CitizenM’s Facebook HQ Hotel Deal Says A Lot About Where Corporate Travel Is Heading

CitizenM’s Facebook HQ Hotel Deal Says A Lot About Where Corporate Travel Is Heading

A deal to build a hotel next to the headquarters of one of the world’s biggest companies was four years in the making. Post-Covid, expect these deals to come a lot faster and thicker.

Dutch hotel group CitizenM has signed a deal to build a 240-room hotel in Menlo Park, California, next to Facebook’s sprawling Frank Gehry-designed headquarters.

There’s not much new in seeing hotels spring up around corporate HQs, of course, but they tend to veer towards capital cities. Now secondary cities, including suburban areas, are where smart hotel developers will set their sights in the future.

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The working-from-home trend has not so much distributed company workforces as dismantled the very concept of the office. Regular trips to the headquarters, to physically work and catch-up with colleagues, might be the most popular type of corporate travel to emerge from the crisis.

So how did CitizenM end up here?

“About four years ago, Facebook kicked off a tender to find a hotel partner, and we participated in that competition,” Ernest Lee, CitizenM’s managing director, development and investments for North America, told Skift, “and we were ultimately selected.”

CitizenM’s proposed hotel for the Facebook Campus at Menlo Park in California. Picture:

Since winning that tender, CitizenM spent years going back and forth with Facebook on reaching a “mutually compatible translation” for the hotel. Planning approval was only granted by the municipality a few months ago, which was when the deal could be signed off.

These types of hotel partner tenders aren’t that unusual, Lee claims, and more may be on the horizon if companies want to create similar spaces for staff to stay at when checking in: “It depends on who, and where the location is. But I’d say a project and an opportunity like this, it’s not uncommon.”

In For The Long Haul

Hotel developers need to adapt, because the genie is out the bottle according to one hotel expert.

“The world will never revert back to the old way of working, even when a vaccine for Covid-19 is found,” said Michael McCarten, principal consultant at consulting. “Businesses have to face up to the new reality that they will need to build and maintain strong hybrid working cultures.”

Although travel remains mostly off-limits, employers should now be preparing for how they engage remote workers. There’s a risk some will feel marginalized from day-to-day activities and decisions, and consequently feel like second-class citizens, McCarten argues. If that does happen, those companies shouldn’t be surprised if they lose valuable staff to other companies that can embed a strong hybrid culture.

“A fundamental component of a hybrid culture is communication and collaboration. While strong communication protocols will ensure remote and office employees are ‘heard’ equally, there is a still a strong requirement to bring groups of people and teams together face-to-face periodically to socialize, strengthen relationships and share ideas,” he added.

Looking towards 2021 and beyond, desks, donuts and food deliveries may not be enough.

“The big companies are pretty open about their plans to go remote first,” agrees Lennert de Jong, CitizenM’s chief commercial officer. Salesforce is one of the more recent examples of a company allowing staff to continue working from home until at least July 31 next year.

The Great Experiment

It’s not just headquarters. Lee pinpoints trends that will determine other future locations. For example, where do companies want to go to be informed and inspired? Not all companies will have offices designed by award-winning architects like Frank Gehry. “Some of that will take on a little bit of reshuffling, especially as more of these corporates become decentralized and distributed,” Lee said. “So if you’re a startup, you could could have a monthly offsite anywhere. That could be your traveling office, and that could take on a new business case for business travel.”

Also, where are decision makers located? In the U.S. CitizenM keeps its eyes on locations around Seattle, Silicon Valley, New York and Austin. Sectors also come into play, and CitizenM wants to cater for those “knowledge economy companies”, so those in the technology, media, finance and business services sectors.

Business does mix with pleasure, however, and De Jong said he’s still on the lookout for sites in capital cities in Europe, where distributed workforces may take longer to emerge, due to tax differences across different countries.

Either way, opportunities are there for the taking by hoteliers, and Lee believes this is the only time the hotel industry, when it comes to business travel, will ever have a chance like this. “The experiment can only work because occupancy rates are so low,” he said.

Meanwhile, CitizenM is looking to further capitalize on the remote trend with a new subscription model, involving a “work-sleep-meet-entertain hybrid”. De Jong argues hotels need a “transactional” relationship even with guests in the lobby.

“You might not have an office, especially in the next couple of years, so there’s a need for a social space, and we’ve had a lot of conversations with corporates about this phenomenon, and they all confirm this is something on the horizon,” he said.

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Photo Credit: CitizenM is building a 240-room hotel next to Facebook’s Menlo Park in California. Lionel Laurent / Bloomberg

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