Is Coliving the Solution for a Hotel Market in Crisis?

The COVID-19 crisis has put a stop to the hotel market: is coliving the solution?

Published on
November 4, 2020

The hotel market has been heavily impacted by the COVID-19 crisis.

The COVID-19 crisis has put a stop to the hotel market. As soon as the lockdown ended, the hotels gradually reopened to welcome summer tourists. In some remote areas especially at the beach or in the mountains, the available hotel park increased from 20% to more than 90% at the end of the summer. Short term rentals in these areas were even more popular. However, this was not the case in large urban centers, especially NYC and SF for example, where only 50% of hotels have been able to reopen.

Occupancy rates fell dramatically, with hotels being hit the hardest - some hotel share prices have dropped as much as 60%. Accommodation that would typically be filled with international crowds has remained empty, and domestic demand has increased due to the lack of opportunities to go abroad. As a result, hotels in France’s most popular tourist destinations are experiencing a surprisingly good season. However, on the other hand, cities and metropolises have suffered as their international visitors and business customers have diminished. Hotel performance fell by more than 50% in LA, by two-thirds in SF and by a drastic 80% in NYC.

In the medium term, the metropolitan hotel business does not seem to have a bright outlook. With the gradual cancellation of conferences and professional events, and the adoption of teleworking for meetings, business travel is taking a break.

Transforming a hotel space into a coliving and coworking residence. 

As hotels continue to sit vacant - especially in places with costly rent - we have to consider what else these buildings could be used for.  The conversion into housing appears expensive and heavy from a legal point of view.

On the other hand, coliving could easily be a solution for both hotel owners, and city dwellers. Hotels are typically designed in a way that makes them flexible enough for a coliving conversion. Coliving includes a combination of "flexibility, services, community". Thus, spaces such as the first floor lobbies, which are often little frequented, could be converted into common areas. If there’s a pre-existing dining space, this could be transformed into a catering offer or a communal kitchen for all of the residents - after all, the kitchen is the heart of a home. Finally, the layout of the rooms on the floors could be maintained, potentially being redesigned to fit with a more comfortable look and feel for longer term residents. 

A change of model is expected. A change of mentality is required. 

Adopting the coliving model requires changes that go beyond the traditional hotel business.

As hotels already offer the ability for people to stay overnight, the space is very flexible. This flexibility must also be maintained for longer stays ranging from several weeks to several months. In addition to the physical space, social constructs need to be built in order to foster human interactions. Sports, culinary or cultural activities are good examples.

Other services such as a coworking space accessible to all residents and external persons are among the many existing examples. Finally, there is still some thought to be given to the jobs of hotel managers: the job of receptionist, for example, could very well be transformed into that of a community manager.

Some hotels are already leading the way! 

At Outsite, we have started to work with hotels to help them to just do that before COVID. We already have a few case studies with boutique hotels in different countries. We now have enough data to show that this model can actually be more profitable than the classic boutique hotel model with high ADR but high operating expenses, not to mention the dependence on OTA’s. We have been refining our offer and we are now looking for new partners. Get in touch with our Real Estate team.

Coliving Spaces in Beautiful Places.
Designed for Flexible Professionals.

Get access to a global network of work-friendly coliving spaces equipped with everything you need to be comfortable and productive.

Explore our locations

Top reads