Report

Can hotels create convergence economies?

The COVID-19 pandemic has challenged the traditional economic model of hyper-competition and continuous growth, which has dominated the hotel industry.

This report explores the concept of convergence economies, where societal and economic goals are aligned, and resilience is prioritized over competition.

By focusing on local communities and integrating various aspects of development, hotels can create sustainable and robust systems that benefit both businesses and societies.

Re-imagining Hotel Development

Integrated Developments:

Mixed-use developments that combine residential, retail, and commercial spaces with hotels can create synergies and foster thriving communities. The revised plans for the Royalmount development in Montreal exemplify this approach, incorporating bike paths, green spaces, and sustainable energy solutions to enhance community well-being and economic viability.

Local Materials for Global Hotels:

Using locally sourced materials reduces development costs, supports the local economy, and enhances sustainability. For instance, the Marival Armony Luxury Resort & Suites in Puerto Vallarta integrates local design elements, creating an authentic guest experience and fostering local engagement.

Operational Focus on Local Culture

Infusing Local Culture:

Hotels can enhance guest experiences by integrating local culture into their operations. This includes hosting art workshops, supporting local musicians, and offering gastronomical experiences that reflect the local flavor. Sheraton’s focus on local F&B design and farm-to-table movements are examples of how hotels can attract experiential travelers and support local producers.

Engaging with Local Businesses:

Partnerships with local businesses for services like food, beverage, and laundry can create synergies and support local economies. AccorLocal’s app allows local residents to access hotel services, fostering a closer connection between hotels and their communities.

Innovative Corporate Strategies

Creating Hub and Spoke Systems:

Large hotel companies are moving towards regional hubs to support local strategies. Accor, IHG, and Marriott are downsizing their headquarters in favor of regional offices that better connect with local communities and support hotels more effectively.

Rethinking Investment and Development:

Local investment and development cycles are becoming more prominent, with local capital, talent, and supply chains driving hotel projects. This approach leads to faster openings, lower costs, and stronger synergies with local businesses.

Benefits of Community Engagement

Trackable ESG Goals:

Setting and tracking Environmental, Social, and Corporate Governance (ESG) goals can enhance a hotel’s reputation and attract investment. Marriott’s Serve360 program is an example of how community engagement can be systematically integrated into business operations.

Increased Investment Opportunities:

Strong ESG programs make hotels more attractive to investors and lending institutions. Companies with robust community engagement are viewed positively and can access better financing options.

Boosting Corporate Image:

Community engagement enhances a hotel’s reputation, increases guest loyalty, and supports local economies. Hotels like Banyan Tree Resorts showcase local crafts, while Fairmont’s Makkah Clock Royal Tower supports health initiatives, demonstrating the multifaceted benefits of community involvement.

Hotels can play a pivotal role in creating convergence economies by integrating local community development into their operations. This approach fosters resilience, supports local economies, and enhances guest experiences. By embracing sustainability, ethical practices, and community engagement, hotels can build robust, adaptable, and thriving systems that benefit both businesses and society.