The Hybrid Hospitality Podcast will examine the trends that are transforming hospitality and explore what the future of the industry might look like.
In this episode, Rosie chats to Charlie MacGregor the CEO and founder of The Student Hotel, a hybrid hospitality brand that is creating boundary-blurring spaces where students, travellers, professionals, creative nomads and enterprising minds can connect and thrive in smart design co-living and co-working spaces. Scroll down to read the transcript of this podcast episode…
Introduction: You are listening to The Hybrid Hospitality Podcast.
If you’re interested in the trends that are transforming hospitality and want to explore what the future of the industry might look like, then you’re in the right place. This podcast is brought to you by Stay the Night, a creative marketing agency, working with hospitality businesses around the world that are changing the way people stay, work and play.
Let’s get started. The Student Hotel operated right through the pandemic, but how are things today?
So we’re a hybrid model, but of course, we focus on the students. So the academic year starts in September and now we’re running very, very well with our bookings for students. We’re almost 100% booked for this September and that’s adding about 20% of our total stock over to the students sector. So we’ve reduced our hotel segment and we’ve increased our student segment and I’m pleased to say it’s almost full – so, it’s okay today!
That’s great to hear. That is one of the big benefits of having a hybrid model, that you can flex those things up and down in response to the demand. Going back to the start then, what were the reasons for making students the focus of your concept in the beginning?
The reason why I started this business is because I started in student housing. I grew up in the student housing world in the UK where of course it was built by developers on the back end of long leases. Those long leases from universities started to fade away and the operators started to become focused on direct renters.
When I moved to Holland, I realised that there was nobody doing that and on the professional scene, there was only housing and corporations focusing on student accommodation. The rules and regulations in Holland are very, very strict – they’re also strict for co-living and all those types of things. So a very long story short is after a few years, I realised I couldn’t do it with residential, but I could operate as a hotel. I realised for the hotel that students only needed to stay for one year.
During that year, you meet the best friends of the rest of your life and you go on to live somewhere else. But as a hotel, I could bring moms and dads into the picture who wanted to be part of their children’s learning experience. I could also bring, young professionals – the graduates, the trainees, the people who weren’t students anymore, but were very close to that mindset and were in the first steps of their career. I could merge those three groups together under the hotel concept. That’s how it started 10 years ago.
So you’ve expanded from students to welcome other groups within the hotel model, but you still say that people with this ‘student spirit’ will enjoy The Student Hotel. What do you see as a ‘student spirit’ and how do you stay in tune with the values and motivations of your guests?
Yeah, it’s a good question. I mean, if we take a step back when I started, there was a lot of people from my funders to the architects, to the city planners, to everybody saying, ‘hey, you can’t have students and hotel guests meeting in the same space. They need to have separate entrances.’
For me, what I’ve always felt was that student accommodation is quite a strange thing because you have a room or a building full of maybe 300 people of a certain demographic, you know, they’re all 21-year-olds. They act like a group of 21-year-olds, you know, just like football people when they’re at football stadiums, they act like a group of drunken men because they think that’s the demographic, you know? So I think what we discovered was that I really wanted to push against this. What I mean by that is we have one entrance. We have one lobby. We have one community team. We have one team we really concentrate on bringing those communities together.
And what you get on the ground floor of a student hotel is a much more real-life environment than any student residence, but also any hotel. Because let’s think about it, when you go to a hotel and you go to a five-star hotel, you go to, you know, different categories of hotels, cause they tend to sort of separate you out, and either stars or pricing or whatever, but there you go into the same type of demographic and that demographic, sometimes don’t really mingle very well together. But what you have in a place that blends the demographics, as you have a very mixed environment with people, and when you have a mixed environment, that’s when real connection and genuine connection is made in a much more interesting, you know, Starbucks type environment where it’s just nice to be because you see everybody from these different environments.
So I think that’s what we noticed really working, when we started trying to market ourselves, we realised that the student spirit is something that is not related to study, it’s a mindset. It’s being curious and open, wanting to learn, wanting to make connections. And that mindset is something that I really felt an affinity with. But we also felt that it was a very good way to connect. From corporate travellers to our student guests, that mindset is something that breaks down through generations and through ages and through certain stereotypes.
Definitely. I know what you’re talking about because I think it’s something that doesn’t go away when you’re not a student anymore. This wanting to meet people and connect, but I guess it’s harder when places aren’t facilitating it in the way that they do when you’re a student.
So, the events of the past 18 months have obviously changed a lot of what guests might be looking for from the hospitality experience. Have you experienced that or what do you think the main changes would be?
