How to lease faster: What retail landlords and shopping center managers can learn from the hotel and tourism industry
There is a lot retail landlords and shopping center operators who rent out flexible retail and promotional space can learn from the hotel and tourism industry. In this guide, we explore these lessons and how they can be applied to leasing faster, more often and to better tenants.
Whether we are on a business trip or letting our hair down on holiday, we all look forward to visiting a nice hotel. There is something about how we feel stepping into a good hotel and being treated like we are special which makes paying top price for a room seem totally worth it.
The best hotels are often sold out. Many are at full capacity for weeks, if not months, in advance.
Deliver an Experience
A bed, a toilet, a sink, a shower, and a desk.
Imagine these five items in a blank room and you would struggle to be inspired. But when you boil it down, that is all most hotels really offer their customers. So why can they get away with charging top prices and still receive countless bookings?
Because they aren't really selling a room, they are selling an experience.
Sure, your primary need when booking a hotel may be a place to sleep, but what you are really paying for is great customer service, to be inspired by your surroundings, and to be made to feel special.
When renting out flexible retail space, landlords often think transactionally. But you aren’t really selling square meters. After all, a self-storage unit would be much more cost-effective if all your customers are looking for space.
You are selling an opportunity to reach the people who matter most to your tenants. You are selling them a seamless, stress-free experience as they wow their customers at your site.
Of course, this isn't exactly the same as a hotel. Where a hotel will focus on creating a luxurious experience with lots of fun and exciting extras included in the price, as a retail landlord it is your goal to give your customers the resources they need, at an affordable price, with as little hassle as possible.
When discussing leasing, although you should communicate the key details such as how much space they will have and where it will be located, focus more on selling them on how simple it will be and how you will support them.
Create a Desirable Destination
Those in the hotel industry know that it isn't just what they offer that helps them secure bookings. A lot more comes into play when their customers decide to book. For example, you may find a hotel promoting all of these benefits when marketing themselves:
- Transport links
- Local attractions such as museums and theme parks
- The best places to eat locally
- Local culture
- Annual events
In fact, the majority of hotels owe a part of their success to external factors. City hotels benefit from the buzz and culture of the city, country hotels benefit from the beautiful landscapes and outdoor pursuits, even airport hotels benefit from their convenient location.
If the destination isn’t desirable, the hotel isn't desirable.
This is the same when it comes to leasing flexible retail space. It doesn't really matter how shiny and attractive the space is, if it's located somewhere unattractive it is going to be harder to sell. Sell your space based on the following factors:
- Number of customers and general foot traffic
- The demographics, interests and affluence of the local population
- Transport links
- Local culture
- Other businesses in the same location or close by
When you make the destination desirable, you make the space within that destination easier to sell.
Leverage an Online Booking Platform
With websites like booking.com and Trivago paving the way for online hotel bookings, it is no surprise that many tenants in the retail industry are all looking for a similar solution to find and book space.
Facilitating online bookings limits friction and makes it easier for customers to purchase. When customers book online they can find key information such as prices, availability, and terms before they book. Then once they are fully informed they can make a purchase with little effort.
Online booking also allows customers to buy on their terms such as where and when they want. It doesn't rely on a potential delay between hotel and customer, which can often lead to them looking elsewhere.
Retail landlords can benefit in the same way by facilitating online bookings. Doing so can drastically speed up the process and help secure deposits quickly. Online bookings can still work, even if you have an approval process as the booking can simply be an application to lease your space.
That’s what we provide with our platform POP UP SHOPS - a booking platform for flexible retail and promotion space.
Ability to Answer Hard Operational Questions Fast
Hotels need to run smoothly in order to make a profit and remain open. This forces them to make hard operational decisions and implement them quickly.
As retail landlords and shopping center operators often have long-term tenants as well as occasional space, it is easy for them to put off leasing space due to operational challenges. But over the years, this stalling can result in considerable losses in profits.
When leasing your space, think like a hotel. Aim to always have your spaces filled and introduce an operational system that makes it easy to deal with key aspects such as inquiries, bookings, tenant communication, logistics and accounting. This also includes making decisions fast whether to accommodate a new tenant or not As a rule of thumb: tenant mix, curation criteria and negative list should be defined enough so that a junior leasing manager could make the decision. See also our article on how to choose and approve a pop-up or promotion tenant.
Increase Occupancy with Smart Pricing
Have you ever wondered why you check the price of a hotel room one day and it costs one amount, only to check it a few days later and it has gone up (or if you are lucky, down) in price?
This is smart pricing (also known as dynamic pricing) in action.
With smart booking software, more hotels are now relying on dynamic pricing to assess supply and demand when pricing their rooms. For example, the room you looked at a few days ago may have gone up in price because it is the only one of that size now left in the hotel.
When you understand supply and demand, you can ensure that you are always priced competitively and increase the likelihood of always being booked up.
Applying this to your retail and promotional space can span from creating smart AI-driven retail market assessment software to getting a simple understanding of busy times of the year and pricing your space accordingly.
Take for example the fact that you may price your flexible retail space higher during peak seasons such as summer holidays and near Christmas, but reduce the price during quieter periods to attract customers.
Leasing Faster: Learning from Hotels
All the techniques and strategies mentioned above show that when it comes to flexible leasing models, retail landlords and shopping center operators can learn a lot from hotels about securing bookings faster.
Tourism is a fast-paced industry and those who succeed must create systems that allow them to stay fully booked. By adopting these systems and approaches you give yourself the best chance at creating a substantial and reliable revenue stream from leasing pop-up retail and promotional space.