‘Hotelification’ - as defined in our 2030 Global Outlook Report, is the re-positioning of residential, retail and office space.
This is where landlords are offering branded and bespoke serviced spaces for an increasingly mobile population, who want space that offers a variety of short-term functions - from living and working, to events, communal dining and much more.
In the world of hospitality, we have trusted brands such as Hilton, through to digital players such as airbnb. And it is in this space where the saying "consumer is key" is particularly adhered to, and because of that dedication, it means brands in this space can build longstanding customer loyalty. Evidence of this can be seen in how they design the physical asset, the product offering, as well as amenities and service standards.
These influences are shaped around what consumers want to see and experience, and it’s that way of thinking that the real estate sector also needs to apply.
Build – but will they come?
In the retail world, a good example of investment in a brand comes from Westfield. They use live performances of international superstars - such as John Legend - to help launch their new sites in Continental Europe. They are determined their sites should not merely be retail destinations, but lifestyle locations.
And thus the need for the brand to become synonymous with that lifestyle, to attract both key retail occupiers but also consumers. This method of building a brand to entice and enhance occupier experience is exactly what office landlords will need to do.
Crucially, this is because vacancy levels are rising, and supply is outstripping demand in a tenant-weighted market. Landlords need a more holistic consideration to their leasing strategy. Therefore, they need to reconsider the whole asset approach and brand value.
Standing out in a crowd has never become more fitting. Despite the limits COVID-19 may have put on marketing budgets, it’s those companies that have successfully focused on their brand that have the competitive edge, offering value to the customer without needing aggressive incentives.
Businesses have realized it’s not business critical that they need an office to operate. At C-Suite level, the office is being recognized as an operational productivity tool, with a customer value shifting away from 'necessity' for the first time.
Especially in periods of oversupply or uncertainty, occupiers are now looking to office and retail space operators whose brand they recognize and can trust to fulfill their space and business needs.
Think brand equity
For many of the leading B2C businesses, brand equity has now become a key agenda on the balance-sheet. In real estate, now is the time to start putting value on brand and forcing leaders to be focused on the long-term stewardship of the brand, because as with Ben Francies and Gymshark, it equates to managing for value.
Now more than ever, the metrics to measure return on equity on brand-related activity cannot be clearer. A reduction in voids, an ability to maintain rents, and ensuring stability of demand can lead to the premiums the landlord is hoping for.
To all asset managers, it’s time to become brand ambassadors.