COVID has hit us hard. Of course, our hotel occupancy has fallen off a cliff – we’re running at the same as everybody else; 5-10% per cent. But our student occupancy has been very resilient. Our coworking – because we have extensive coworking in all of our hotels – has been very resilient and our extended stay, our core living product has also been fairly resilient, across the board. I think we were one of the first companies to come up with this hybrid model 10 years ago with full flexibility whether it be for one day or 1 year, working or learning or playing, whatever you want to do in this sort of mixed-use environment. This is the first time that we’ve really had to use the model really.
What I mean by that is taking rooms that were used by, in this case, hotel guests – so three-star hotel rooms or four-star hotel rooms and filling them with long term residents. We’ve reduced our exposure to the very bad hotel market and we’ve increased our exposure to the very solid markets of extended stay for students and for professionals.
I think this has been the first time that we’ve used the model. So for me, when I take a step back and get rid of all sorts of heartache and hardships that everybody’s suffered through COVID, for The Student Hotel this has been a really interesting moment where we’ve proven that the hybrid model really works. We’ve managed to make sure that our occupancy is very high. We’ve been cash-flow positive through the crisis.
We’ve managed to survive the real heart of the crisis. As we come out of the crisis, we’re in a very strong position where our rooms are full of long-stay guests. As the hotel market comes in, those long-stay contracts, of course, will come to an end with Erasmus travelling students and various things, and we’re able to release them back into the hotel market. I think the other thing that we see happening – and it’d be interesting to hear if you think this is the case – is there’s been an acceleration of certain trends from the customer’s point of view and from the hoteliers as well.
The customer – the new generation sort of corporate traveller – is not looking for a Hilton honours type package anymore. They’re looking for, ‘I want to be in a coworking space. I want to be connected with local communities when I go to their local entrepreneurship and corporate community.’ I feel that everything’s kind of coming together where this hybrid hospitality is being embraced by the market and by the consumer at the same time.
It’s a trend that we started to see – because we started life working with hostels actually – and then our clients evolved and we saw that the lines were blurring quite a while ago as well. I think what will be the proof is which brands can really do the community aspect well because I think that community is such a buzzword now.
It’ll be interesting to see how that transpires on the ground.
That brings me to my next question. You touched on community earlier and bringing those different groups together – how do you proactively create that sense of community at your sites?
I’m quite passionate about community, but I’m also quite passionate about how badly it gets misused or abused. The essence for me of a community evolves around a fixed group of people being in an environment very often together. They start to know each other, they start to build up relationships and they start to want to help each other – you have to be there enough times to see each other and to start feeling that connection of ‘we’re part of something bigger, we’re part of a community together’.
You’re never going to get that on one or two nights in a hotel. You’re never going to get that on a few hours on a plane. You’re never going to get that if you never go to your member’s club, but when you do walk into your member’s club, you feel something tangible. If you walk into Soho House, you feel something tangible. If you walk into WeWork, you feel it as well, because people see each other every day, they walk past the same office team every single day, they know who you are. They know what you did last night. They know what football team you support and those little connections build up a community. You have it in your bakers, you have it in your butchers, you know, the local shops, they’re totally different from what you have in a Sainsbury’s.
For me, you need a certain amount of ingredients that are really genuine. If you have those ingredients, then the question is, okay, what do you do to encourage your community to be stronger, to do more things? I think that’s fundamental. The student community – they come to stay with us for 10 months for a year. 60% of our rooms are full of those fixed residents. We have the coliving part of our business – which people are coming for three, four months at a time. Then, of course, coworking – which is corporate or individual startups booking their desks at our offices for years after each other.
I think those are the core of our community. And then the hotel guests, they get to be part of that for free. They get to soak up this vibe and this energy of community, but they’re not part of that community, per se.
A big part of bringing people together is the space itself and how that’s designed. When it comes to design in hybrid spaces, what are the ways in which this differs from designing a traditional accommodation space?
We’ve got a portfolio of 30 hotels under ownership. Half of them, more than half of them are open. We’ve learned quite a lot. What you start to see is that your different groups, your different subgroups within your community use space at a different time. So for example, the students – they use the working space before university starts, so before nine o’clock is very busy, after six o’clock is also very busy.
When you look at your coworking community, they are very often in after nine o’clock – between 10 and four – that’s your peak time for your coworking community. Your hotel customers – they’re checking in, in the afternoon, they’re checking out in the morning. You have your locals who come in during the day. We’re learning that you can make sure your space is always active by understanding how your community use it.
When you look at a traditional hotel, or a traditional apartment block, or an additional student block, very often it’s empty for a huge part of the day. With this hybrid model, you ensure that there’s all this activity going on.
So it’s almost looking at it like a 24 hour day and seeing where the spaces can be used – that makes sense.
We’ve spoken a bit about the resilience of the hybrid model, and obviously, there is the aspect of getting the most out of the real estate space. What are the things that you think are most attractive to investors about this model?
