London: Luxury hotels are turning to crowdsourcing and crowdfunding to get their properties financed, rather than banks and traditional investment routes, reveals the WTM Global Trends Report 2015, in association with Euromonitor International, released at World Travel Market London.
For the crowdsourcing stage, would-be hoteliers use social media to get ideas from consumers, who are then encouraged to give feedback through the design and development stages.
Then individual investors are sought to raise the capital through crowdfunding with contributors receiving benefits for their investment, such as free stays once the hotel is open.
Examples include Prodigy Network, a real estate crowdfunding firm, which plans to create a 194-unit space for short and long-term hotel rooms, called ‘cotels’ in downtown New York.
Another is recent start-up Amberlair, which hopes to open a crowdsourced and crowdfunded luxury boutique hotel. The exact location and design will be chosen by investors.
The luxury segment will be the main player in this new trend, as there is a potentially long lead time for crowdfunding and the concept is best suited to individual hotels with unique features, reveals the report.
Crowdsourcing has the potential to significantly change future hotel designs and creation and is not restricted to the design of new properties.
For example, Marriott International used digital crowdsourcing to create brand innovations such as towel design and vending machines, with the best ideas implemented at certain US Marriott outlets.
The WTM Global Trends Report 2015, in association with Euromonitor International, forecasts crowdfunding initiatives of the future could create themed hotels, funded by small-time investors who share a passion in anything from hobbies, books, TV shows or films.
According to Crowdsourcing.org, total funds raised worldwide grew from US$2.7 billion in 2012, to US$5.1 billion in 2013 and are expected to reach an estimated US$10 billion for 2015.
Euromonitor International, Head of Travel, Caroline Bremner said: “Crowdfunding has its roots in the US and Europe, but with global internet access at 40% and growing, Asia is likely to see development, particularly as hotel demand continues to expand.
World Travel Market, Senior Director, Simon Press said: “Once again, social media is at the forefront of this new way of funding projects. If done well, crowdsourcing and crowdfunding will work brilliantly in the hotel environment because future guests are involved right from the beginning of the project and – once the hotel is up-and-running – are bound to remain loyal to the brand they helped create."