Going beyond Hospitality

This article appeared in the summer issue of Urban Land on page 46.

In the world of hotels, the lobby is a convenient hub for the vast array of services that the establishment provides, including checking in, checking out, and arranging transportation. It often doubles as a communal multipurpose gathering place for the work and leisure activities of guests—providing a place where they can do everything from meeting with corporate clients to relaxing with a good cup of coffee and a book.

But Greenbelt, Maryland–based Bozzuto Group, a diversified real estate company that manages 72,000 apartments and 2 million square feet (186,000 sq m) of commercial space in East Coast cities and Chicago, has figured out that lobbies can provide similar—and even more expansive—benefits to residents of its apartment buildings.

Bozzuto employs interior designers from the hospitality field who emulate the flow and activation of space in hotel lobbies and often incorporate hotel-like features such as business centers and conference rooms to accommodate residents who are remote workers. One apartment community in Baltimore, Anthem House, features a coffee shop with tables that spill into the lobby as a way of activating that space.

“Mixing uses—that’s what hotels have really done well,” says Lauren Jezienicki, Bozzuto senior vice president of development. “It’s taking space and reenvisioning it to provide more to our residents. Hotels always have done a nice job with that.”

But Bozzuto puts the common areas of its buildings to even more imaginative use than do many hotels. One Boston apartment community uses its lobby space at times for pop-up retail space, including a farmers market in summer.

“We’re definitely trying to get more utilization of the lobbies,” Jezienicki says.

Bozzuto is one of numerous commercial real estate operators that realize their business increasingly is about more than space, location, and price. Across the commercial real estate sector, trend-setting companies are taking inspiration from the hospitality industry’s focus on customer service, convenience, and satisfaction, and similarly striving to provide a better experience for tenants.

Many real estate companies are going beyond the model of offering an array of services and amenities comparable to those of a high-end hotel to also apply some of their design principles. They are analyzing tenant needs and challenges and finding innovative ways to fill them, from merging co-living and coworking into paradigm-shifting product offerings to delivering at office buildings on-site services that are designed to reduce workforce stress and improve work/life balance.

Such creativity helps them differentiate their brand in the marketplace and increases retention by providing more value for tenants than just the building itself. But innovators say that for the approach to work, it is necessary to do extensive consumer research and analysis to discern what tenants really want and need, and to find ways to deliver those benefits to tenants at an affordable cost.

One characteristic that real estate innovators and hospitality companies share is the desire to move away from standardization and toward customization of the consumer experience, says Gilda Perez-Alvarado, chief executive officer of JLL’s Americas Hotels & Hospitality Group. “Think about how much more data we have about the end consumer now,” she says. “We can use that to better create spaces.”

The following are four leading categories of hospitality-inspired innovation, and a few of the companies that are leading the way.

Data-Driven Innovations in Co-Living

New York City–based co-living provider Ollie has a business model that clearly shows the influence of the hospitality industry. The seven-year-old company, which operates buildings in New York City and Pittsburgh—with additional locations planned in Boston and Los Angeles, and numerous others in the works—offers furnished housing with what it calls “hotel-style services.”

An example is the company’s seven-story, 127-unit apartment building on the edge of Pittsburgh’s Shadyside neighborhood, which offers a mixture of micro-studios, micro-suites, and conventional one-, two-, and three-bedroom units. In addition, residents get services such as housekeeping, fresh towels and bed linens, a refillable supply of bath products, wi-fi connections, and TV sets with premium programming, in addition to access to a gym equipped with strength-training equipment and cardio machines. They also get access to a schedule of events curated by a community manager, from mixers and brunches to sunset yoga sessions and ski trips, plus discounted tickets to sports and cultural events.

“Where you’re living at Ollie, it’s hotel-style living,” says company cofounder and chief executive officer Chris Bledsoe.

Bledsoe, a former Wall Street consumer analyst, says the Ollie model grew out of the experience his brother Andrew, the company’s cofounder and chief operating officer, had when he took a job in New York City in the mid-2000s and had difficulty affording housing. After Chris Bledsoe helped by cosigning a lease for a one-bedroom apartment, his brother split the unit into smaller spaces with temporary dividers and found roommates to sublet them—an arrangement that, though short on comfort, provided cost savings, convenience, and a sense of community. The brothers eventually realized there was a business opportunity if they could develop an alternative housing model that provided all four of those Cs.