They love the story that you were able to switch inventory from a non-performing market segment over to a performing segment. The question was, does it work? You know, and we’ve never had to use it before. So we’ve been going 10 years. We came out of the last crisis, of course, the hotel market’s only been getting stronger and stronger, and students is very strong. Coworking is being born, it’s becoming an established product. So, will it survive a crisis? We’ve had our first pandemic – let’s see what happens in a recession. But we know historically that students will be very strong. We know that the hotel industry is quite fickle and will come and go depending on the market. I think that the investors understand it and I think that’s where we are really in quite a strong position because we’ve proven that it really, really, really works.
You were one of the first – as you said – 10 years ago to adopt a hybrid model, which is well ahead of the curve. Now we’ve seen, especially over the last couple of years, a lot more brands switch into this model and incorporating both coworking and coliving. How will The Student Hotel stay one step ahead of that as more brands embrace this?
Good question. I mean we’ve learned a lot and this crisis has been the first time that we’ve really paused in those last 10 years. So we’ve really taken the opportunity to evaluate what’s working. What can we do better? Where do we see our guests going to? I think we’ve really realised that we’re a real help for the locals as well. You know, it’s not just about our fixed customers. It’s about this constant stream of local people coming into our lobbies and using our spaces.
I think we can, you know, by really making the community as our USP and really, really trying to help them achieve their goals, and connecting them with other people within our community who can help them achieve their goals. I think that was where we can take the next steps and we’ve got some nice tricks up our sleeve which we’ll be launching next year. There’s going to be some big news next year so we keep a couple of steps ahead of it.
So you said that everyone thought you were crazy at the start – which is usually what happens to the best ideas – but because no one else was doing this, where did you get your inspiration from?
For me, it was complete common sense. When I realised that we had to be a hotel, the first thing I thought was this is fantastic because student accommodation had such a bad reputation. I dared to invite moms and dads into the buildings and happy days, they thought it was a really good product. We started to get guys and girls who are on three-month contracts from the US working with Nike here in Holland, you know, it was fantastic!
When we did the coworking, we had a choice to rent our spaces to WeWork, and we thought, well, you know, we’ve run a hotel, we run 26 square meters of hotel, 570 bedrooms, how difficult can it be to rent offices and chairs?
So, we said, well, let’s just do it. By just embracing it and just saying, wow, these people are super cool, they should all be part of this aspirational community. You put them all together in one room and you’ve got a really super cool community there. And the business model works, which is even better.
Why do you think it’s taken others so long to catch up?
I mean, let’s be honest, if you’re a regular hotel and you’re ticking along and your businesses is going well – where’s the real motivation to change?
So I think there are real nuances there in managing a community. There is a skillset and a mindset that is necessary. But as I said, we’ve been doing this for 10 years so we’ve got an amazing team that kind of really enjoy it and understand it pretty well.
Can you talk to me a little bit about your marketing approach then because obviously when you’re marketing to different groups, it’s not quite as straightforward as marketing to just students or backpackers or whatever the segment might be?
We do have different marketing campaigns for students than for hotel guests, for sure. But that’s because the way they find you are also different and things like that. But I think, you know, we have a four-star hotel product, so we don’t have a backpacking product or a hostel product. We have a pretty sophisticated four-star hotel product all year round, we have a three-star hotel product. We have penthouses, which are a couple of grand a night as well in our portfolio and stuff like that.
So, I think you have to market, of course, individually, I think one of the things that you’ll be seeing – and I talked about it earlier – is you will see from next year, we’re really going to be taking a much more sort of global approach saying, ‘Hey, you know, let’s try to blend that marketing message as much as one‘. I guess, you know, if you take coworking and coliving, they’re quite easy to explain. Coworking is a great name, co-living yeah, I get it. But what do you call it when you blend them together?
There’s loads of debate over whether you use a dash or not…
Exactly! So I don’t know, but I think what we’re trying to say is, we’ve been doing this for some time. We have seven sizes of rooms open, we’re building another five sizes of rooms. We’re in eight different countries. We’re pretty established and we need to kind of embrace this coliving, coworking mindset and really claim that spot.
I think that’s the thing when you talked about understanding that shared mindset of your guests, that’s something that we…it’s the first step in any client we work with, is getting to the crux of what that is, because then it makes that messaging just that bit easier, rather than trying to speak to different individual groups. And then you can just tweak it, but you know the core of what they want from you.
And how do you find that out? If I may ask, how do you identify that?
So you’ve got the data side of things. That’s a starting point with Google Analytics, social media insights, all of that.
Then we go into more research-based and we speak to the teams as well, because you’ll find that the people who are working on-site really know the customer better than anyone. So we work really closely with our client’s teams on the ground, always in a lot of communication. We either have WhatsApp groups or Slack groups and we speak daily. And then just our general research, we might do questionnaires, surveys. We also simply do it through social media – so for example, on Instagram, we might do a quiz that for the user is really enjoyable but we’re actually gleaning little bits of information from it. We’re then taking that data and putting it into our guest’s personas. That’s it in a nutshell.
