‘Bright, But With Increasing Complexity’: Siemens' David Armour On The Future Of Hospitality

In the face of economic headwinds, some CRE asset classes have proven to be more resilient than others, including multifamily, industrial and hospitality.

The hospitality sector, in particular, has made a notable rebound following a significant blow from the pandemic. At the beginning of the pandemic, revenue per available room sank to $17, a record low. In 2023, room rates have risen more quickly than projected, signifying that demand is growing again. 

While appetite for the hotel experience is increasing, guests' demands have shifted in favor of sustainability and personalization — things the industry is hurrying to embrace. 

“We can build solutions through sustainability with energy-efficient utilities while still creating more personalization for the hotel experience,” Siemens Head of U.S. Commercial Markets David Armour said. “Guests want to be able to personalize the room behavior, just like they do at home. And we’re in a time where personalization and sustainability are intersecting.”

Bisnow spoke with Armour about the new trends the hospitality industry should be paying attention to, the importance of a personalized and sustainable hospitality experience and what inspired Armour to speak at Bisnow’s Miami State of the Market event on Sept. 12.

Bisnow: What are some trends or opportunities you see in the hospitality market?

Armour: Hospitality is roaring back from a three-year downturn, and investments in the U.S. market are accelerating. In 2023, there are more than 3,000 new hotel construction projects initiated, and the forecast is for this level of activity to continue for at least the next few years. 

The pandemic had a serious impact on hotel staffing, both in housekeeping and with technical staff. The competition for staff is fierce. To bridge this gap, property owners are looking to the virtual space to use smart technology to provide a virtual extension to staff productivity. 

Most industries in the U.S. have a keen eye on sustainability. The reason is quite simple: It’s good business. In hospitality, guests are now seeking hotels focused on sustainability with features including the availability of electric vehicle chargers, which have become required infrastructure in many geographies.

It is well established that between 60% and 80% of the energy used in a typical hotel is consumed in the guest room. With smarter energy management in those spaces, there would be a business-reasonable break-even point. Improved energy management may also be necessary to, for example, provide energy to the EV chargers. In many geographies, the utilities do not have enough energy density to meet the increasing EV charging demands. Therefore, an intelligent use of the energy on campus will be required.

Bisnow: How is the hospitality market adapting to the rising importance of sustainable accommodations? 

Armour: The major hotel brands, including owned and franchised properties, represent 65% of the global development pipeline. These brands have all committed to a carbon-neutral future and are engaged in sustainability programs. 

There are two main drivers behind the focus. First, guests are increasingly looking at hotel sustainability in their purchasing decisions. Secondly, many corporations are now pushing their traveling employees to rent EVs that may require charging at the hotel. Being more sustainable is also a good form of business resilience. 

The move from fossil fuel to electric buildings and cars is placing stress on the utilities’ ability to provide all the energy that is requested. End users will have to get more structured in the way they use energy to maintain business continuity.

Bisnow: What inspired you to attend Bisnow's hospitality-focused events?

Armour: The Bisnow forums bring interests together from the investment and developer communities along with solutions providers. They are highly interactive, so the information exchange is considerable. 

The events are targeted both geographically and in subject matter, so we can be very focused in our messaging. Bisnow has a keen eye for locations where the selected vertical market focus is growing, so we are reaching a target audience that is growing and is looking for good ideas.

Bisnow: Can you talk about your role as Siemens’ U.S. head of the commercial markets? How is Siemens using innovation to make the hospitality guest experience more compelling?

Armour: Siemens recognized long ago that the way to be relevant in any market is to focus on its unique needs. That focus is only possible with a more intimate understanding of the way the business operates and the gaps that exist.  

My role is to be intimate with the hospitality market so that Siemens’ engagement is relevant and compelling. Siemens invests $5B annually in research and development to lead through innovation. We channel that R&D investment through our vertical market focus so that solutions are immediately relevant in the marketplace. 

It is often the case that some of the best solutions come from other vertical markets. The digital twin that is just beginning to be used in hospitality and commercial real estate has been in use by Siemens for several decades in the factory and industrial markets. My job is to leverage that knowledge and synthesize appropriate use cases for hospitality.

Bisnow: Do you see the hospitality industry pivoting toward a smarter and more digital experience?

Armour: The hospitality industry has been pivoting to digital for some time. Many hotels already have online guest room selections and digital keys for room entry through a smartphone. 

We see the future having a greater amount of guest personalization along with a focus on healthy environments. Much of this is driven by the hotel guests' expectations that they will experience the same level of comfort and adjustability that they now enjoy at home. Hotels also want to reduce energy use in a guest room when it isn’t occupied, but the guest wants to have the right temperature/level of comfort when they are in the room.

One of the lessons coming out of the pandemic is that hotel guests now expect a healthier environment and clarity on how “healthier” is being delivered. Part of that journey will require bringing in more fresh air from the outside while balancing with the need to climatize the air within the sustainability parameters for each facility. The future is bright, but it will have increasing complexity.

This article was produced in collaboration between Siemens and Studio B. Bisnow news staff was not involved in the production of this content.

Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to studio@bisnow.com.