Looking Ahead
Pandemic Punditry Panel Discussion - Looking Ahead: Actionable Insights for Commercial Real Estate & Hospitality Markets.A global panel of pundits discuss how the pandemic has impacted the commercial real estate and hospitality markets.
Background A global panel of pundits recently discussed how the pandemic has impacted commercial real estate and hospitality markets. https://youtu.be/EEcqiN2QqlI During the hour and half long discussion, this cross-section of experts and practioners from multiple disciplines explored the pandemic's impact on the commercial real estate and hospitalty markets. The following was discussed: • How has the pandemic influenced consumer behaviors and expectations? • What are the near-term and long-term implications for the larger real-estate and hospitality eco-system? • Are most predictions of gloom and doom warranted? • What are some of the silver linings within these dark clouds? • What insights have they gleaned from this experience, and how do they propose to act on them? • What transformative changes do they anticipate in their industry, and how would those changes impact the business and their employees?
Insight 1: The impact of working from home (WFH) on commercial real estate, particularly on the co-working/flexible offices market may not be as dire as predicted. Several constraints may temper initial reactions to shift workplaces to the home. Chief among these concerns, especially for larger corporates and the customers they serve is cybersecurity. Employee productivity and performance concerns may also be an issue over the longer term. These concerns are also opportunities for technology companies looking to making working from home a reality. Insight - 1
Insight 2: There are also social, cultural, and regional constraints that may also temper and moderate the push to WFH. Issues like poor internet connectivity, spotty mobile coverage, cramped living conditions, dual-income families with both spouses working, etc. will make WFH untenable. Strongly believe that to get the right combination of collaboration, productivity, and innovative thinking you need to get people together in the same room.
Insight 3: The desire to WFH, especially by knowledge workers, may also be driven by factors like work-life balance, flexible hours, and the desire to focus on "deep work" without the usual distractions of a corporate office. This could also be a silver lining of co-working spaces because they allow such workers the option of working from home when required but also have the option of enjoying the perks of corporate office space when needed and desired.
Insight 4: Long commutes to commercial office spaces (co-working or otherwise) located in the CBD could also be at the heart of employees' desire to WFH. Co-working spaces may have to rethink their expansion plans and provide co-working spaces closer to where people live rather than rush to create more options within the CBD. With global companies and MNCs looking to relocate operations from China, there could be a potential windfall for the Indian economy and consequently the Indian real estate market with those companies seeking or expanding their physical presence in the country. What would the future of work look like? Would it entail the merging of work and home in a community setting with sustainability and technology at its core?
Insight 5: New standards of hygiene, sanitization, and safety will impact both commercial workplaces and guest spaces. This is an opportunity to not only establish a standard for different workspaces and guest spaces but also an opportunity to set different standards for different spaces within a particular space. For example, different protocols and procedures for high traffic lift/elevators, reception areas/front-desks, restrooms, and others for less congested and used areas like rooms/offices.
Insight 6: Changes in consumer behaviors and expectations will require that the hospitality sector make investments in new and improved cleaning and sanitization technologies and other systems to ensure guest safety. These could run the gamut from room service robots, contactless menus, automated tracing of food ingredients, constant automated thermal scanning in public areas, contact tracing, etc. Insight - 6 Hospitality providers will have to create or modify their SOPs to address the new reality. Evening or turn-down service is most likely dead. Buffet breakfast, a standard in most hotels catering to business travelers, is most likely dead. Hotel gyms, spas, bars, and restaurants SOPs will need to be revisited.
Insight 7: Once a vaccine or cure is found there will be a lot of pent-up demand for travel. Initially, that travel will be mostly domestic and largely reached via automobile, bus, or train. They will seek niche tourism, such as rural and adventure tourism, and off-beat locations may become popular as travelers prefer regions with a lower population density. Countries like Sri Lanka could benefit greatly from such demand and from its proximity to India which according to analysts will be the least impacted hospitality market in the world in the longer term.
Insight 8: Once a vaccine is out or a cure is found, human memory being fairly frail most things may revert to business as usual, however, somethings will change as its fairly certain that another pandemic or epidemic is not too far away. Therefore as an industry, the hospitality business needs to plan and adjust accordingly. This might also involve re- engineering/altering the physical configuration of spaces. Insight - 8 Hotels will have to learn to be less cost-intensive. They will have to have fewer people working especially in Asia where guest-to-staff ratios are higher. The hotels in the region will have to rationalize hotel operations.
Both the hospitality and real estate have been laggards in the adoption of technology. We will see an unprecedented rush to adopt in both these markets. Managing large workforces and new guest and tenant expectations will be the drivers behind this growth. The opening of the hospitality sector is also largely contingent on the lifting of travel restrictions and the response of airlines (those that manage to survive the downturn) to the pandemic. If there are fewer flights operating and the cost of fares is higher because middle seats have been removed in economy class then the number of visitors will be proportionately reduced hampering recovery efforts. Medical and liability insurance norms will also have an impact on travel.