As a Swiss hospitality graduate, I have always been intrigued by the coming trends in socio-demographics and shifting economy, which will eventually challenge the very definition of the decades-old industry as we know it. Considered to be one of the oldest trades in the world, hospitality has been lagging behind for years in adopting new technologies and operating paradigms, unlike other industries.

Far gone the days when the hotel management and investors can command the sky-high pricing and stellar returns, all thanks to the scarcity of supply in a specific destination. The wave of ever-changing technology has up-ended a number of industries, including the likes of Uber and Lyft threatening the existence of local taxi operators. Whilst for hoteliers, AirBnB, with its revolutionizing model of house-sharing, poses a threat to international lodging sector.

From an insider’s view, we have witnessed a shift in branding strategies of hotel management companies in order to keep up with the changing demographics, whereas new brands are launched in every quarter, trying to cater to different segments of the market. On the other hand, the consolidation is still going strong with many M&As in the pipeline, all in the name of stream-lining operations, optimizing corporate resources and better financial results for investor community.

Yet we should not forget a bigger, existential threat on the horizon, with the rising popularity of the AirBnB. Empowered by technology and aimed to liberalize the un-used resources of residential housing, AirBnB has grown to be the poster child of the Silicon Valley tech scenes. Travelers now have the option to book a stay at millions of houses and apartments around the world. Talking about the resource scarcity, traditional lodging sector cannot out-number the collective power of the crowd. AirBnB is destined to become the biggest lodging operator in the world in the near future, if not now.

As usual, the hotel management conglomerates tried to fight back with the political lobbying to impose regulations and taxes on the newcomer. They even took a step further, by copy-ing the home-sharing model with limited success. One thing we must understand is the power of a brand. AirBnB is lauded not only as a technology company, but also as the front-runner of a new economy model. Tech-savvy globe-trotters fascinatingly embraced the model for its wide availability of options and competitive pricing.

All in all, we hoteliers need to be wary of the impact of technology that are being brought onto us. Meanwhile, the independent lodging operators may celebrate the new changes in a industry once dominated by big players with deep pocket. The world suddenly turns flat, where an individual can run a number of apartment & house leasing on AirBnB at even higher profit margin than big hotels.

So what’s next ? Society has dramatically changed thanks to the new advent of technology. The economy model of yesterday may no longer work for the new class of customers. It is imperative for us to watch the changing socio-demographic changes, since they are the ones who decide our fate.

Simply upgrading or launching a new lifestyle brand might not be enough to stay competitive anymore these days.

So how do we define our next generation of paying customers ?

If there is only one word to describe the current state of the market, it will be “Fragmentation”. People become smarter, healthier, and have different styles of living. Their sexual orientation is more diverse than ever. They may embrace various political views, ferociously express their opinion on a number of societal issues through social media and become an Internet sensation overnight. The accumulated financial resources passed through generations nowadays enable them to live out many fantasies and pay for surreal experiences.

The younger generation now opt for inspiring experiences curated through their travel, as opposed to luxurious hotel settings. They believe in the lasting, beneficial impact of experiential living over material things. Hotels have worked on Experiential Marketing for years, while many startups nowadays strive to bring a better experiences to travelers, such as the tours & trips performed by a local host instead of a traditional tour guide.

Another noticeable change is the rising popularity of Mobile Living. Young workers tend to move around more often, trade the stable income of a corporate officer for the convenience of freelancing. More and more, intellectuals are enabled to make a living through online jobs, thus striking a balance between work and life and finally taking control of their life. First populated by the tech workers in Silicon Valley, it has spread around the world and become a global movement. The Millennials and Generation Z heartily embraced the Mobile Living concept and introduced dramatic changes to the definition of office working. The stellar rise of co-working startup WeWork is an obvious example of changing work environment. Freelancers have total freedom to move in and out for minimal fee while building a network with like-minded people. It is similar to a Tribal Culture, first mentioned by Seth Godin in the last ten years.