I think the mistake that we see the most is that people start off with the best intentions and do these guests personas, and then they just get left in a strategy document and aren’t looked at. Whereas actually, it’s should always be changing as well. You update them constantly to fit with that.
That’s good. It’s nice to learn.
So seeing as you’re the pioneer of the hybrid model. What is next do you think? How do you see it evolving?
I do believe it’s going to really continue to become rapidly accepted. I think, of course, if the pandemic’s over tomorrow, then people would just go back to their old business models. So the longer it goes on, the more interesting it will be for some bigger players to step into this. I do think that the tide has shifted. There are some amazing property management systems like Mews, for example, who is embracing this hybrid model really, they’re becoming really established and really the main player and, potentially the future of the hospitality industry because they focus on the customer. I think that there’s a number of bigger players who are realising they want to see this. We see at an investment level that even hardcore hotel investors are looking to diversify their hotel investment portfolio into this sector because it’s resilient. It can handle a recession or pandemics. So, I think the tide has changed on the professional side.
Yeah, for sure. Something that I just wanted to touch on before we wrap up – when we last spoke, it was because we were doing a round-up of brands that have given back during the pandemic and we featured The Student Hotel. I know that you also have an NGO. Why is it important to you to give back through hospitality and otherwise?
From a very, very basic level, we are aware that we’re buying a building in somebody’s neighbourhood and we’re making it come alive 24 hours a day, seven days a week, all year long. So we make a real effort to go and say hello to the community to say, ‘look, we’re your new neighbour, and if you need anything from us, come and say, hello‘.
We do that on a very just human level. Then I think the soul of TSH, the ‘S’ is really focused on social, it’s focused on community, focused on connecting, listening to people’s dreams and aspirations and seeing if we can help each other. The NGO is something that I did separately, focused also very much on community, but within the refugee camps and trying to change that dysfunctional model.
I feel that a lot of the colleagues that we have in The Student Hotel are here because we feel that we’re making a social impact and adding value to our customers’ lives. That’s of course – more of the residents and the working community -as opposed to the hotel community as they’re coming and going, but I think that mindset and that energy spills over, and that’s why we’re also an attractive hotel destination as a standalone hotel.
Yeah, definitely. I think it’s something that’s becoming more and more important to people and obviously, it gives for your team another source of motivation beyond just providing that great experience.
Thinking about your team then, what would you say on a personal level are the biggest leadership lessons you’ve learned over the past 18 months?
18 months? Wow.
I mean, my leadership style has had to change for sure, because we’ve been growing really quickly. Of course with the pandemic, that stopped. There was a pause on funding for new projects from the banks because they wanted to see what was happening and so I think there was really just a big pause in our business.
There’s a difference between starting a company and being an entrepreneur then moving and evolving into a leader and into a manager. It’s been a really interesting and rewarding personal journey for myself. But maybe after the pandemic’s over, we can see if it’s worked or not.
No, I know what you mean. Our team has just grown and we’re hiring again and it’s kind of like – it was just myself and my co-founder and then we brought in freelancers and now we’re getting that more permanent team and it is a total journey. It’s a whole other element of the business to think about now, but it’s exciting. I enjoy it – I’m reading a lot of books at the moment about leadership remotely.
I’ve got a good one for you – Five Dysfunctions of a Team by Patrick Lencioni. He’s got some great podcasts and we’re using the Lencioni model as a leadership framework. It’s all about trust and all about openness and exposing your vulnerabilities and insecurities.
It’s all psychology, isn’t it really?
Finally, what’s next on the agenda for The Student Hotel? What projects are in the pipeline?
I can’t tell you too much, but as I said, there’s going to be some big changes. We’re aware that a lot of the competition has been copying us – I mean, some of the stuff is just embarrassing, to be honest. I mean, it’s a compliment. They say it’s the biggest compliment you can have. We’re aware that the industry is copying our design. They’re moving into the model that we like to think that we kind of started.
I think the question for us is indeed how do we make that next step forward? How do we come out of this crisis? Next year is an exciting year for us anyway – we’re opening TSH in Madrid, Barcelona and Toulouse. Two world cities are being opened next year – they are fantastic properties with extensive co-working within these properties. Barcelona’s an amazing location, 3000 square meters of coworking with a 400-bed hotel coliving at a building next to it. I’m really excited about those properties as well.
Thank you so much, Charlie. That’s been great. It’s been really interesting and I’m super excited to see what you guys do next.
And likewise, looking forward to seeing what you guys do next!
For those listening who want to find out more about The Student Hotel, you can visit their website here.
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