“Affordability meant that we needed to drive density,” Chris Bledsoe says. But that required shifting the consumer’s mind-set. “A 300-square-foot [28 sq m] apartment might feel small, but if you have a hotel room that size in New York City, it feels generous,” he says. “So, the question became, how can we reframe the environment so it’s anchoring to a hotel experience?”

Another New York City–based co-living provider, Common, which operates apartment buildings in a half-dozen major U.S. cities, also has drawn inspiration both from the hospitality industry and the informal housing market. As chief executive officer Brad Hargreaves explains, the company’s business model is designed to provide the benefits of having roommates, but without the typical downsides and annoyances that add stress to daily existence.

When Common started in 2015, “we researched the most common causes of roommate disputes,” Hargreaves says. “We found a fairly pedestrian list of things, many of which we could solve through services and amenities.”

Because roommates frequently argued about who would provide paper towels and toilet paper or whose sofa to put in the living room, for example, Common decided to provide all those items. And to eliminate quarrels that erupt when one roommate has to front the rent and then collect shares from others, Common developed a property management software platform that automatically splits the monthly payment among all of them when it collects the money.

By using consumer research to eliminate the annoyances, Common enables its residents to focus on the positive aspects of co-living, such as connecting around shared interests, Hargreaves says.

“If you step back and look at the reasons why people share apartments and what makes these situations great or terrible, you try to have as much of the former and as little of the latter as you can,” he says. “You meet other people and build friendships instead of fighting over the day-to-day things. We built a system that has community on one side and tech-enabled operations on the other to mitigate many of these issues.”

Accommodations for the Mobile Workforce

A growing trend in the U.S. workforce is the rise of so-called digital nomads who spend much of their time traveling and working remotely from various locations. A 2018 study by contract staffing provider MBO Partners, for example, found that nearly 5 million such nomadic independent contractors are on the move, some of them for years at a time.

While such traveling workers traditionally have formed a major portion of the clientele of the hospitality industry, innovative real estate companies recently have developed alternative housing models that combine co-living and coworking. They are designed to provide amenities comparable to hotels while alleviating some of the isolation that business travelers often experience.

San Francisco area–based Outsite, for example, has 18 locations in the United States and other countries, ranging from Brooklyn to Bali, where digital nomads can live and work from one week to several months at a time. Chief executive officer Emmanuel Guisset, who started the company because “I was traveling a lot and getting lonely,” says Outsite started with large homes with five to 10 bedrooms, but has shifted toward small apartment buildings and former hotels.

“The typical model is ground-floor coworking with upper floors devoted to living space,” he says. “We have lots of common spaces and a community kitchen,” in addition to bedrooms.

Outsite provides business travelers lodging for lower rates than those of the hospitality industry—a stay in New York City can cost just $600 a week, for example—and offers an annual subscription at a discount. The residences do not provide the same services as a hotel—there is no front desk, concierge, or daily housekeeping for rooms, for example—though daily linen service is included. Instead, in-house managers focus on organizing group dinners and other activities for residents.

The experience “is more powerful than coworking alone,” Guisset says. “You track better when you get to eat together and spend time cooking and doing dishes.”

New York City–based Roam, another international network of co-living and coworking spaces, has five locations—London; Miami; San Francisco; Tokyo; and Ubud, Bali. Founder and chief executive officer Bruno Haid repurposes former hotels in those cities. In addition to a bedroom and attached bath, the units provide access to a coworking space, a shared kitchen, and laundry facilities. Residents have the option of signing up for subscriptions to the network, including a flex plan that allows them to pay in advance for credits that can be used at various locations.

Yet another innovator, New York City–based Convene, has developed a flexible workspace model that provides both individual digital nomads and entire teams of workers with high-end office suites—including the services of chefs and hotel-trained staff to provide farm-to-table cuisine for tenants who can take out 12- to 36-month leases. It is a strategy that combines aspects of the hospitality industry with a high-performance office environment.