Behold, another up-and-coming phenomenon is on the horizon. Co-living, a lifestyle concept that emulates the co-working yet for how we live, is quickly taking over. It first came to life in dense neighborhood like San Francisco and Silicon Valley, where cost of living and accommodation rental are sky-high. Therefore, the co-living model presents a viable and interesting option to the community of tech workers.

So, what exactly is Co-living ? You may find many definitions on the Internet, yet according to Open Door, an early co-living operator, co-living is a modern form of housing where residents share living space and a set of interests, values, and/or intentions. It is a new take on an old idea, imagined by a millennial generation that values things like openness and collaboration, social networking, and the sharing economy. In short, think dorm life for the grow-ups.

One of the Human Truths is that people love to connect. We spend hours everyday on social media, liking and commenting each other’s status and updates. It is funny to see how social media and mobile phones vowed to get people closer, only to further the separation of nearby friends in the real life. Time is limited, it is difficult to catch up with friends both online and offline, so people opt for the ease and convenience of connecting through social media. When was the last time you finished a lunch with friends without touching your phone at all ?

We tend to bond well with people of similar liking, as well as political stance and social point of view. The Co-living concept is the perfect answer to that. By simply moving into a co-living facility, we are instantly entering a beehive of persons with similar mindset; otherwise you will be excluded right away. People are no longer enchained to the circle of childhood or neighborhood friends, but they can click with people from different walks of life.

Kind of similar to co-working space, co-living is often characterized with open living space, where residents can network and enjoy things together. It is certainly not new, since we already knew the existence of communal housing and back-to-the-land movement of the 60’. Nowadays, a co-living space usually accommodates around 20 to 30 something professionals.

More than often, co-living space is designed with a modern, aesthetic touch; since it caters to their primary clientele: the young, vibrant, smart, iPhone lover, tech-savvy cohort of creatives and techies. A daily routine of co-living residents may include group exercises, socializing over a coffee or beer, team-based brainstorming session, and individual working time.

  Co-living is not a fad, but more like a cultural and societal distinction. Young people have the tendency to live far away from their parents, and they find co-living favorable in finding like-minded roommates and soulmates indeed. Who bothers to go on Facebook and looks for random group of local food aficionados ?

A simple way to understand Co-living is by watching this video: https://youtu.be/bfAOoSJxyQY (Courtesy of The Collective, London)

WILL CO-LIVING BE THE FUTURE OF COMMUNITY ?

Very likely, at least for the young and singles. When you are married, you tend to move out of co-living facilities and settle down with permanent housing or residential leasing. Still, modern people often stay single longer than previous generations, since they work hard towards career achievements and allocate more time for self-enjoyment and personal development.

Who would not miss the dorm life and on-campus fraternities after school ?

WHAT DOES IT MEAN FOR HOSPITALITY PROFESSIONALS ?

Employment. Exciting career opportunities await fresh graduates and introduce another option to traditional positions in lodging industry. Just like in serviced apartment sector, the lodging operator will need to possess professional hospitality skills and training, and be able to ensure a terrific living experience for the in-house residents.

Some additional requirements might be technology proficiency and a taste for interior design.

Even though at the moment the co-living concept is fairly new and limited to certain areas in the US and UK, its breakthrough success and loyal fanbase will propel its popularity in the world soon enough. We expect many co-living facilities pop up elsewhere due to the simplicity of set-up and the widespread lifestyle adoption.

SPECIAL FOR VIETNAM: WILL IT WORK HERE ?

May and may not. It is a bit distant from the local culture, so much that it will find a hard time to attract local young professionals to join. Nevertheless, Vietnam has one of the most diverse and active expat communities in the region. The Westerners tend to be the early adopters of the new trend.

On another hand, its simplicity in setting up indicates an easy switch of local hosts to the new business model. Who would not want a housing facility packed with long-term residents ?

It may take the country 5-10 years to catch up with the rest of the world. Until then, we will wait and see.

June 16th, 2018

Johnny Tuan Nguyen