The impact of the pandemic on the hotel and leisure sector was, arguably, felt stronger than in any other single area of the economy. With no ability to pivot their business to ‘online’, and no prospect that ‘working from home’ might provide a temporary solution, the sector was faced with an unprecedented fight for survival.
The fact that the majority of the players in the industry have not only survived, but many are now looking at growth and development, is testament to the adaptability, resilience and sheer hard work (and, living with someone in the industry, I can attest to that!) of those in the sector.
The rebound looks very different from what went before, however. Apart from the obvious physical changes that have had to be put in place e.g. screens at reception desks, limiting numbers in lifts, social-distancing in swimming pools(!) the more fundamental question is how the industry is addressing the shifts in lifestyle and working behaviours, and also taking advantage of new opportunities. As much as hotels are now reconsidering their locations and the nature of their offering, so changes in the demand for office and residential space have afforded the sector with these opportunities.
Our clients’ experience is that, following the initial lockdown, and the lifting of restrictions on 4 July 2020 their market had shifted considerably. International travel had obviously all but dried up – although there was limited ongoing demand for occupation from a limited number of international C-suite clients – and business occupancy was non-existent as in-person meetings were switched to Teams and Zoom calls. Consequently, demand started to increase for different types of hotel offerings and the longer-stay market, where quarantine requirements could be met, in accommodation which already had all of the technology and connectivity required to conduct business remotely. This also provided a unique opportunity for hotels in residential neighbourhoods to alter their appeal and offer in a way that either had not been possible or profitable and cater to this market.
However, by the summer of 2020, with overseas summer holidays off the cards, the demand for regional hotels in the UK, especially resort hotels and those with leisure facilities, soared – and, with those holidays on the French Riviera on hold – luxury hotels, in particular, were in high demand for the so-called ‘Staycation’. And this trend looks to be continuing, albeit with a more international focus – witness IHG’s acquisition of the Six Senses brand (admittedly before the onset of the pandemic) and Hyatt’s’ stated increased focus on luxury leisure (as evidenced by an interview in the Estates Gazette of 11 September 2021).
Where, though, has this left the traditional City business hotel? Well, it would appear that options are twofold – either upgrade existing hotels that offer the ability to both be at leisure and do business (I will refrain from using the term ‘bleisure’ that I have seen used recently to describe it!) and, again, the Kimpton and VOCO brands that IHG are increasingly rolling out are signs of this type of hotel, or look to take advantage of potential relaxation in the planning systems to convert to blended-use buildings with office, residential and hotel space all on the same site. This approach could, of course, take advantage of the increasingly available office space in the City centres – almost the inverse of the trend to ‘working from home’, and perhaps blurring the lines between the leisure and work in the same way that ‘working from home’ has done?
One last word (or, more accurately, acronym), and no article on development trends would be complete without it, and that is the focus on ESG. This is both from the contractor/developer perspective but also, I would argue, from the hotel operator/franchisee perspective. Not only must the physical building look to comply with the ever-increasing and pressing move to higher environmental standards and carbon-neutrality, and the location ensure better accessibility by public transport, but the contractor/employer has to meet the social criteria demanded to attract both investors and employees, especially in the post-Brexit dearth of experienced hotel staff.
The opportunities to rise phoenix-like from the ashes of the pandemic are certainly there … and initial signs are that the hotel sector is moving forward and has the adaptability and foresight to meet the challenge.
Want to join The Collective, and contribute to the debate?
Email us at: The.Collective@lewissilkin.com