“Customer expectations for elevated user experience, design, hospitality, and food are higher than ever,” says Nick LiVigne, Convene vice president. “There is an ongoing integration of work and life, which means the places that we work need to embody a lot of the elements and attributes of the places where we live and play.”

Services to Improve Work/Life Balance

In 2015, Tishman Speyer, a global real estate firm with a portfolio of properties that includes New York City’s Rockefeller Center, began looking at a new way to create value for its corporate tenants by helping their employees maintain work/life balance in an increasingly 24/7 business culture. “It’s become perhaps the most important need for companies that are concerned with the productivity and happiness of their workforces,” says senior managing director Michael Spies.

To help meet that need, Tishman Speyer convened focus groups with corporate workers about their needs and challenges. From that process, the real estate firm was able to compile “a long list of all the things you’d want to bring into a workplace to make life easier and help people to be sharp and productive and have fresh minds and healthy bodies,” Spies says.

Tishman Speyer then sought service providers who could meet those needs—from getting a massage or a nutritious meal to finding backup child care or promptly fixing a broken phone screen—and created a mobile app and a website that would allow employees to get access to all those resources without having to leave their buildings.

The expansive suite of services and the app were dubbed Zo—derived from zoe, the Greek word for life—which was unveiled at Rockefeller Center in February 2017. The response was so strong that since then the Zo suite expanded to cover the company’s buildings in Washington, Boston, Chicago, Los Angeles, San Francisco, London, Paris, and Frankfurt, and 30,000 of the 250,000 people who work in Tishman Speyer buildings are now using it, Spies says.

Though it is too early to quantify the benefits, “we clearly see this as really important in driving value for tenants,” Spies says. The ability of employees to receive health care treatment on site from a nurse practitioner, for example, could help companies reduce days lost to illness, as well as save the time that workers otherwise would have to use to go to health care appointments, he says. The app, which is customized for specific buildings, also enables workers to connect with others on a different floor or down the hall who share their interests, whether it is photography, book club discussions, or wine tasting. “It’s very dynamic and it’s constantly evolving,” Spies says.

Other real estate companies are turning to tenant experience apps to offer wellness and concierge services and other functions to occupiers of office space.

Global real estate services and management firm Cushman & Wakefield, for example, recently rolled out Workplace Edge, an app that allows corporate tenants to give employees access to on-site services that the tenants provide, or to connect them with a network of services that Cushman & Wakefield offers. In addition, the app can be used by tenants to send out announcements, and it is integrated into building management systems so it can be used to reserve meeting rooms or request repairs. “The goal is really to simplify and create a seamless experience in the workplace,” says Tim Peters, Cushman & Wakefield managing director for global occupier services.

Leveraging of Web and Mobile Apps

The hospitality industry increasingly relies on the web and mobile apps to interact with customers who want to make reservations or check availability or pricing. Real estate companies are following that lead.

UDR Inc., a Highlands Ranch, Colorado–based multifamily residential real estate owner/operator with a portfolio that includes 165 communities with nearly 49,500 apartment units in 11 states and the District of Columbia, provides both a website and a mobile app that allow residents to sign and renew leases, make payments, and submit requests for repairs to their units.

Jerry Davis, UDR president and chief operating officer, says the streamlined online access allows tenants to perform tasks without having to take time out of their workdays to visit the office in person. It also is possible for prospective tenants to schedule an appointment to see a home online: Davis says the company is in the process of developing app-guided self-tours, in which electronic beacons would provide information along the route and a code would unlock a smart lock on the home to allow prospects to go inside for a look without a salesperson tagging along.

“The majority of the population is getting used to shopping that way on Amazon,” Davis notes.

Davis says that down the road, UDR is considering use of technologies such as virtual reality headsets and augmented reality to display additional information, but only after such devices become sufficiently commonplace that people are familiar with them.

All of these hospitality-influenced innovations are part of a movement in real estate toward listening more carefully to the needs of the people who use the space and moving away from commoditization to address those needs. As Bledsoe explains, for many tenants, convenience that translates into even small time savings can make a big difference in a person’s life.

“If we can add 15 percent more time to a person’s day, that might be the difference that helps them to pursue their life’s passion with more vigor,” he says. That potential seems likely to drive still more creativity in the future.