Alternative accommodations and affordable luxury are two concepts that continue to gain momentum in the hospitality industry. Travelers today are looking for unique experiences, flexibility and high-quality amenities without breaking the bank.
It may be no surprise then that the alternative lodging landscape is becoming more crowded. It can encompass anything from traditional short vs. extended-stay hotel brands, condo-hotels, build-to-rent and flexible residential operators, co-living, peer-to-peer rentals and decentralized/digital rental platforms.
To truly understand how to capitalize on these trends, it’s first important for hotel owners and operators to contextualize where the evolution of alternative lodging is coming from. Lifestyle norms are being reshaped by several global megatrends, including:
- Shifting values toward lifestyle mobility;
- Economic volatility and cost of living pressures; and
- Long-term travel demand growth.
All of these things are driving a need for more flexibility and nuance in accommodations. While there is much variation in the end offering available, realistically, a guest’s needs are rarely siloed to one single option. In short, hospitality experiences need to be designed to match the increasing complexity of modern travelers.
A focus on affordable luxury
How can hoteliers ensure they are completely leaning into the guest experience at every stage of the journey? This is where the concept of “affordable luxury” comes in. It’s a term we have been focused on understanding, delivering and helping to define for more than 15 years.
Affordable luxury means a few things. First, it’s about understanding the psychographics of who the target guests are and what defines their motivations, behaviors and lifestyles. It’s not enough to only look at the obvious factors of price and location.
Our commercial and development teams have been focused on understanding this profile for a long time—collectively referred to as “Generation Go.” Contrary to traditional belief, there’s no strict and stereotypical demographic boundary for this. Ultimately, it’s a shared motivation to seek out high-quality and highly efficient experiences on guests’ own terms. That means only focusing on what is truly valued for a guest’s non-stop, active lifestyle. By not providing anything beyond what’s truly demanded, operators can save that extra value for guests via a more affordable price point.
More practically, affordable luxury is also about being highly detail-oriented in understanding what has allowed an entirely new generation of non-hotel concepts to emerge and thrive. After all, Airbnb is doing something right when more than 1 billion guests have booked stays, and the platform has listings in more than 220 countries and regions.
For the hotel industry, affordable luxury and experiential success happen by focusing on the details that matter most to guests.
It’s crucial for hoteliers to understand that affordable luxury is not merely a marketing gimmick. Rather, it’s fundamental for guests and the entire viability of any real estate project. On the one hand, leisure guests and corporate travelers are in the midst of a cost of living and travel budget crunch. On the other hand, property owners must protect their rising development and operating costs. Affordable luxury is what makes the entire end-to-end experience not only attractive but essential.
Untapped opportunities for hoteliers
Embracing flexibility is one of the most significant untapped opportunities for hoteliers in the affordable luxury alternative accommodations space. Alternative accommodation needs to be truly fluid in order to be globally relevant. There’s an opportunity in understanding how to accommodate stays between one night and one year. Narrowly focusing on only ever being an apart-hotel, a short-term rental or a condo-hotel brand is restrictive and makes scaling difficult.
Likewise, being too narrowly defined and attempting to provide a “one-size-fits-all” approach for extended stays has been a huge barrier for operators. Guest preferences, real estate constraints and the perpetual gray areas and complexities of planning permission variations mean that adaptability is crucial.
As a result, the most exciting opportunity in developing alternative accommodations comes from not mindlessly planting the same pre-packaged product. It’s one of the most rewarding spaces to be in. Revenue management can be optimized by tapping into different demand and stay-length types. Distribution can leverage hoteliers’ existing channels while accessing an entirely new set of niche networks. Development strategy can look beyond prime city center locations to unlock greater real estate value and be in areas where people targeting longer stays may actually prefer to be for a better sense of livability. This flexibility even translates to the potential for a single building to tap into “the best of both worlds” from hotel-style vs. residential-style development funding and exit strategies.
Another untapped opportunity is the changing value of branding. The traditional assumption that hoteliers need to de-risk alternative accommodation development (especially branded residences) with “old school” luxury brands to drive unit sales and nightly stays is no longer a requirement. While branding still remains crucial—the data on price premiums vs. non-branded is clear—there is a new evolution in demand for brands that simply connect with lifestyle and delivers a highly functional and relevant experience beyond pure luxury.
The industry is already seeing this with a number of modern lifestyle-driven brands expanding to longer-stay or branded residence products. It’s definitely at the cusp of an emerging trend as the future of flexible stays in the hotel industry continues to evolve.
Closing the gaps
There’s no one answer for what exactly travelers are looking for today. There are lots of travelers who will only ever stay with one hotel brand, and there are many who have sworn off hotels completely.
That’s why it’s essential to look for the gaps and work to understand those guests who travel with a degree of flexibility. To truly differentiate from the competition, hotel owners and operators need to deliver the best “hotel-style” service and amenities while protecting the personalization and livability of “non-hotel” or even residential accommodations.
What could that look like for hotels? Specifics like a 24/7 staffed reception, flexible housekeeping and in-room amenities that integrate with a guest’s personal tech stack are some things that matter most to travelers today. Many digital rental platforms offering decentralized and fragmented experiences aren’t able to consistently deliver on all of this. These things require a dedicated and experienced hospitality provider. Now is the time for the hotel industry to close the gaps.
Anthony Smith is senior business development manager with YOTELPAD, the flexible stays brand of YOTEL Group. He is based at the company’s global headquarters in London. He has more than 10 years experience across hotels, hospitality and innovation.
This is a contributed piece to Hotel Business, authored by an industry professional. The thoughts expressed are the perspective of the bylined individual.
