III. Hotels, modular spaces & poor yield management (yet)

The recent acquisition of Dynamic Yield by Mc Do is clearly disruptive, with looming impacts on the overall hospitality industry. If predictability scales up emotion, size will matter, as the build-up of two data encyclopedias (recipes & dishes, clients), of an algorithm for resolving seasonal raw materials sourcing problems, logistics, pricing … imply to invest deeply  in research, data learning, etc.

Most of the hotels could well use on-time outsourced production, as new co-procurement solutions could emerge in the megacities (x workshops – X restaurants), transforming F&B outlets in pure experiential platforms where flexible atmospheres-inspirations-cuisines intertwine.

Use of sensors (as does WeWork) to measure attendance, qualitative analysis of what the client expectancies are (they don’t tend to hang out in their rooms anyway), could both contribute to leverage the profitability of unoccupied meeting rooms, costly lobbies.

Implicitly, how poor appears their yield management nowadays.

Owners have been spending from 10% up to 30%+ of their overall investment in deco, furniture, etc. (that need to be replaced, sometimes radically if there’s a new lease or managing contract).

But spaces were designed one day to last for long, and very few sqm have been spared for storage, as the priority was, whenever possible, to give grandeur, larger volumes for the picture. (Other looming business : x furniture depots – X hotels ; IKEA is said to be considering office-furniture rental).

The kind of modularity, the AIRBNB, WeWork and co have introduced, is a repurposing based on profitability, driven by a philosophy (ubiquity, sharing) endorsed by technology.

Where experience primes (wherever flexibility is allowed), space conversion is an add-on that stirs up yield.

Hotels are becoming standard assets computerizing value per sqm. REVPAR, ADR, and their routine variations give a somewhat warped measure of a performance.

Yan Vacher