Should Owners Embrace the Hotel Management Model?
It’s as true in business as it is at the gym: strengthening your core is a smart move and better for your long-term health. That’s why more companies, including some of the world’s leading commercial real estate owners, are no longer delivering intensive services and instead partnering with flexible workspace providers through full-service management deals. This new strategy enables owners to improve operational efficiency and service their clients in creative ways. Most importantly, it frees up owners to do what they do best.
The recent strategic shift among hotel chains is a good analogy. At one point, Marriott and Hilton were burdened by high overhead, so they switched to a new model. Here's how it works: A hotel owner pays a fee to Marriott or Hilton in exchange for using their branding, or the owner pays a management fee in exchange for having the chain actually run and operate that space.
Much like those hotel owners who can't replicate the branding and operating expertise that Marriott or Hilton have, today's commercial property owners can't replicate the high-touch service that a flexible workspace provider such as Knotel can provide.
Since owners usually aren't in the business of providing the high-touch service customers demand, it makes smart financial sense for them to partner with a flex provider that delivers on those services. In effect, this type of management deal enables owners to improve their financial performance through revenue-sharing and offloading of service responsibilities to experts in the field.
Forget Bulk, Focus on Your Core
Marriott and Hilton both recognized the need to recalibrate their strategy, and adopted a business model where they achieved scalability by giving up some of their responsibilities. This freed the hotel chains to focus resources back onto their core functions: branding and expansion.
In much the same way, commercial real estate owners can evolve their model to shift space management and customer services to a flex provider like Knotel, which then conducts the heavy lifting of day-to-day operations and provides a high-touch service experience.
Lighten the Load with Flex
In commercial real estate, the traditional leasing model no longer works for companies seeking operational agility and quick adaptability to new market conditions. Today’s landscape is all about moving quickly and adapting to changing needs—signing a long-term lease works against those principles. When a business scales up or down, it’s often forced to break that lease entirely, forcing it to bear burdensome disposition costs.
On the other hand, a company like Knotel can offer flexible leases that can be adjusted to scale to a company’s shifting needs. And, much like Marriott and Hilton, it can deliver cost-effective hotel-style management services for an office, freeing up owners to focus on their core competencies. Instead of hiring space operations teams and service professionals who would be needed to deliver an excellent experience to customers, owners can simply partner with a flex firm that already has that expertise in place.
For owners looking to stay agile, the appeal of cost-effective services and the ease of deploying space management through a flex provider is a game-changer. In effect, owners that partner with flex providers are better able to dedicate time and resources to maintaining, acquiring, and developing properties.
Nimble Footwork for the Future
Commercial property owners stand to gain considerably from this new, transformational approach. As the weight of space management and services is offloaded, more time, research, and funding can be routed back into building out the company’s core offerings, strengthening both the brand and the business.
It boils down to this: the stronger the core, the more endurance a business has. The shedding of unnecessary service layers can free up any owner to scale, invest, shape, and reshape their core services, and isn’t that what flex is all about?