In the late 19th and early 20th centuries, living in hotels was widespread, especially for the wealthy, artistic, and bohemian. Why bother with the hassle of home ownership when you can rely on the amenities and services of a hotel?
Today, this way of living is making something of a comeback, and the hotel industry has reacted to a rising demand for longer stays.
Sabine Schaffer, co-founder & CEO Europe, Pro-invest Group, said: “We operate classic hotels – 6,000 keys – and we have recognised every now and then some guests are staying for two or three months.”
Why? Given the choice between a serviced apartment and a hotel room, Schaffer reckoned these guests prefer the sociability of a hotel environment, with the opportunity for socialising in the lobby, bar, and restaurant.
As an investor, developer, asset manager and operator, this knowledge has encouraged Pro-invest Group to move into the residential and co-living market and convert old hotels and office buildings into products with a focus on eight-month average stays, she said.
Hybrid hospitality refers to the blending of traditional hotel concepts with living models like BTR, co-living, co-working, members clubs, and student housing. It often means properties cater to at least two different markets within the same building.
Commercial zoning
Luca Bovone, founder and CEO of Habyt, explained how his company has found an optimal balance between long and short stay: “Large-scale properties zoned as hotels are now 70 percent dedicated to long stays of six to seven months, while the rest remains short stay. We think this is the future of hospitality. We’re proud to say that we have buildings licensed as hotels, but we have long-stay guests.”
Rohan Thakkar, chief development officer, Yotel, said that demand from investors, the developer and guests led the group to create a hotel in Miami with branded condos on the upper floors (known as Yotel Pads).
Navneet Bali, founder & CEO, LyvInn Hotels, said that his guests can choose to pay either €35 for a single bed, or €130 for a room: “I only have one brand but it’s a flexible brand. Depending on the building or the location I can be more hostel or more hotel, in terms of getting the best return for the investor and from a marketing point of view.”
Schaffer said that taking an old hotel (cap rate of 6 percent) or an office building (7-8 percent) and converting it into a living space with a lower cap rate of 5 percent was a way to increase the value of the asset for investors.
Jon Hubbard, head of hospitality EMEA, Cushman & Wakefield asked whether there is more appetite for living products or hospitality products from investors?
Bovone answered: “Where we see value creation is with sites that are outside of the city centre and we create a new living environment. This increases the value of a B or C location. A lot of the developers we are working with are basically buying a commercial hospitality asset, zoning wise, but then we are working with them to still have a very high percentage of long stays. And having that long stay capability, the cap rate will be better on the exit.”
In addition to private studios with their own workspaces, kitchenettes and bathrooms, Habyt provides onsite gyms and wellness centres, co-working spaces, shared community areas, and cafes.
Sociable spaces
It’s not only new companies that are moving ahead with hybrid hospitality. Established aparthotel operators have also recognised the need to incorporate living elements into their products.
Thomas Lamson, VP development & PTS EMEA, The Ascott Limited, said: “We have been doing extended stay for 41 years, and before Covid, we realised we needed to transform the traditional spaces into something different. We didn’t call it hybrid, but just responding to the needs of the travellers. They want to meet people and socialise. We created our new brand Lyf in 2019, which is now in its fourth version. We put in shared kitchens, and a chill space on each floor, with a fridge and microwave. On the ground floor, there are many options, such as a bar, karaoke, restaurant. It’s not just a real estate product but also a change in mindset for the staff.”
A new multi-tasking approach to staff roles has made front-line teams feel “more proud,” said Lamson. At the Yotel Pad in Stratford, London, there is a pilot in progress to fully automate operations, said Thakkar, with staff remaining present but in the background.