, it will definitely be on it's, on its way. I think the idea that you have more multifunctional arrival spaces, so that you're mak-ing better use of the, the whole of the building and how you can generate income from that and how you can enjoy it as a, as an occupant. For example, swimming pools and spa spaces and relaxation zones, which which not all business travel hotels had previously. I think we'll be- it'll be interesting to see whether they feed in more, whether that's a dry spa or a massage space or a relaxation room. And I think that that kind of understanding of how we live our lives and how we have quite intense days at work, and then we want to really relax at night and we don't neces-sarily want to just relax with an interactive telly in our bedroom. You know, we want to see people and be somewhere and that might be a bath, but it might equally just be a relaxation.
Mariam Sobh[25:02] I'd like to thank Paul Wells and Richard Gaunt for taking the time to guide us through the future of hotels as we all adjust. I'm really excited to see how the world of hotels and leisure continues to serve the needs of its patrons and everyone else across the value chain. There's no telling what you may find the next time you check into your hotel room. Here's hoping they'll always put chocolates on your pillow. Join us next week as we go behind your favorite delivery apps and into the still unknown world of ghost kitchens. What kitchens? Exactly. I know this is an episode you will not want to miss. I'm Mariam Sobh and this is Changing Places, brought to you by Avison Young. See places changing and evolving in your neighborhood? Share your evolving spaces with us on social media using the hashtag #changingplacespodcast. I'm Mariam Sobh, and this is Changing Places. Changing Places is brought to you by Avison Young. Our producer is Andrew Pemberton-Fowler. Our sound engineer is Patrick Emile, our production assistant is Gabriella Mrozowski. Additional production support is provided by JAR Audio.