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Prof Satish Jayaram: Re-conceiving hospitality spaces to discover new revenue streams

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Prof. Satish Jayaram, PhD, principal, IHM Aurangabad, says that current conditions demand a new perspective of revaluating space rather than fretting about returns

Most hospitality spaces are created with enormous investment on each miniscule detail usually by square foot. It is natural to expect that each square foot of investment will yield handsome returns in the same measure. The challenge is to maintain modularity and keep shifting goal posts in line with business environment constraints. Our current conditions demand a new perspective of revaluating space rather than fretting about returns, especially in uncontrollable market circumstances.

Let us re-conceptualise a portfolio of spaces that need a paradigm change in the manner we visualise them. Some spaces are cast in stone in the true sense of the word, yet others are elastic to change. This conceptual model is presented to facilitate a thought process that enables the re-visualisation of spaces. Aesthetic value plays an overriding role alongside strong mental models to reconceive spaces. Unfreezing our freedom to visualise alternate revenue streams is a controllable precursor.

  1. Re-purpose Low Risk Low Yield Spaces: Huge hotel lobbies may be quintessential to the mores of social distancing. They are definitely dead spaces when a meter or more of space is unproductively blocked between two persons, all in good faith. Since the primary purpose of this space is social, mostly meeting and greeting, it could be tagged to a cup of herbal or medicinal tea in a lobby lounge. These activities could be immediately conceptualised redeploying existing resources from other domains in your hotel. Re-purpose this space to adapt its utility creatively within constraints.
  2. Re-define High Risk Low Yield Spaces: Large social spaces like all day dining, 24-hour points of sale are created at huge investment. The footfalls and occupancy density justified the investment in yesteryears, where guests virtually jostled at breakfast buffets. Co-developed activities between other points of sale could be integrated like a pre-plated meal within leisure activity or a wellness consultant’s digital appointment over a solitary or socially distanced meal. The basis for an individual spa appointment may be triggered. This redefinition to add value must be a short term priority.
  3. Re-develop Low Risk High Yield Spaces: Volume returns from meeting spaces justified the investments since revenues were virtually guaranteed from large gatherings. This reality seems distant even as the value of the space and the premium attached to it remains. Redeveloping these large spaces for exhibitions and displays, potentially for retail purposes could offset the losses from a lack of banqueting activity. High quality highly personalised merchandise may be the answer here. Redeveloping this space to deploy it differently could open vistas to unknown revenue streams.
  4. Re-quantify High Risk High Yield Spaces: Specialty restaurants and high value points of sale represented the top end of margins and positions through high investments and risks. These premium spaces acquired their standing largely based on social standing and marquee considerations. The rarity and exclusivity of activities may potentially remain but at reduced volumes exposing entrepreneurs to higher risks. The evolution of spontaneous pop-up specialty exclusives or themed micro-restaurants a la demand may supplement losses. The need to recalibrate utility of such spaces to yield quick cash returns, may become a medium term priority on account of renewed investments desired.

There is no perfect solution to an optimal utility of all spaces to yield returns against investments made. The alternative is to maintain a portfolio of spaces categorised into the four broad heads defined above to evaluate offset value. A dynamic solution could be evolved over time, prioritising privacy at a premium while seeking optimum ticket solutions in socially extended spaces. A consolidated micro-view rather than a collective macro-view, of the premium real estate developed at huge risk must be categorised by micro-returns. One size cannot fit all, service spaces and hitherto dead spaces must be tagged to points of sale.

A key solution remains after you have sunk the investment. Not returns, but discover the possibility of unexplored revenue streams.


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