My Hotel, Your Hotel: Crowdfunding in the Hospitality Industry. By Janelle Dumalaon ~ Weekly Exclusive - Global Views On Recent Trends Tuesday, 8th April 2014
Exclusive Feature: A cure for tuberculosis, a 3D printer for personal use, several documentary films on socially-relevant topics - Question: What do these three things have in common?
Answer: A group of people have decided society would be better of with them, and have pooled their money to transform them from ideas to realities. Some are further along the realization spectrum (personal 3D printers) than others (tuberculosis cure).
But nowadays, the model of getting enough support from as many people as possible to distribute cost and risk is applicable to almost anything - even to industry traditionally backed by big names and big money, such as the hotel business.
The example to have made the most headlines was New York real-estate company Prodigy Network's project to crowdfund the transformation of an apartment building at 17 John Street in Manhattan into an "an extended-stay residence designed to service the growth in the financial district including new development, luxury retailers and restaurants being opened in the area," according to the company's website.
The project is still on-going. However, in contrast to to the couple dollars one would donate to Kickstarter campaign for an underwater dance school, sharing in 17 John Street's load would cost a supporter $100,000 per REP, or real estate participation.
Of course, the comparison might not entirely be accurate. While one would donate – in the truest sense of the word, give money away without expecting anything back – to a project on Kickstarter or other similar crowdfunding platforms, participating in Prodigy Network's version of crowdfunding actually does come with financial gain.
This is the company's second experience with crowdfunding a prestige project. Prodigy Network's CEO Rodrigo Niño has crowdfunded a skyscraper in his native Colombia called BD Bacata, intended to be the country's tallest building. According to reporting by Bloomberg, around 3,100 investors put up $171.8 million of the $239 million needed to build the 66-story building.
Hotel con Corazan is another similar initiative. A hotel in Nicaragua which invests all its profits in a foundation dedicated to education, it calls itself “a hotel with a heart” and is now crowdfunding to ensure more hotels with hearts – ten, to be exact - come into being.
The initial locations listed on their crowdfunding website include Cambodia, Mexico, Nicaragua and Suriname. A ‘social share’ of around 650 USD (500 euros) would get one dividend is paid in the form of one free night in any Hotel con Corazón.
Whether closer to a social initiative, or toa variation of an existing business model, versions of crowdfunding have become commonplace, and in the hotel and real estate world as well, redefining the words “popular investment”. How much it will ultimately change the industry, remains to be seen – at least until the next wave of funding trends arrives. But the days where the ordinary working citizen could not be a “hotel co-owner”, might be long gone.
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Janelle Dumalaon is a correspondent based in Berlin, Germany. She has a Masters in Cultural Journalism from the University of Arts in Berlin and now works with journalists across the globe as part of international journalism organization, Associated Reporters Abroad (ARA). Janelle believes in traveling light, deviating from itineraries, and trying the street food.
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