More than three years after the onset of the pandemic, the hospitality industry has, or is inching closer to, exceeding 2019 performance levels. The luxury sector, in particular, is witnessing a transformative phase of mixed-use properties and experiences, folding upscale condominium units into hotel properties and continuously expanding their offerings in premier resort destinations.
The concept of “revenge travel,” which refers to travel done in an effort to make up for the disruptions caused by COVID-19, remains strong and it is helping fuel the hospitality industry’s comeback as affluent travelers are willing to pay a premium to explore luxury brands and take part in novel experiences. This demand is pushing new high-quality, design-forward condominium developments with full-service amenities at the top of the market in destinations around the world. Provided budget and timeline risks are kept in check, investments in this sector are likely to continue to show economic viability and have the potential to promise outsized returns.
Here’s a look at a few of the trends currently shaping the future of luxury hospitality.
The Rise of Mixed-Use Luxury Developments
One of the biggest trends defining luxury hospitality right now is the shift toward mixed-use lifestyle developments, which integrate high-end condominiums into hotel properties. The trend is taking off particularly in urban areas, where skyrocketing costs of prime real estate demand strategic solutions. Blending condominiums with traditional hotel models, these mixed-use developments can help developers more quickly recoup a significant portion of their investments on an expensive property to reduce ongoing debt and enhance the potential for a substantial exit return.
Resort destinations, such as Orlando, Hawaii and parts of the Caribbean, are beginning to offer this kind of unit mix—from standard hotel rooms to multi-bedroom timeshare suites and condominiums—that can be rented out when not in use. Prime markets, such as Boston, may not be a first choice for five-star hoteliers looking for a new location, but adding in a mixed-use approach opens the potential to capture a larger share of end users, including both guests and residents. This approach not only optimizes land use in premium locations, but also creates diverse revenue streams through multiple product types.
Adapting to the Demands of Affluent Travelers
Experiences are driving the latest expansion of high-end resort destinations. Affluent travelers are seeking more than accommodations; they want singular, culturally rich experiences that are unique and memorable: rooftop martini lounges using locally sourced spirits, private pools with sweeping skyline views or resplendent club rooms offering exclusive restaurants, cooking classes and other special perks.
To achieve this, many successful hoteliers and developers are partnering with creative entrepreneurs to act as concierges offering one-of-a-kind experiences, rather than standardizing them under a single brand. In turn, these unique amenities can generate momentum on development and attract new buyers to fresh, exciting experiences within a hospitality property. Not only does this approach enrich the guest and resident experience, but it adds to the brand’s uniqueness and localization, as well as to the overall appeal of the property.
Understanding the Challenges of Mixed-Use Development
Mixed-use development can be tricky, especially when it comes to balancing the needs of condominium owners and hotel guests with the scale of the property. Oftentimes, the project scale on mixed-use developments can require the creation of separate infrastructure systems and amenities, such as different elevators and loading docks, that can be complicated and pricey. While shared amenities like spas are common, exclusive facilities like private lounges or pools are also necessary to cater to a high-end clientele. This separation is crucial to meeting the expectations of both condominium owners and hotel guests at once. The key: Understanding and responding to the specific demands and expectations of guests and residents, while effectively managing the shared resources.
At Your Service: Technology and Personalized Amenities
In 2024, luxury properties no longer have the option to not make investments in technology a priority. After all, the point of differentiation in high-end hospitality is typically defined by the level of service and the integration of technology. This includes considering personalized services like 24-hour butlers for guests and unique amenities for residents that go beyond the norm. Contactless or self check-in and check-out are now expected. This creates a more efficient operational experience for hotel guests and workers, alike. Not only do these technologies enhance the guest experience, but they also distinguish the development from conventional hotels or condominiums, so long as there is an adequate staff-to-guest ratio and seamless technology to help with responsiveness.
At the end of the day, hospitality is all about the human experience. When it comes to technology integration in hospitality properties, the biggest challenge is managing how to leverage technological solutions and create pathways to profitability while still giving guests and residents the human interactions that define the sector.
Future Outlook: Opportunities and Innovation
Looking to the future, developers may shift their efforts toward exploring new markets and repurposing existing assets into mixed-use spaces, which offer potentially higher returns than new ground up construction. These developments will be driven by unique, memorable experiences facilitated by partnerships with creative entrepreneurs that can help build a brand that expands their brand standard in luxury travel and living.
The hospitality industry is at an exciting crossroads, where luxury meets innovation, and profitability aligns with exclusive experiential access. As the sector continues to evolve, we will undoubtably see the standards of luxury travel and living redefined for a new generation.
Story contributed by Mark Knott, VP & hospitality sector lead, Project Management Advisors, Inc.
