The hospitality gene lives with you forever. For those who don’t know, I worked in the hospitality industry until 2006, at which point I decided to create my own marketing agency. Recently, I spent 5 weeks in San Francisco taking the first steps to set up the Zero Above satellite office in the city and exploring sector-specific business opportunities. One of these was the hospitality sector.
The continually evolving San Francisco hospitality sector is stepping to a different beat these days, with the advent of AirBNB, MisterB&B, Uber and Lyft bringing accessibility and mobility around the city safe and effortless. Travellers can now stay in more places, experience the vibe of different neighbourhoods and feel more like a local as opposed to feeling like a visitor or tourist. This is particularly the case for the affluent self-explorer and well-off millennials who savour experience above all else. Particular growth emphasis will be seen in Mid Market over the next 2 years, as both independent, smaller boutique multiples and corporate chains look to occupy this rapidly gentrifying area of the city.
The Marketplace and Its Opportunities
This introduces both challenges and opportunities for hotel owners, and it’s not just the solus operators and existing business owners who are picking up on this. Take The Phoenix in Tenderloin (http://www.phoenixsf.com/) for example, which has a smart, intuitive and well designed online presence. The look and feel, focus on experience and neighbourhood (as well as the amazing venue) would appeal to sophisticated travellers, particularly from Europe and Asia (incidentally a rapidly growing sector for the city). This is a new venture for the Bunkhouse Group, who are a rapidly growing boutique hotel offer. Check out the clever use of a map on their website showcasing ‘cultural highlights’ – a smart piece of UX worthy of note.
Rise of the Boutique Hotel Offer
You could consider this an overplayed term now and you’d be right. Many operators are jumping on the bandwagon, but in terms of the international business and leisure traveller, this is still a dominant search term online. Check out the below link to see just how many major operators now offer a ‘boutique experience’ and in particular, the rates on offer are enticing and competitive, in a city with super growth in real estate (130% in less than 10 years) this is really interesting. Check out The Zephyr for example which has wow factor and rates from $169 per night.
Making Your Bed – But No Time To Lie In It
The hospitality macro and micro market are evolving quickly with development growing out from the traditional hotel areas of the city (for example Union Square and Financial District). New hotels are emerging in more urban neighbourhoods such as SoMa, Dogpatch and Mission Bay. The focus in these neighbourhoods is made up of mainly solus independent boutique-style or small group offers such as the BunkHouse Group referred to earlier.
It’s an exciting time for the city, with SFO passenger traffic at close to 50 million travellers per annum, $4m of planned investment in the airport over the next ten years and projected tax revenue from the hotel sector over $700m dollars within the next decade, the opportunity for growth is very clear.