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Leisure Insight – Karim Malak

Redefining Hospitality

Leisure Insight - Karim Malak 1

Our well-established industry was forced to pivot and adapt in ways like never before during the pandemic and with the return to travel, we were hosting guests who wanted to travel differently than they had before. Demand surged and travellers had new needs, centred around experiences and curated travel. Whether it be a tighter budget that needs more flexibility, or the social media effect which has led to the capturing and sharing of experiences far and wide, the hotel industry has been at the forefront of these changing demands and offers a new approach to attract the growing number of travellers.

Polarisation of demands
According to the World Tourism Organisation, an estimated 975 million tourists travelled internationally between January – September 2023, an increase of 38 per cent vs 2022. With this surge in demand, there has been some polarisations of what customers are looking for.
For those looking for a luxury travel experience, unsurprisingly, they stick to luxury and don’t change their taste. In fact, with HNWI growing every year, the demand is clear and luxury hotels drove 21.4 per cent of global single asset hotel liquidity in 2023, the second highest portion since 2015, according to JLL. For the other end of the market, low-cost hotels have also seen growth and in 2023, the market size of the budget hotels industry increased 15.2 per cent. With both the luxury and budget sectors having a clear value proposition, it is easier to define who the customer is and attract more of the market; unfortunately for the mid-market offering, it can lose its sense of appeal for customers.

Getting out into the local area
Whereas previous highlights from a hotel experience were extravagant continental breakfasts or hotel cocktails, consumers are now searching elsewhere. A renewed focus on community has accentuated this and social media plays its part as a platform for individuals to show their experiences and interactions with a particular place.

As a result, there is less demand for generic restaurants, often carbon copies repeated across an operator’s portfolio. Building hotels in great locations unlocks a wealth of dining and drinking experiences for guests and we’re seeing this trend really establish itself with big operators even now converting their restaurants to bedrooms or selling them off to local operators.

There is also mileage in the use of hotels as an extension of the family home, for those who already know the city and just need somewhere to stay overnight. Our Charles De Galle hotel for example, sees 15 per cent of its visitors stay through local connections. A great value hotel on your doorstop can do wonders for creating that extra guest bedroom without the need to expand or move home!

Evolving events
Internationally we are seeing events get bigger and the bigger opportunities which come with this, from building new infrastructure to host events, to partnerships with local businesses and communities. Headliners are choosing to perform from stadiums with much larger capacities than arenas – Taylor Swift is playing at Wembley Stadium with a capacity of 90,000 instead of the O2 arena which holds only 20,000 and Beyonce last year toured exclusively from stadiums including the Stade de France in Paris with an 80,000 capacity.

These large-scale events provide huge opportunities for hosting cities and are increasingly seen as tourism attractions. Tour operator Contiki for example is running trips coinciding with the European Era’s tour date in 2024 for Taylor Swift fans. While not a new trend, the numbers now taking part are noteworthy.

Smartly designed compact rooms that make the best use of space, such as our optimised easyHotel room, which is just under 12sqm in total size, can be a significant driver to increase much needed capacity. After all, guests are much more likely to remember being able to attend the concert of their dreams facilitated by an affordable and comfortable night’s sleep in a nearby hotel, than a hotel with large rooms and designed to keep guests on site with a gym, spa or restaurant.

Business travel returns, in a new way
While leisure continues to be at the forefront of travel expansion, it is important to not forget business travel. Not only are people now trying to add on time to their business trip to explore the local area, but remote work means much more demand for affordable hotel options. According to a survey in 2023, over 40 per cent of business trips were extended for leisure purposes.

The value of a ‘bedroom office’ is another area which has been called into question. Analysts predict the number of coworking spaces worldwide will reach around 40,000 by the end of 2024 and an estimated five million people will be based in co-working spaces this year. With so many people embracing co-working spaces and coffee shops on every corner, operators should ask themselves whether business suites are the right area to spend on, or whether the space can be put to better use.

Another driver has been remote work and the ability to work on the move. According to ONS, 28 per cent of works are now hybrid in 2023 and some are therefore basing themselves out of the city centre and commuting in for a night or two. While traditional business travel would be defined as visiting clients, or expanding over different geographies, now, this also includes people visiting their office and needing a local place to stay.

A new era with plenty of potential
These themes illustrate how our industry is constantly evolving, and the growing number of travellers presents significant opportunities. Businesses that can adapt, innovate and pivot will thrive by catering to the modern traveller’s desire for authentic experiences in the unique communities where we operate from.