Business management & development

“Hotels have become MUDs in their own right,” observes Dexter Moren, founder of architect’s practice Dexter Moren Associates, which specialises in hospitality design. “Most hotels we work on are much more than guest accommodation. There is a real focus on engaging and providing facilities and services to the local community. This includes leisure as well as co-working spaces, deli and retail.” Moren suggests that, as they are 24-hour operations,

hotels can be a real boost to dying high streets by supporting local retailers. This could be by providing collection and pick-up after hours for dry cleaners, florists or a host of other businesses. One approach to the MUD concept is to repurpose

existing properties and incorporate residential and retail elements. Another approach – one that is attracting a growing number of investors – is the development of a purpose-built site with hospitality at its heart that works in combination with a broad mix of living, working, retail and entertainment spaces. The modern MUD is more than just a floor of retail with apartments above. It can be a blend of serviced apartments, hostels, sports and leisure venues, co-working spaces and even retirement living. “MUDs are spreading fast now,” says Marloes

Knippenberg, CEO of global mixed-use operator Kerten Hospitality. “Real estate developers are often focused on the bricks and mortar and the speed of development. Now, people have become keener and smarter, so developers are ready to look outside their comfort zone.” To have a single-use asset has become a costly investment,” she remarks. “So, we have worked on developments with long and short-stay components, work environments and related services. The perfect mix depends on the location and what else has been built around it. What investors need is visionary owners who see where the world is going.”

Connecting with the community Kerten styles itself as a disruptive and dynamic force in international hospitality. It focuses solely on the management of mixed-use developments in key global destinations. Knippenberg is the driving force behind the company and she has grown its operational and pipeline portfolio from one brand in one country to more than 35 development projects across three continents. The company creates lifestyle destinations that combine branded residences, serviced apartments, luxury and mid-market hotels, fully serviced collaborative workspaces and food and beverage concepts, with a focus on the community. It manages a portfolio of 11 owned brands including Cloud7 Hotel and Residence, The House Hotel and Residence and a co-working and business club concept called Ouspace.

Hotel Management International / “We started talking about MUDs five years ago,”

notes Knippenberg. “Back then, owners were being sold cookie-cutter proposals. So, we wanted to do something different. The idea was that brand collaborations could increase footfall. A MUD is more than just retail and residential. It is more than building an apartment building and putting one floor of retail on the bottom. It is about connecting people.” This means shaping the future for better living and

improving communities in the process. With a string of recent projects across the Middle East, the company has worked with some of the region’s largest developers, including Tatweer Misr in Egypt, and has recently opened a new entertainment and business centre in the Al Rawdah district of Jeddah, Saudi Arabia, of which The House Hotel is a key element. Kippenberg argues that the most important factor for each development is that it reflects the needs of the location. The blend of housing, hospitality and workspace is defined by what will complement the community. “Short-stay versus long-stay varies greatly between projects, but the hotel component is always needed to provide services,” she says. “We run our own hotel brands because big hotel brands are not built to collaborate. We operate the hotel but we give up the lobby, which is prime real estate for retail.” For Moren, the growing interest in such

developments is symptomatic of changing attitudes among investors, who are increasingly open to novel ideas. This broadening of horizons dovetails with the willingness of hotels to reach beyond their front doors and connect with local communities. “Traditionally, the investment community has had a

kind of apartheid attitude to real estate, eschewing anything other than pure retail, pure offices and so forth,” Moren says. “In the recent past they’ve realised that mixed use, like a mixed investment portfolio, is actually a risk hedge and this has driven a more positive stance towards MUDs.” Moren also points out that flats or offices without

other facilities in immediate proximity are becoming less and less desirable. Furthermore, hotel food and beverage has also morphed into deli-style retail, with local residents able to buy fresh or artisan produce on their way home.

Investors open their eyes

The flexibility of MUDs is increasingly catching the attention of investors, who see them as a financially sound proposition that diversifies income streams and eliminates the dependency on one asset class. “There is no one-size-fits-all development, no cookie-cutter template,” observes Russell Kett, chairman of advisory consultancy HVS, which has supported the hospitality sector through the last 40 years of its evolution.

21 54%

Survey respondents that said they are currently investing in mixed-use assets.

PwC and the Urban Land Institute

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