Modern Professionals Sparked Unlimited Upside for the Travel Industry
While the pandemic changed how we all live, one cohort achieved what would have previously been impossible. They permanently blurred the lines between work, play, and travel. In 2020, experienced urban workers in salaried positions- a cohort we are referring to as “Modern Professionals”- accounted for 96% of the increase in digital nomadism. Other groups like high school grads, recent college grads, and families looking for better work-life balance also jumped on the bandwagon. This “permanent shift” transformed how hundreds of millions of people live.
Modern Professionals are now free agents no longer tied to one corporate office location. Empowered with a new sense of freedom and autonomy, this cohort shifted power dynamics away from urban epicenters and large multinational corporations. Cities are fighting for talent in an all-out race to become the next Silicon Valley. Companies are prioritizing remote-first policies as a way to retain top corporate employees.
While these players struggle to adapt and evolve, travel stands to gain a tremendous upside. The $8T travel industry is expanding at unprecedented rates. In April 2021, Skift’s Travel Hacker reported that more than half of Americans had taken or were planning to travel due to their flexibility with this new lifestyle. This inevitably impacts how trillions of dollars in assets are transacted.
Modern Professionals have increased the frequency and length of stay per trip, causing many alternative accommodations and traditional hospitality companies to shift their positioning from “travel” to “housing.” Travel is no longer a seasonal, occasion-based category. It’s now an indirect extension of the real estate market.
Companies in hospitality and alternative accommodations are reacting accordingly.
After revealing that a quarter of their customers booked stays for 28 days or longer, Airbnb recently launched a new partnership with over 20 global destinations that address the unique needs of Modern Professionals. The destinations selected were based on their “attraction to remote workers” and the location’s willingness to enact visas and other policies facilitating temporary work and living arrangements.
Selina, one of the first hospitality solutions to go all-in on remote workers, recently revamped their subscription-based model. Their “travel passes” offer discounts on work-from-anywhere trips covering over 80 destinations globally.
These strides are necessary. Yet, there’s still a long way to go if flexible living arrangements are to become a sustainable lifestyle. This is particularly salient for groups with layered professional or personal commitments. The Economist recently highlighted many of the limitations of remote work. “The option to work from anywhere is most attractive to people with well-paid jobs and fewer obligations: childless tech workers.”
One fact remains irrefutable: This megatrend is here to stay and to scale.
Given the many obstacles ahead, how will we define and determine who becomes tomorrow’s landlord?
The answer lies in product offerings focused on bridging this lifestyle’s “achievability gap,” the ability to make flexible work and living arrangements achievable for all.
Solutions should be oriented at these key opportunities:
- Affordability: Business models making flexible living arrangements more affordable will unlock opportunities for countless sub-cohorts of the Modern Professional.
- Accessibility: Inventory in desirable destinations is scarce. Companies creating unique inventory solutions, especially in historically unconventional markets, will provide a strong value proposition for customers.
- Flexibility: Companies focused on flexible solutions for Modern Professionals with complex needs, primarily those with caring responsibilities, will have a compelling product offering.
While a clear front-runner has yet to emerge, a few up-and-comers tackle these challenges head-on.
Oasis Collections recently introduced “Passport,” a subscription offering that allows members to hop between rentals in over 25 cities for a flat monthly fee. Their global inventory and set pricing model appeal to customers who don’t want to overpay during high season at desirable destinations.
My Place is creating a new supply by having its customers rent accommodations from its invite-only network. Affinity groups create significant network effects, and consumers feel a sense of ease when renting from friends or friends of friends. Fostering a sense of security, community, and trust in the alternative accommodations market is critical for scale. These cumulative effects create a dent in unique and unconventional supply.
Summer is making buying a second home more accessible through a rent-to-buy model. Members pay less upfront and earn equity faster. They have the option to walk away at any time.
Boundless empowers families to live a flexible lifestyle by offering housing in beautiful destinations with cohesive education programs for children.
As travel makes a dent in housing and real estate, it will operate more like the experience and service industry. We expect to see more affordable subscription-based models that offer a mix of urban and vacation destinations. We also foresee flexible housing becoming a popular corporate perk in the form of corporate housing designed to attract top talent or lifestyle programs created for employees.
We are in the early innings of converging housing and travel. There is nothing but upside for those with the foresight to capitalize on this massive market.