Hotel Rooms in Brazil Turned Into Offices Amid Crisis

RIO DE JANEIRO, BRAZIL – With no prospect of regaining, before 2023, the occupancy levels of early 2020, hotels take advantage of the gradual reopening of the economy to seek alternative sources of revenue, while business travel and tourism show no signs of rebounding.

One of the alternatives found by two chains – the French chain Accor, owner of brands such as Ibis and Mercure, and the Bourbon in Paraná – was to convert empty rooms into offices. With a quick remodeling – beds and night tables are removed, desks and chairs come in – companies have already started renting their spaces for monthly rates starting at R$2,000 (US$400).

A study by Hotel Invest consultants showed that the situation is bleak for the entire sector, but particularly difficult for medium and high-end hotels focused on the corporate market. While budget hotels may reach 35 percent average occupancy by the end of the year, higher-value enterprises should remain close to the 25 percent mark. In other words: a 300-room hotel will have, on average, 75 units occupied, resulting in nearly inevitable losses.

In search of creative solutions to contain the impact of the coronavirus crisis, Accor – the leader in the Brazilian market – decided to act quickly. In May, it launched a product nicknamed “Room Office”. The operation began with the budget Ibis network, in 25 units. “We started in São Paulo and soon we realized there was huge demand and we had to repeat it in other states”, says Carlos Bernardo, director of budget and medium standard hotels for Accor.

Until June 12th, another 43 hotels throughout the country will start operating the model, according to Bernardo. As the hotels are independent, the management team of each hotel may define the size of the “Room Office” – it may separate a wing from a floor, or an entire floor. The rental model is flexible: “Customers can book per day, per week or per month,” explains the executive.

For monthly rent, Accor rooms range from R$2,200 to R$3,100, depending on their size. In addition to the office, the hotel also offers complimentary coffee and snacks, as well as serving meals through room service. Each unit can accommodate up to two workers. Accor is also looking for ways to reopen its hotels in Brazil. Of the 300 units in the French network here, more than half are now closed.

The second largest hotel in Latin America, the Bourbon Convention Ibirapuera, in São Paulo, comprises 630 units, and roughly 70 percent of turnover is in business tourism. The hotel is known for its large events area, able to accommodate up to 1,500 people. After over two months closed, the Bourbon Ibirapuera has now reopened – and is also betting on “room-office” to survive.

According to Fabiano Machado, the chain’s general director, 60 apartments are being converted into offices. Each unit covers 28 square meters and can accommodate up to four people. In addition to occupying idle rooms, the Bourbon hopes that the offices will also increase the activity of its restaurant, where an executive lunch can be ordered for about R$50. As in the Ibis chain, coffee is complimentary.

Privacy

Machado says that private space is the main differential of hotels compared to other temporary office options. “Furthermore, the hotel does not require a contract or any future obligation. Clients can pay by credit card.” A room-office at Bourbon Ibirapuera goes for about R$3,000 (US$600) a month. The company should extend the offer to its hotels in Curitiba and Campinas.

Entrepreneur Rudge Masiero de Aquino, founder of the Ideas startups incubator, joined the Bourbon Ibirapuera proposal in the very first days. He took the opportunity to set up a new office, free of bureaucracy, to separate one of the five companies in his portfolio from the others. “It is a way to enable the entrepreneur to move faster, because the company’s costs are no longer mixed with those of the others (incubated). It is a way to encourage the search for break-even (financial balance)”.

The Apps2mart digital signage company was chosen to occupy a “room-office “. The company sells a solution that enables supermarkets to offer promotions for certain items in their stock on screens installed at the point of sale. “In a click, the company can show the product’s photo, description and price from the information in the inventory”, he explains.

Aquino says he prefers the hotel environment to a co-working area, mainly to protect himself from competition. “In co-working, apart from the fact that your idea can be copied, there is an interaction between companies. This allows another startup to spot a good employee and take him or her to work with them. You invest in training an employee and someone ends up taking them away. We end up serving as a filter for professionals from another company”.

Hotel Startup says it will open five units in 2020

Guests coming to the Vivenzo Savassi hotel no longer meet the receptionist face to face. A tablet outside allows for remote check-in. Upon reaching the check-in counter, guests will find masks and a hand sanitizer. The meals are served directly in the rooms, which are cleaned every three days, by staff covered from head to toe. The Vivenzo Savassi – located in a prime neighborhood of Belo Horizonte – is the pilot project of a lodging startup in the capital of Minas Gerais. The operation’s “trial by fire” was to keep its doors open amid the spread of Covid-19, thus preparing the protocol to continue operating at a cost of R$150,000, according to the company.

Frederico Amaral, founder of the Macna group, of which the Vivenzo hotel is part, said 2020 will be a survival test for the hotel industry. He says it’s been impossible to keep the accounts in the black since March, but with activity partially recovering, the 48-year-old entrepreneur says he expects to close June at “zero to zero”. Despite the devastating impact of the pandemic on the tourism sector, Amaral does not intend to take his foot off the gas. “We’re not going to stop anything. The five hotels that are planned will open. The sector will have to redesign itself – and we’ll be in the lead in this process.”

In order to compete with the traditional hotel chains, Macna has developed a system in which the administrative part of all its hotels is managed from a unified central structure. This is not what happens in traditional hotel chains, where the units are usually independent and work as a kind of franchise. This requires these structures to be replicated in each hotel.

Source: O Estado de S. Paulo