Latin American hospitality brand Selina took the world by storm when it was launched in 2015, selling a dreamy lifestyle to modern nomads and remote workers. How have Selina managed one of the toughest periods for the hotel industry (and for the world) and where do they find growth opportunities? Rafael Museri, Selina’s CEO, shares the company’s priorities and plans.
Riding out of the pandemic
Our main focus is on significant growth and also, just like for every other hotel company, sustainable costs to ride through this period. Covid-19 impacted all hotels from budget to luxury. The impact has been severe, and it's still ongoing, but we see the light at the end of the tunnel. We were in a slightly advantaged position because of our geographical diversification: we have a US, South & Central America, and Europe’s presence. When the pandemic wave was starting in Europe, Latin America was still open, and then when the wave started in America, Europe opened. In certain markets, the recovery happened sooner than in others. While some hotels were closed, others remained open. Other hospitality companies with prime city destination strategies were not so lucky.
When most of the countries closed their borders, people were still able to travel domestically - we've seen it as a trend in many countries. Selina has always relied on the domestic market with our diverse categories of property: urban properties, secondary cities, remote and off-the-grid locations. That also helped us navigate this crisis and be in the position that we are today - almost 50% of our portfolio in our US and South American properties are back to 2019 levels.
Our business model enables us to make decisions faster than other traditional hospitality companies. And, of course, with this pandemic, this came in handy. We can convert any Selina property between 90 and 120 days which is a pretty quick turnover time. That's why we have been able to keep growing even in the current situation. Last year alone, we managed to open 19 properties, and this year we have already opened eight properties.
Opportunity in distress
We see new opportunities in challenged assets in southern Europe and UK; entire Europe and the US is on our strategic roadmap, and we will continue our efforts in countries where we already have a presence. In the US market, landlords are looking for more secure income and volume, allowing our lease model to be an additional option to the traditional US market. We continue our strategy of developing countries where we already have a presence - the UK, Greece, Israel, Portugal, and we are currently closing deals all through Europe with soon-to-be-open deals in Berlin, Germany, and Paros in Greece.
Global hotel industry spending is $570 billion annually, of which $200 billion represents the global millennial spend on travel (35% of the travel market). When we look at the room supply, only 3% (500K) of the room inventory directly serves millennials’ needs. We are talking about a ballooned potential market of 5.4 million rooms. This represents a massive opportunity to address an underserved market, and Covid has made this supply even more distressed.
Powered by tech
Our tech suite enables our entire business, and we will continue to prioritise it in the next year.
We were expecting a lot of challenged assets because of the crisis, so we developed a proprietary in-house technology called Distress Asset Finder - a machine-learning tool that uses algorithms to identify underperforming assets. It helps our Distress Asset Squad to find these properties and add them to Selina's portfolio quickly. Its mission is to bring the best deals to SupplyCo with strong supporting pipeline data by providing 100% clarity on market prices through robust deal data. We also have developed an internal online marketplace for inventory.
On the guest experience side, we keep improving our Selina APP with more features, including one close to launch that will let you connect with friends in the properties. We also deploy our wristbands that let guests pay and manage funds cashless.
On a property level, we have been implementing IoT that will enable smart locks in all locations allowing keyless check-ins as well as reducing OPEX on-site by saving energy.
Harnessing the rise of the nomadic lifestyle
When Selina was created, we envisioned that our most significant customer segment would be nomads and remote workers. We knew from day one that millennials, our target audience, increasingly wanted to work remotely and travel simultaneously, and we had the data to back it up. The pandemic only accelerated this trend as many people got to experience working from home and more balanced life. More people are starting to realise that they can combine travel and work, and some took this opportunity to relocate and work from seaside resorts all over the world instead of being locked up at their urban homes.
Last August, we launched a co-living subscription product CoLive to target this market because people wanted longer stays than pre-pandemic. We now see that people meet at our coworking spaces and then start travelling together between our co-living properties on subscription. The plan is to shift 50% of our room inventory to serve this product.
Now, many big companies are planning to never return to a physical space. The workspace is going to change. Remote working is a trend that is only going to grow. “In a way, we feel validated, and we believe that Selina is shaping the future of travel and remote work in this space”.
Building a social company
Our brand is all about creating communities, facilitating meaningful connections, and bringing everyone together in a social circle. It is also one of our ESG metrics - building a social company together. So, a lot of insight comes from our guests' feedback, and we take it very seriously. We have a huge fan following - we call them super-fans and we survey them extensively. They follow us from location to location and they help us decide where we should be going next.
We also bring the community into the property to discuss and brainstorm how this property needs to look like to be relevant to the community and their culture. We need to be relevant to the local markets because we believe that the mix between locals and travellers in our properties is what really elevates the experience for the guests and the community.
We are focused on the sustainable conversion of distressed assets into relevant spaces for the community to join in; in some properties, we upcycle up to 95% of the existing inventory. There's no Selina alike in the world.
At a corporate level, we are creating committees on Diversity, Equality, and Inclusion. We have serious KPIs to hit the mark, increasing diversity and inclusion around Selina even though Selina is already a pretty diverse workplace - we have people of many nationalities, and we almost achieved gender parity.
Alleviating millennial loneliness
We study the trends of millennials quite extensively. One of the things we knew before the pandemic was that millennials felt lonely and alone. And that's why one of the most important aspects we measure is how many friends a guest has made at Selina – it’s our main KPI for the property. Today 65% of our guests said that they made a friend at Selina. This metric gives us a huge insight into the brand. I don't think there is any other hospitality company out there that measures that.
The pandemic brought more isolation and loneliness, and people want to connect more than ever. Everything we do at Selina is with the community and connection aspect in mind from developing our loyalty program to connecting local artists to bring a Selina to life. We are a platform in which travellers and locals alike can stay, work, play, and experience. We believe that if you deliver the right experiences and the right energy, everything else comes in place.
Rafael Museri will be speaking at the IHIF Adjacent Spaces event in Berlin on the 2nd of September in a session ‘Blend it Like Selina – Inventing Hospitality for Modern Nomads’. Register now to join the international hospitality investment community.