The Hospitality Industry Seeks to Reinvent Itself With the Adjacent Space

The hospitality industry has suffered greatly because of the global pandemic. This is due in large part to its dependence on bringing people together and its relationship to essential human activities such as work, travel, and eating out. At the moment, everything we do has been dramatically upended, which is what has the hospitality industry rethinking its purpose. If the very meaning of work and home has changed, what does that mean for hotels?

If we take a deep breath, ideally of fresher air, we can glean some perspective on developing opportunities in the hospitality sector — namely in the serviced apartment, aparthotel, and long-stay market.

These types of spaces were already drawing a lot of attention from investors and operators before the pandemic. The impact of working from home and where people decide to live while working — and for how long — is expanding the market for what can collectively be referred to as the Adjacent Space (adjacent to the traditional hotel).

From luxury boutique operators like Cheval Collection in the U.K., to large scale operators like Accor and Marriott, specific hospitality events curated by IHIF, and many variations along the way, developers, owners and others are pursuing these alternatives with a reinvigorated focus due to the COVID-19.

In fact, the trend is expanding beyond the traditional hotel market. On its own merits, serviced apartments and their many variants present opportunities to improve upon how we can live and work in our cities, the suburbs, the countryside, and even more traditional holiday destinations.

Here are a few “what if” scenarios that we can use to frame the potential for the market now that the pandemic has changed the landscape and potential demand for hospitality products:

What if… the impact of remote working and where people decide to live — and for how long — is opening up the market?

What if… Saturday and Sunday aren’t the only days of the week that are weekends? Staggered working hours and work weeks can create a different model to combine travel for work and leisure.

What if… the trend of fewer people being able to afford home ownership continues?

What if… we could reduce the size of our living spaces? By offering other amenities in the property or neighborhood where we are living, this reduction in living space becomes a possibility.

What if… we were able to take a week or a month to work from Paris, Miami, London, Vancouver, or Lagos? Or in a place that’s by the sea, a lake, the mountains, or an island? Destinations hit by the global halt in travel, such as Anguilla, Barbados, Estonia, Georgia, and Croatia, have launched programs offering favorable visa and travel options targeting nomadic workers who are fortunate enough to have options to work from elsewhere.

What if… an aparthotel or serviced apartment could be designed for better mental and physical well-being and ultimately allow for more productivity? Our homes are not always the best places to work and focus.

There’s clearly an emerging market for the “adjacent space,” and many in the hospitality industry are already positioned to take advantage of the trends we’re seeing. Some have already keyed into this new strategy. Here are three examples from a variety of markets that show the diversity and potential upheaval these opportunities present.

Cheval Collection

Cheval Collection’s experience in London and the U.K. during the pandemic show the resilience in the serviced apartment sector. According to Daniel Johansson, director of Development and Acquisitions at Cheval, they’ve seen enough to consider expanding their offerings.

Cheval units are self-sufficient with kitchens and laundries in each apartment, creating a more secure and safe domestic setting. In mid-March 2020, this allowed Cheval to accommodate several guests who needed to remain in London professionally, but could not stay in any hotels due to the shutdown.

Now that travel to London has opened up since July, Johansson has noticed that guests are combining multiple business obligations into one trip to be more efficient. This means that they’re staying longer and in need of the domestic settings Cheval has to offer. Cheval is offering to turn second or third bedrooms into an office if requested. Guests are also able to book their housekeeping on an as-needed basis and cook their own meals as desired for the extended stay.

When asked whether a decline in travel to urban destinations (outside of London and Edinburgh in particular) could have an impact on their future plans, Johansson said that Cheval is optimistic about the future for urban travel and this remains their focus. That said, the brand is currently considering new opportunities and options in typically leisure destinations.

The Accor Group

Several observers have dryly noted that we are not working from home, rather we are living in the office. The Accor Group, which operates hotels in over 100 countries, is offering daytime stays for people looking for an alternative to what may be a less than inspiring WFH experience.

Called the Hotel Office (a playful riff on the home office), the accommodations have creative rates, increased cleaning and safety protocols, and date flexibility. The favorable rates (most options are less than $100/day as of this writing) also include access to the amenities and conveniences of the hotel. Accor’s pitch is to offer an option between home and the office for people needing a different kind of focus and experience.

Cube City

Chinese developer Xu Weiping received planning approval in 2015 for a 35-acre site in the Royal Albert Docks in East London for a business park that would include 21 office buildings. Fast forward to 2020 and a global health crisis, and the market for office space in London looks very different. Thus his concept for Cube City, a unique approach to combining the work from home and in-person office culture.

Cube City is made up of individual prefabricated office cubes within the office buildings he originally planned. The cubes measure approximately 9 square meters (97 square feet) and include basic kitchen functions and a day bed.

The idea is to test out the model with 2,000 units that will bring together the key comforts of home to an office environment for safer and more consistent professional collaboration that many people now crave or require.

As hotels seek to reimagine their role and purpose in the hospitality industry, more creative solutions will boil to the surface. It may be that we also need to rethink the term “guest” in the hospitality sector. Brand loyalists, digital nomads, tenants, Work-from-Anywhere-ists — these names start to capture the variety of people seeking alternative places to stay in this new environment. At Gensler, we’re currently working on a range of projects with developers and owners — including ground-up serviced apartments with flexible amenity spaces and a conversion of an existing hotel into and aparthotel — that will address the changing needs of these travelers, visitors, and remote workers.

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