Hospitality professionals are using mainstream generative AI products or developing their own solutions rather than turning to third-party proptech software.
Proptech (property technology) refers to technology that helps individuals and companies research, buy, sell, and manage real estate. The term has been around since the 1980s but has gained greater currency in the age of generative AI.
Every hospitality investor wants to uncover ‘hidden’ opportunities, such as family-owned Italian hotels not on the market but potentially interested in selling. Can proptech help here?
Lionel Anidjar, hotels project director, Global Asset Solutions, commented: “We already know where to find that kind of information. We have people who are always on the lookout for opportunities, at trade shows, cultivating relationships, and this is usually the way the best deals are made. It’s down to the richness of human relationships and I don’t think this falls under proptech or AI.”
Luxury downturn
Can proptech help unearth value in other ways? New residential developments can stay empty for months, sometimes years. According to The New York Times, one in four luxury apartments in New York City remain unsold, including new constructions dating back to 2013.
Different products have different sales cycles. Like food sitting on supermarket shelves, this involves spending some time as unsold inventory, and luxury apartments stay empty much longer than more affordable options. Obviously, for their developers and investors this situation is not ideal.
In 2017 Jason Fudin and Bao Vuong saw a business opportunity to monetize vacant units during the pre-sale phase by offering them as hospitality accommodation. Today, the pair’s company Placemakr flexes property use between multi-family and hospitality at ten US locations. Placemakr, which includes its own real estate investment arm, is a good example of a tech-enabled entrepreneurial company that identified a specific value add.
What is a proptech company?
Is Placemakr a proptech company? Some see a distinction. The likes of Airbnb, WeWork, Sonder and Placemakr are tech-enabled companies that provide their services through a technology platform (booking, location flexibility, on-demand usage) but are still essentially fee-for-service real estate management companies.
Separately, there is a new generation of software startups – names like Built AI, Monga and Swapp – that are promoting specific services to the construction and real estate industries. These are pure proptech firms.
Once a selection of prospective deals are lined up, can proptech evaluate and cherry-pick the best? Built AI’s website says: “No more missed opportunities. Reliable investment analysis and unparalleled data insights in minutes, not days.” Its AI-powered platform claims to overcome the problems associated with spreadsheets – missed opportunities, manual data entry, inefficiencies, and siloed data.
Anidjar commented: “If you know your line of business and what you are doing, I think what this company are trying to sell is something we’d be able to do on our own with a paid-for version of ChatGPT.”
He added that he did not see the evolution of AI as necessarily following existing commercial norms whereby a company devises a tool and the customer pays to use it: “I don’t see AI as repeating this pattern. AI is going to reinvent some professions and create jobs that don’t exist today.”
Once a deal is done and a project underway, how might proptech help? With clients including Nikki Beach Global and Oman Tourism Development Company (OMRAN Group), Anidjar said: “I use AI for design and imaging. A designer used to ask us for up to €3,000 for a 3D rendering. Now it costs literally zero and doesn’t take any time.”
In the field of project management, however, Anidjar is yet to see a real application of AI. Understanding the impact on budgets and timescales of various design options in real time would be a great help, he said.
“Today, you do a design and give it to a quantity surveyor or cost estimator, and they come up with the costs. If that was something we could do live, that would save a lot of time immediately. Value engineering eats up a lot of project time. If we had an AI tool that, as we play around with the building and the size of the areas, gave us immediate impacts on costs and timescales, we would save weeks, maybe months.”
While Anidjar is frequently contacted by marketing companies, he has never been approached by a proptech firm. The property consultants who have been contacted say that proptech firms pitching for work often lack case studies or proof of concept.
Whether you believe it or not, the message coming from the proptech startups is that real estate, the world’s biggest asset class, is a digital laggard where critical decisions are based on disconnected data, manual processes, and gut feel.
Gut feel
Hospitality experts, however, are likely to see gut feel as a valuable trait. “I like doing what I do because there is this human element and it’s the unknown quantity that you’re always dealing with,” said Julian Kemp, senior director, hotel advisory services, CBRE. “You can walk around a building site and think: ‘Why is this hotel being built here?’ You only get that if you’ve been there. You can’t allow a computer to do it. There is still gut feel.”
2022 was a record year for VC investment in European proptech companies. Things appear to have quietened down since. Whether proptech tools become widely adopted remains to be seen. The dominance of mainstream products like ChatGPT and the sheer speed of change in the generative AI space will create winners and losers.
Anidjar, who uses generative AI for work every day, said: “I find it very exciting. What AI was a month ago is not what it is today. We don’t have an AI division yet so I’m waiting for that to happen.”
A notable early adopter of AI is Blackstone which has developed in-house solutions since 2015 and has a team of more than 50 data scientists. Matt Katz, Blackstone’s global head of data science, said: “We are building in-house AI solutions designed to strengthen our investment processes, compare lease and property data and benchmark our performance against industry peers. We’re also starting to introduce external, generative AI-powered solutions such as helpdesk chatbots, coding tools and Microsoft 365 Copilot to drive productivity.”