The past few years have focused the minds of guests about what they really want out of a stay.
Too often, the hospitality sector had become used to the idea that it could decide what the customer wanted and it would be delivered, no debate allowed.
The belief echoed Henry Ford’s comment about what would happen if you asked the customer what they wanted: He believed they would simply ask for a faster horse. Who could imagine a car?
But hospitality is not the internal combustion engine. The guest of tomorrow is the dinner party host of tonight and the spare-bed inflator of the weekend sleepover. Guests know hospitality. They do it themselves and they do it well, and to their exacting requirements.
But while we’re not moving from horse to Honda, the professionals still have something to teach and some trends to impart, even if they did begin in the home.
The serviced-apartment sector started out decades ago — more than four decades for us at Cheval — and has grown in popularity, but patchily geographically.
The Middle East and Asia has embraced the concept at the high end, while in the U.S. the sector has focused more on executives on the road, with brands to reassure but rarely inspire. Europe has started to show enthusiasm for the lifestyle end of the market. We have seen growth in demand from guests across our brands, from our latest flag, the design-led My Locanda, to our luxury Cheval Residences.
Airbnb was at the center of mass adoption of the product, as guests realized that they could have their own personal space but in the heart of the city. They could bring that hospitality back under their control, using someone else’s home to entertain and relax with friends and family. This opened people up to the idea of brands, with the appeal of consistency, of guaranteed quality and of people on-site to provide attentive service and amenities that meant that your space was your own, but just a little bit better.
The post-pandemic travel boom unleashed leisure demand all over Europe as COVID-19 travel requirements were dropped and long-paused travel plans were reactivated.
The difference between plans then and now was the education of the pandemic years, where travelers had sought the reassurance of a space of their own, where cleanliness and traffic could all be controlled.
This summer saw an increase in interest from the U.S., aided by the strong dollar but also by the growing appreciation of what serviced apartments can offer. Our Cheval The Edinburgh Grand property joined the Virtuoso network earlier this year, illustrating that, even in luxury, the serviced-apartment model is now part of the mainstream accommodation vernacular.
This year we have seen demand from all over the world, looking for flexible space with a strong food-and-beverage offering and team members who were eager to connect them to the local community, be that recommending restaurants or entertainment or just a book about the area.
We provide the backdrop for the empowered guest to create the stay that they want, which, for us, has the added bonus that we can have a leaner operation than the average hospitality property. With fewer facilities than the regular full-service venue, our teams are smaller and our technology is more limber. There is less operational grunt work and more focus on creating a great stay, which means lower staff turnover and a warm welcome.
Being able to deliver a memorable stay at a lower operational cost and higher profit margin than the equivalent hotel means that investors are becoming as global as the guests.
We are seeing cities around the world where the current economic climates are ruling out the classic luxury hotel. Wages for staff — if they can be found at all — to run restaurants, spas, events spaces and the myriad operations within a traditional hotel are becoming prohibitive, and so are rising costs in food, energy and building materials. The hotel developer, particularly at the higher end, faces significant challenges before they can get out of the ground, assuming they can find investors to take the bet.
This means we are seeing a diminishing number of locations that can sustain the rates needed to support these hotels. The classic locations are still pulling in those global travelers who are prepared to pay the rising rates needed to break even, let alone make a profit, but outside that handful of main cities, the development options are faltering.
Demand has shifted in the past few years, from both guests and investors. Flexibility of space, length of stay and of operations means that the global hospitality pipeline is moving away from the kind of luxury hotel Henry Ford would have stayed in.
But the hospitality remains intact, although you might need to find somewhere else for your horse.
Daniel Johansson is director of development and acquisitions at Cheval Collection.
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