As consumer confidence starts to return, there are some reasons for optimism in the hotel industry. However, the scars of the pandemic will not heal overnight.
Burgeoning trends we were already seeing have been accelerated by 20 years, with shifts in lifestyle and working behaviours leading to a step change in the way architects, investors and operators need to think about assets to ensure their long-term viability. They must learn and evolve, or risk getting left behind.
Firms are keeping an eye on international travel trends and confirming who will be returning, and in what numbers, before they make capital decisions. Some contacts are worried they may not be able to sell all their current guest-room stock and may consider dividing up some of their space.
This standstill presents another issue: some planning permissions, which are valid for three years, may lapse in the next 18 months. Some may lose hard-won permissions if work does not start by the end of next year. Do they risk starting work before we have more clarity, and potentially get the offering wrong?
Many city-centre planning use classes are protected in central London, making some office-to-hotel conversions difficult until there is political will to change this. But as a result of the pandemic, I think there will be more appetite for blended-use buildings with residential, hotel and office space on the same site. This could significantly reduce some risk for developers, who will not have to bank on a single-use site offering.
Travellers are looking at different types of hotel offerings and the longer-stay market. The 90-days residency rule may need to be relaxed in the future for London, and serviced branded apartments and we could see more residential blended models. There already seems to be an overlap of build-to-rent and other hospitality models, including later living and co-working, as more people will want to stay on holiday for longer, perhaps taking a week’s holiday and then another week to work remotely from the same location – known as ‘bleisure’.
New technology will also be important. Things like circadian lighting that matches hormones and rhythms are being used in later living projects and hoteliers are also asking for this now.
Meanwhile, ESG can no longer be ignored – developers are becoming more interested in operational costs, costs in use and costs to refurbish. Construction can be a destructive process and uses significant human and natural resources, accounting for around 38% of global carbon dioxide emissions, so there will be a lot more recycling and reusing existing properties in the future.
This is something we are heavily focused on with our recraft methodology, which can breathe new life and income into existing assets. However, to be truly sustainable, you have to look at your entire supply chain and how much carbon is being used in manufacturing every item.
Ultimately, the hotel industry must invest in the future. The days of non-disruption to operations have passed and are not coming back for many in the near term. Creating estates where all parties can contribute in a holistic way will ensure that the industry is fit for the future and able to grow in a controlled way. Hopefully, this pandemic will help limit economic cycles that are often so disruptive to investment and sustainable development.
– Ramsay Ritchie, Associate Principal at CallisonRTKL