The Power (and Profits) of "Hybrid Hospitality" - Charlie MacGregor, The Social Hub

Josiah: How do you create a vibrant multi-use space that attracts travelers and locals alike while maximizing revenue and profitability? In this episode, we're learning about this from Charlie MacGregor, founder of The Social Hub, and exploring the revolutionary concept he pioneered: hybrid hospitality. Charlie shares how blending different groups of people and using space flexibly has transformed the traditional hotel model. From co-working spaces that connect corporate travelers with local freelancers to seamlessly adjusting the inventory for guests and visitors based on market demands, Charlie's approach is reshaping the industry and showing us all what's possible. If you want to hear the backstory of how he started this incredible company, you can find it exclusively on the Hospitality Daily YouTube channel, which I've linked to in the show notes, There's a lot in there that sets the stage for our conversation, but keep listening to hear about the power of hybrid hospitality today. 

[intro]

Josiah: What is hybrid hospitality?

Charlie: For us, hybrid hospitality is when we bring different users and different demographics all into one building. And we're able to move our inventory around as well, depending on either time of year or time of market. So for us, we start with the foundations. We build a four-star hotel room, and we build hundreds of them. So our buildings are generally 400 rooms large. We have very, very large, extensive common spaces that we also bring to our hybrid hospitality office users. So we bring in co-working. We have extensive meeting and event spaces. And, of course, then we need lots of food and drink venues as well to make sure everybody's fed and watered as they go through the space. So, for me, hybrid hospitality is really blending different demographics with different spaces and being able to use those spaces, depending on market conditions, to maximize the occupancy of the building.

Josiah: I feel like in the last few years, hybrid hospitality has become somewhat of a buzzword. I feel like you coined or popularized this notion because you were early. You have been doing this for a long time, as you indicated. When you launched, you were operating in this way. Then, you went through a rebrand to the social hub to reflect that. I'm curious to hear, you know, some of, some more of your thoughts around the power of this. You talked about the social power. I think I hear you now talking about a kind of business operation, and I just muted myself, so I need to edit that out now. But I would love to get your thoughts on why hybrid hospitality is so powerful today.

Charlie: Because it works! Where I get sort of emotionally excited about it is bringing just different people together in a building, which creates a much more fun environment to be in. It's much safer. So, as a student accommodation provider, we are much safer than a regular student block of kids. As a hotel, I don't know the data, to be honest, but I would bet to say that our lobbies are also much more fun, exciting, and vibrant. But everybody balances each other out. And that's really what we're looking for as human beings. We're looking for an environment that is a reflection of real life. And when you take a step back, and that's what we really had to break down as TSH, as first the student hotel and then as the social hub, these barriers where we've built quite siloed environments. And either that's a business hotel, a leisure hotel, a conference hotel, or, you know, all these different sorts of products. And I, and I get the whole brand's level, uh, plays into that. And there's a lot of, a lot of advantages to it. But what we're offering is really breaking down those boundaries, breaking down those barriers, breaking down those silos, using our spaces and our extensive lobbies, not only to bring our guests together but really to connect to the fabric of the local neighborhood, to invite the locals into our spaces, to invite local businesses to use our spaces. That's where we saw co-working. We've been doing co-working for 10 years now, and co-working is such a good way to connect to the locals, whether that's you or I working for ourselves or for our corporate company and using the local co-working space as our local networking space, but also really connecting the corporate traveler. We have extensive four-star hotel rooms, and we're reaching out, of course, to the corporate traveler market, especially in midweek. But the idea that you come into your hotel room you go down to your lobby with your laptop, you know, what we're able to offer is a very vibrant lobby that is full of local freelancers, local businesses, the corporations are using our buildings. So you're not just connecting, you know, you're not just sitting in a hopefully a busy lobby, which is not often the case. You don't need to go to the local Starworks to get that vibrancy. You're getting that vibrancy, but you're also connecting to people who are in the local fabric of the business environment. So for us, It's kind of a win, win, win, win. And when you throw in the students to this co-working community as well, they have access to the next generation of talent. So whether that be soundboarding ideas or getting input on what's hot or what's not, getting access to the next generation of workforce, finding your next employee is one of the hardest things for many, many companies. And we have, coming off the mom and dad sort of conveyor belt, the next generation of talent. So it's a very good way for us to naturally connect businesses with the workforce, next-generation workforce, connecting with the corporate hotel market as well, and just kind of mixing it up, having fun, and not taking it too seriously. And it really works. It feels kind of natural, I think.

