Since the pandemic halted lucrative business travel and overseas vacations, hotels have been confronting their biggest crisis. They’ve had little choice but to get creative in filling all those rooms. That’s why operators from Whitbread Plc’s budget Premier Inn to the luxurious Mandarin Oriental International Ltd. are trying to attract a new clientele: home workers. If they succeed in repurposing their properties, the hotel trade may be an unlikely beneficiary of our shift to flexible working.
Most of the focus right now is on the rise of work-from-hotel programs, through which operators not only offer workspace in hotel rooms, but also provide wifi, business support, refreshments and use of other facilities.
Accor SA, the French hospitality company, launched Hotel Office in August — and the program is now in around 220 hotels in the U.K. and 70 in the Benelux region. It’s also available in Russia and South America and is being expanded to other markets, including North America, Hong Kong and France.
In the U.K., you can work from the group’s five-star Hotel Sofitel St James. For 350 pounds ($455) a day, you get one of the most deluxe suites, along with breakfast, unlimited tea and coffee, lunch and a cocktail in the bar. Or you can go the budget route and work in an Ibis — their offerings start at about 30 pounds per day, roughly comparable to subscribing to a desk in a co-working space.
Accor says it’s seeing strong demand from individuals booking a single day to get respite from distracting building work, noisy children and crowded house shares. But companies are also looking for longer-term availability. In Russia, for example, one business booked multiple rooms in an Ibis hotel for two months.
Other hotels are partnering with co-working companies to offer workspace in their rooms and suites. Proper Hospitality, which operates luxury hotels in Los Angeles, San Francisco, Austin and Palm Springs, recently teamed up with premium flexible office provider Industrious.
Still, selling rooms for the day is less profitable for hotels, typically commanding 50% to 80% of the price of an overnight stay. Then there’s the cost of intensive cleaning. But with hotel occupancy at less than 50% globally in August, according to data provider STR, having some extra customers is better than earning no income at all.
Meanwhile, managing room occupancy to maximize profits is a core skill of hotel operators. Richard Clarke, a leisure analyst at Bernstein, says the dream would be to sell a room twice over — once for a daytime worker and once for an overnight stay. Although this struggling industry is a long way from such a happy situation, flexible working may leave a lasting legacy.
Up until now, business travel has mainly involved people visiting customers and staying in nearby hotels overnight. Now we’re likely to see a greater proportion of the trade made up of workers coming to spend some time at corporate headquarters.
CitizenM, a hip Dutch hotel chain, recently signed a deal to build a 240-room hotel next to Facebook Inc.’s Menlo Park, California, campus. The company is unusual in the industry because it owns most of its hotels. It is backed by Singapore’s sovereign wealth fund, the Dutch pension fund APG and entrepreneur Rattan Chadha, founder of the Mexx fashion brand, so it can afford to take a long-term view. But it’s still a bold bet on more nomadic workforces.
It’s even possible that as corporate offices shrink, some vacant floors could be turned into on-site accommodation, which could also be managed by hotel chains. Alternatively, companies cutting back on traditional office space might use hotel facilities when their teams come together.
With infections rising across Europe and the U.S., the hospitality industry’s focus is firmly back on navigating the crisis and new restrictions. But there are reasons to think that our great work-from-home experiment could help hotels cope in a post-pandemic world.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.
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