5 Trends Influencing Mixed-Use Hospitality Developments

Amy Stewart

Daniel Kodsi is Founder and CEO of Royal Palm Companies (RPC), a Florida-based real estate and development company established in the 1970s.

It takes years before a large-scale development project becomes reality. So, designing for the future of real estate requires extensive foresight and vision.

Before my team and I determined the market positioning for our latest mixed-use hospitality project, we dove into statistics and trends along with the major disruptors in real estate and luxury travel. In the end, our findings yielded the ultimate mixed-use development—a hybrid luxury hotel with lifestyle hospitality, a micro-residential component, ground-floor retail and to top it off, a major wellness center.

In essence, we blended multiple business models together under one roof where each model could be profitable on its own, but when placed together, create a sustainable ecosystem. This ecosystem not only enhances each component financially but also satisfies the global demand for life-changing experiences that consumers across all demographics are seeking.

People often ask me why we created such a multi-faceted business model. Below are five trends we feel are influencing mixed-use hospitality:

Luxury Travel Growth

The luxury travel sector remains strong. According to Allied Market Research, the global luxury travel market was valued at $945.6 billion in 2019 and is expected to grow to almost $1,198.3 billion by 2027. But the largest factor in our decision process to incorporate luxury travel into our model is that we will soon see the largest transfer of wealth since the beginning of time: As much as $68 trillion is expected to transfer from baby boomers to millennials over the next two decades.

Demand for Lifestyle Experiences

Salesforce found in a survey of more than 8,000 consumers and business buyers that 84% of customers say the experience a company provides is as important as the products and services it delivers. When it came to experiences that luxury travelers want, Skift found they want exclusivity, visceral experiences and a destination where they can immerse themselves in the local culture.

To address this market segment, you will want to create a variety of lifestyle experiences within a property. This can include signature restaurants, event spaces and resort-style pools. Other amenities and offerings could include a high-tech business lounge or unique programming where guests can explore the property and the surrounding community.

I also recommend looking for ways to improve the guest experience. When we conceptualized our project, for instance, I recognized that most lifestyle hotels have great restaurants and lounges, but the rooms and lobby lack luxury. In contrast, most luxury hotels have well-appointed rooms and public spaces, but the restaurants and lounges are not destinations and lack energy.

Our goal was to create an architecturally significant building, an energetic vibe, and to offer exclusive experiences never seen before. For example, we designed a glass atrium lounge 50 stories in the air with a Singapore-inspired cantilevered pool overlooking the city as the property’s main feature.

Branded Residences

New real estate developments have become a commodity, especially in destination locations. The most sought-out solution we’re seeing is to offer branded residences, which may deliver around a 25% to 35% premium over non-branded residences.

Many consumers prefer branded properties because brands are viewed as having consistency in both service and the guest experience. Your branded property could be in partnership with an existing brand that has a loyal customer base. Alternatively, a developer could create their own brand.

The Rise in Flexible Ownership

Residential properties often aren’t viewed simply as residences anymore. With rental platforms from third-party sites like Airbnb, many individuals are using properties as an investment to generate and shelter wealth. Supporting this is the fact that vacation home sales skyrocketed to 57.2% year-over-year in 2021 compared to the 20% year-over-year growth in total existing-home sales. In certain locations, the pandemic has propelled this trend even more. Redfin recently found that demand for second homes was up 87% above pre-pandemic levels with buyer interest in second homes surpassing demand for primary homes.

One of the biggest issues for travelers who stay in short-term rentals, though, is that they often lack cleaning standards and they don’t typically offer basic services such as concierge or on-site assistance. Furthermore, many of these properties don’t have amenities like spas, gyms, pools, event spaces, restaurants or the ability to add services to your bill. Amenities are drivers that attract guests, which is important when you are selling a property that buyers want to monetize.

We determined that in order to attract vacation home buyers, we recommend selling fully furnished units that are part of a mixed-use hospitality project that offers both services and amenities. Owners can rent out their properties themselves or developers can find a hotel partner to handle the management to ensure a consistent guest experience and to streamline the rental process. We chose a highly regarded international hospitality partner to run the hotel for our residents and hotel guests.

Demand for Wellness and Medical Tourism

If you don’t have health, it doesn’t matter how much wealth you accumulate. Travel is now viewed as a time to get away and get “me time.” Hotel Management reports that travelers are willing to pay a higher average daily rate for wellness experiences regardless of the hotel’s star rating, and medical tourism is predicted to continue growing with the pandemic propelling the notion of disease-conscious travel.

For our project, we were inspired by blue zones—areas where people live extraordinarily longer, happier and healthier lives. If you want to add well-being and medical services to your own project, we suggest finding a partner who specializes in this so you tap into their customer base and branded experience. Services that you could offer include diagnostic, sports medicine, spa, fitness and well-being programming.

In conclusion, while trends continue to shift in the luxury, mixed-use hospitality market, it is important to stay fluid so you can modify your business as consumer demands change.


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https://www.forbes.com/sites/forbesbusinesscouncil/2022/03/31/5-trends-influencing-mixed-use-hospitality-developments/

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