Josiah: I hear a lot of hospitality leaders wanting lobbies as you've described, but I feel like few have articulated it as specifically as you have. I think, just to repeat back to you, what I heard is sort of this three-part benefit of there's convenience, you know, this co-working opportunity provides the convenience of I have my laptop, I can do work. There are the vibes or vibrancy that you touched on and then the connection to others, right? Whether that's just social connection that we need or hiring or, you know, finding new colleagues and things like this. So it feels like it's integral to the guest experience. It's not just about vibes, but you're actually delivering real value to your guests is what I'm hearing.

Charlie: Yeah, I think so. I mean, that's certainly the feedback we have. And I guess a hotel, you know, you have a lot of facilities which are almost wasted on just one guest type. You know, you need a 24-hour, seven days-a-week reception team. You know, you often need a bar or restaurant, but you often only focus on the breakfast space. So, you know, for us, you're really utilizing this space much, much more. And I guess when you open the doors to the locals, even more magic happens. I have to say that, for me, this hybrid hotel manager is coming into the glory moments. They're really sought after. But it isn't easy. Initially, I don't come from a hotel background or the hospitality world. I didn't go through hotel school. But when we started being a hotel, of course, I needed a lot of hotel professionals to teach me how to be a hotelier. But what I find difficult was, there's quite a lot of sort of structure that you learn going through hotel school and certainly back 15 years ago that we kind of tried to shake out of people, you know because the idea that you invite the local neighbors to come into your nice calm lobby is kind of not what what normal old school hotels were wanting to happen. This chaos of a student walking through, going to the laundry in their slippers is like, you know, the last thing that you want in a four-star corporate environment. So we had to spend a lot of time kind of shaking that way of thinking out of our hotel teams while getting their expertise on running a professional hotel business. And now it's becoming a little bit easier, of course. You see many hotels that are trying to get into co-working and get the locals into their lobbies, et cetera. And that takes a different type of mentality from the hotel managers. So the ones that can do it are really being sought after in the market, which is quite nice to see that it's becoming popular.

Josiah: I imagine all your different offerings are really interesting on a business level because they provide some agility or allow you to respond faster. There are just so many different revenue streams I feel like you can pull from. Is that right? Do you feel like there's something powerful about hybrid hospitality from a business model perspective?

Charlie: Yeah, for sure. I mean, you know, it does add a level of complexation, complexion that I'm not going to deny. You know, it's not; you're not a cookie cutter for, by any way, a stretch of the imagination. You know, if you just look at your PMS, you know, general PMS, you know, back in the day had a calendar of like a hundred days, you know, that doesn't work when you're offering a room for a year. We're now not looking just for a room. The PMSs of the past, where most of them today, are still focused on just that room history. You know, I want to know your history, and it doesn't really matter if you want a desk, a meeting room or a bedroom, you know. So how do I find that? So it took us four different systems before we now work with Mews, which is, we joke, the founder and I joke that, or he says to me, if we didn't exist, they would need to create us because their whole PMS is designed for us. But that took a number of years. So that's a level of complexity for sure. When you look at the robustness, I mean, COVID is a great example. We lost 6% of our revenue overnight, the same as every other hotel. We stayed open all through COVID. We stayed EBITDA positive all through COVID. At the hotel level, we're managing to change our inventory or the guests, so to offer, instead of hotel, where there was no hotel guests, we moved our guests to students. And we had access to kitchens. So you're able to move your inventory around, and we basically do that twice a year. We have the academic year, which starts in September, so after the summer, fantastic. We say how many rooms do we want to release to the four-star market, and how many rooms do we want for extended stay, co-living, or how many rooms do we want for students. And then, you know, that goes through to the second semester, which is January, February as well. So again, we can change our shift. So if there's a dip in the hotel market, we can allocate more rooms to students and make sure that our occupancy is there. And we're able then as a hotel too, you're effectively reducing or increasing the size of your hotel exposure depending on market conditions on a twice-a-year basis, which gives you a lot of security and a lot of flexibility as well. And it doesn't change your core offering, nor does it change the fundamental guest offering. So it's a very robust business.