From sustainable materials to modular construction, innovations in real estate build and design are reshaping the very foundations of hospitality property. With nearly 40 per cent of global carbon dioxide emissions coming from the real estate sector, hospitality assets need to play their part in the eco-revolution – and now investors have the measurement tools, there’s nowhere to hide non-compliance.
Using data for due diligence
“There's so much more data around now that, as an investor, we can actually make really informed decisions,” says Michiel van Soest, senior vice president, development management at Lifestyle Hospitality Capital (LHC) Group, which bought a majority stake in the Dean Hotel Group last year.
He says the group is looking at the ESG standards of potential acquisitions from the outset, including benchmarking how well a property is performing across its life cycle and assessing how much capex may be needed to ensure it meets sustainability standards.
It’s an area investors very much need to be taking seriously or risk an asset becoming stranded if it doesn’t meet changing standards and legislation. “When the time comes to resell or value a hotel, if your ESG commitments are not consistent, you might have bad surprises,” points out Pascal Donat, président of Valotel, which developed the TOO hotel in Paris.
“For example, you might not find a bank to finance your project anymore or an insurance company to insure your hotel.”
The focus has shifted over the last 20-30 years to construction as the operational carbon and energy usage of buildings have become more efficient, says Willem van Bolderen, co-founder and architect at Studio Puisto Architects. The firm has worked on projects including Pistohiekka Resort in Finland and the Solea Valley Healing Resort in Cyprus. This includes looking at buildings’ long-term lifecycle and multifunctionality opportunities in the design and construction phases, he says.
“Of course, the natural reaction that we all have is, let's build buildings that last hundreds of years, and that's all good and well, but it requires a huge investment in carbon in the beginning,” he explains. An alternative, he suggests, is to design buildings that can be disassembled, repurposed or relocated.
The benefits of modular
One way of doing this that has been increasing in popularity in recent years is modular construction, even in the luxury segment. Van Soest highlights the many advantages of this approach: it’s quicker, cheaper, offers better quality, consistency, and better working conditions for construction teams.
“Typically, in a hotel, the same mistake is copied from room to room, whereas with modular construction, you can make a prototype, try it out, bathroom floors can be cast upside down, for example, to get the perfect angle to get the water out. You make the mistake once, you learn from it, and the next one is better. So, it's really a product that you're developing,” he says.
“It's probably also better to deconstruct at some point when it's at the end of its lifecycle, so that's a very promising wave in the construction industry.”
Investors need to consider the long-term when it comes to hotel design and construction decisions. Donat stresses that building a hotel is a long-term process and it will be years from project conception to realisation, and during that time guest preferences, market trends and sustainability standards and legislation will change.
“The guest experience changes and suddenly people want spa, they want massage, they want a second bar, they want to have a coffee in the lobby. And this is why you have to change the plans all the time and you have to adapt the journey all the time to what clients are expecting,” he adds.
All those quoted in the article appeared on stage at the International Hospitality Investment Forum Europe, the Middle East and Africa (IHIF EMEA), held in Berlin between April 15 and 17 2024, in a session called: Build for the Future: Cutting-Edge Practices in Real Estate Construction and Design.