Can a hotel brand retain a uniqueness across its properties when expanding? Selina thinks so, and has been trying to convince potential investors it’s (almost) got the magic formula for a mass market cool factor. Still, it admits it’s stepping into the unknown with these hurdles to face.
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Scaling a brand that prides itself on uniqueness won’t be easy, especially during a period of global economic uncertainty, Selina’s execs admitted during a series of investor roadshows held this week.
Ever on-brand, the digital nomad-focused hospitality company took to Twitter Spaces to share its strategy ahead of its business combination with special purpose acquisition company (or SPAC) BOA Acquisition Corp on Oct. 26, following a stockholders meeting on Oct. 21.
But over the course of its “fireside chats,” senior members shared some of the challenges they’ll face expanding the company, and guaranteeing a sustainable future.
Striving for ‘Operational Excellence’
Selina wants to open one hotel every 10 to 12 days, and also has $350 million allocated capital from investors that want their new hotels to be Selina-branded.
But the hospitality-meets-lifestyle outfit is concerned over how it will be able to guarantee consistency of quality, as well as a unique feel.
“If you think about the Y axis being uniqueness of experience and the X axis being operational excellence at scale, nobody’s been able to solve both, right?,” said Steven O’Hayon, head of strategy, during its Oct. 18 roadshow event.
“So we have to become operationally excellent. In order to be able to do that, we have to become probably the most operationally excellent brand in the world … And to be honest, today, we’re not there yet. Right?”
As a result, the company needs to figure out how to give guests a different product every time, and standardize the processes to deliver a unique product every single time. It’s a “big challenge.”
Controlling Advertising Spend
As well as the costs involved with fine-tuning this operational excellence, Selina still needs to be able to fill its properties. And it looks like it will backtrack on a long-held word-of-mouth marketing strategy.
That’s because if you’re going to open lots of hotels in rapid succession, you can’t rely solely on your brand name, especially in new destinations. So it’s going to take an on-off approach to marketing.
O’Hayon said Selina hasn’t had a marketing budget, or chief marketing officer “from the moment that we started this business”. Which isn’t quite true.
“We never once had a big social media spend, or Facebook or Instagram,” he said during the Oct. 17 roadshow. “A hundred percent of the people that stepped into Selina were there because one of their friends told them to come, or they heard that it’s a beautiful place, or they wanted to experience something new and they arrived to this place.”
However, speaking a few days earlier to IPO Edge, Selina CEO Rafael Museri said while word-of-mouth was the strategy, “it doesn’t mean that in the new destinations you don’t want to use the traditional tools, online travel agents, Booking.com, Expedia. It’s a great tool to use as a penetration strategy for a new place … Direct booking performance strategies right to use Facebook, Twitter, TikTok and other relevant tools management to new areas,” he said.
However, once it becomes a destination and the brand feels strong enough, Selina would reduce the customer acquisition cost, and enjoying higher organic engagement.
Breaking Into the World of Business
Selina has a laser focus on digital nomads, but also sees the corporate world as key to driving more growth. New brand Mantra, which offers wellness retreats for companies and consumers, was only recently revealed — but it stands to play a pivotal role.
During one roadshow, O’Hayon revealed that Selina will even throw in Mantra retreats for free, as part of a yet-to-launched corporate subscription package. This membership would allow companies to offer staff a period of time working at its locations.
“I can come to a company right now, and tell them you have a really big problem because all your employees want to work from home or they want to travel and see the world, while still working,” he said, claiming employers were noticing and starting to create flexible work policies, and access to a Selina product would be a company perk. Examples included seven days a month to work from any Selina hotel, or three months a year.
“I can tell the company, on top of that, I will also make sure you have three offsites a year using the Mantra brand, and I will operate it for you,” he said.
The idea is that bonding between employees creates a better culture in the company, but it may require a lot of trust on behalf of those corporates. “I think it will be a huge driver of growth for us in the mid to long-term, because we’ll be able to capture that.”
Speaking during a similar event on Oct. 17, the exec also shared how the “pinnacle of our vision” was giving guests access to music festivals, access to be able to travel and work from its hotels and alongside a like-minded community of travelers. In essence, a “forever” guest.
But again, he said he was unsure of how long it would take to get there: “We’re starting to think about it and we’re starting to build it, but we are very excited about starting to leverage this repeat customer that keeps coming back.”
It’s also aiming to create loyalty without a points-based system. That’s the “old school way” of capturing value, O’Hayon added.
Instead it wants to create a holistic ecosystem that will allow it to interact in many ways with its guests. “We think there are other more creative ways to capture value from this community, and on the business side capturing recurring more revenue streams of income, and that’s through potentially offering a membership program.
That would include access to certain events or discounts. “We’re not ready launch, but we will very soon,” he said.
Selina has many bold plans, but the decision to go public also comes amid rumblings of a recession, as well as questions over the SPAC concept. According to spacresearch.com, $162.5 billion in proceeds were generated from 613 deals in 2021. So far this year that figure is much lower at $13.2 billion, from 82 deals.
“The market is in a situation where we can’t hide away from it, or not talk about it,” O’Hayon said on Oct. 17. “It’s not in a great situation, so it’s going to present a lot of challenges for us, but at the same time if we put our heads down and execute and deliver, I believe we are on to something very special.”
The topic also came up the day before: “We’re entering into a very challenging market and we’re actually using a vehicle which is called SPAC, which is also a challenging vehicle to enter. So there is going to be a lot of let’s say wind against us as we as we enter this market.”
New regional trends continue to emerge in the post-pandemic recovery phase, with businesses in North Asia now seemingly downgrading to low-cost carriers, Sabre predicts in a survey of corporate travel agencies across Asia Pacific.
The technology company’s findings were published just after American Express Global Business Travel revealed companies in Asia were the most likely to retain virtual and hybrid meetings and events in 2023, compared to other regions around the world.
Sabre’s latest “Top 10 Trends” research shows cost is a major concern. More than two-thirds of the agencies said they had seen a moderate or significant increase in bookings with low-cost carriers. The trend was most prevalent in North Asia where there’s been a 42 percent switch from full-service airlines to low-cost carriers.
Sabre also said there was a growing need for the corporate travel industry to tailor service offerings for new workforce realities, such as remote and blended working — already being highlighted in the U.S. by carriers including American Airlines and more recently United Airlines.
Half of the agencies also saw a rise in internal corporate travel, to bring remote workers together, will create recovery opportunities, while 45 percent said emerging corporate travel markets are important for growth.
Meanwhile, four-fifths of respondents said they had adopted new technological solutions to manage Covid-19 related risk over the past two years, including risk management tools, automated workflows and virtual payment tools.
“While business travel is rebounding, what is clear is that it is returning differently,” said Brett Thorstad, vice president, Sabre Travel Solutions, agency sales. “It is important, as an industry, that we understand these changes, and the reasons for them, and we are prepared to drive our own evolution, supported by robust technology.
The research was carried out with respondents in five languages in 21 countries, to gain insight into the evolving expectations of business travelers, and how corporate sellers in the region are adapting to service these new demands.
10-Second Corporate Travel Catch-Up
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