Real estate investors are leaning into the blurring of the line that has traditionally separated the hotel guest from the local as they put placemaking at the front and centre of their business case.
While these assets are more operationally intensive and complicated to run, they do have the advantage of multiple demand drivers over the traditional hotel. Co-working spaces and F&B outlets help smooth over the quieter months and when the tourists do arrive they have the added advantage of giving the property an authentic feel.
Of course this means diversifying revenue, but it also means building in resilience. Occupancy and room revenue are not the only game, with membership schemes an attractive option in some locations.
It’s a topic that featured heavily at the Annual Hospitality Conference in Manchester earlier this month, with one speaker noting that hotels are being viewed as the "social anchor" of wider developments, helping to drive footfall, dwell time and economic activity beyond the building itself.
It’s a trend too we are seeing across the whole of Europe. The growth of hybrid hospitality businesses presents the clearest shift. Companies like The Social Hub are leaning into this looser definition, with tourists, students, business travellers and locals all in the mix.
Another good example is the joint venture between Invel Real Estate and YellowSquare, which has recently made three new acquisitions across Italy, representing a combined investment in excess of €75 million. The pair have also agreed a landmark long-term lease in Naples.
Together, the four assets will take the YellowSquare platform to approximately 3,300 beds. Works are already underway in Bologna and Naples, while Milan and Venice are set to follow shortly.
Fabio Coppola, founder & chief visionary officer, YellowSquare, said: “People often describe YellowSquare as a hostel brand, but it's not a simple hostel. For us, hospitality means creating places where people who would never normally meet can share experiences, ideas and opportunities, much like the piazzas that have always anchored Italian cities. Every YellowSquare starts with a building, but our ambition is for it to become part of the social fabric of the city. Together with Invel, we are building much more than a hospitality platform: we are creating a network of contemporary piazzas across Europe.”