A Global Shift In Travel & Lifestyle Habits
The standardised offerings that have been the hallmark of tourism for years are fundamentally changing. Modern travellers crave unique experiences, strive to live like locals and be part of a community – people demand the consistency and service of a great hotel, but in a space that feels more like home. This has forced global hospitality brands such as Airbnb, Marriott Hotels and Oyo to review their traditional approaches and become more innovative to attract modern travellers.
This shift is also reflected in office working trends, driven largely by the world’s 2.4bn Millennials (those born between 1981 and 1996) and ‘Digital Nomads’ who are redefining travel as a lifestyle. In the next 15 years it’s predicted there will be 1bn Digital Nomads globally (1), who choose to be location independent with technology enabling them to travel and work remotely, anywhere in the world.
Capturing A Movement
Selina’s founders, Rafael Museri and Daniel Rudasevski, were quick to identify these market trends and that Millennials represented a significant segment of the travel sector. Not only that, but also traditional hotels, hostels and home-sharing solutions were far from meeting their needs or recognising their desire for work and travel experiences.
In fact, Millennials now represent 35% of the travel market and spend $200bn on travel globally (3). However, of the 16.9m hotel rooms available globally (4), just 2% meet their needs. Accordingly, the early identification of this shift in audience expectations has paved the way for Selina to become the default choice for people craving unique travel experiences and the opportunity to work remotely in inspirational locations
The Early Bird Catches The Worm
Since launching, Selina has consolidated its industry leading position as the world’s first experience driven hospitality brand. Today Selina has over 129 properties in 19 locations world-wide, is valued at $850m and still operates with few direct competitors in the Millennial hospitality sector.
Selina have achieved this position through insight and innovation. Since launching they have not only tapped into the Millennial travel market first, but also more successfully than any other hospitality brand. Recognising, understanding and meeting their needs to the most intricate detail has allowed Selina to make a strong brand impact and set the standard for the industry and accordingly, established considerable brand loyalty with the millennial audience. Selina has a net promoter score of 42, four times higher than Hilton and the Marriott. Their search interest on Google is four times higher than the sector average (5) and their social reach two times higher, with nearly 300k Instagram followers.
Being the first mover in this sector has created a scenario that means every 1% of the Millennial market who convert to Selina, represents a potential £6bn of revenue to the brand, a position other hospitality chains are not easily equipped to achieve and cementing Selina’s first mover advantage.
Staying Ahead Of The Curve
Critical to building on this first mover success is an organisation’s ability to continually evolve, ensuring it stays relevant and ahead of the competition; a philosophy that Selina have enthusiastically embraced. Selina has built a defendable infrastructure and developed operational tactics which have successfully raised barriers to new entrants, whilst at the same time strengthening the brand as it has scaled.
To maintain market dominance and support global expansion, Selina has invested heavily in proprietary technology. The company has built a fully integrated and flexible platform that combines data analysis and insight, with a central reservations system & property management software. This is the powerhouse behind Selina, allowing the brand to closely monitor individual hotels, to optimise customer experience and maximise revenue. It’s a platform built to provide a comprehensive experience in which customers are able to travel, live, work and interact within one global system, constantly allowing Selina staying ahead of the pack.
Selina is also innovating when it comes to their bricks and mortar infrastructure, operating a model competitors find hard to match or adapt to.
By only sourcing distressed hotels, new inventory is acquired at 20% below market value, with Selina able to convert properties in less than 90 days. Part of the conversion process reviews every square foot and maximises revenue through retail, co-working spaces, food and beverage and event programming. This allows most Selina properties to break-even at only 45% occupancy, helping deliver growth even in challenging times.
Even Selina’s funding model is unique. To reduce its capital needs and expand at pace, Selina offers investment opportunities to local partners in each country of operation. The selected partners then fund either the purchase of freeholds / leaseholds or lend money to Selina to facilitate a hotel’s refurbishment. In return for greater flexibility and speed than traditional models provide, the local partners take a share of the profit from the hotels they have financed.
Positioned For Continued Success
Whilst history sometimes suggests being first to market doesn’t necessarily sustain a marketing leading position, the past 6 years have seen few operations with Selina’s scale enter the market. With their investment in technology, flexible operating model and innovative funding solution, Selina look very well placed to remain at the forefront of the market segment they created back in 2014. Indeed, in the next four years, Selina plan a 300% increase in their number of beds to reach 160k and forecast revenue to grow rapidly from $122m in 2019 to $1.8bn in 2023.
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(5) 2020, Selina. Selina Corporate Investment Deck.
(6) 2020, Selina. Selina Corporate Investment Deck.