Host Hotels & Resorts has signed a joint development agreement with IBM Research, designed, it said, “to enhance the company’s predictive analytics capabilities”.
The agreement came as the brokerage and real estate management worked to incorporate AI and other technologies into their operations as they came under pressure to improve yields as the cycle moves on.
James Risoleo, president and CEO, Host Hotels & Resorts, said: “I am thrilled to announce this collaboration, which will combine Host’s industry-leading Enterprise Analytics platform with IBM’s unparalleled expertise in AI and machine learning, to seek to maximise investment value across the portfolio.”
The two companies will collaborate to develop predictive models designed to improve investment decisions by using IBM Watson APIs (application programming interface) and research expertise in natural language processing and machine learning to extract predictive insights from structured and unstructured data.
Sophie Vandebroek, COO, IBM Research, said: “We look forward to applying the deep expertise of IBM Research in AI and predictive analytics to help Host work to unlock and connect insights from millions of data points, both qualitative and quantitative, giving them a better picture of the future.”
Watson is not alone and new technologies are on offer throughout the real estate sector. According to a study undertaken by PwC last year, 28.2% of the jobs in real estate were at risk of being lost to automation.
PwC’s Emerging Trends 2018 report concluded that those real estate companies which did not embrace change were at risk of being left behind. The company said: “Huge amounts of capital are flowing into the sector, and it will flow to the companies that can use technology to give themselves even the smallest edge.
“With real estate late in the cycle, investors and owners will need to utilise any means necessary to improve performance of assets – or maintain performance during a downturn. The greater the sophistication, the easier it will be to raise money and make money in a crowded field.”
The group said that there were two sectors where the effect of disruption was increasingly felt in 2017, and which it was felt would continue to see huge changes over the coming years, and that was offices and hotels. Part of this disruption was related to players such as Airbnb, but PwC said: “Real estate is continuing to evolve into something that is less about ownership and more about access – or services and outcomes.
“In simple terms, this means that we are seeing a relative value-shift from the passive ‘bricks and mortar’ component to a more dynamic, operational business. This is important for investors – who either need to find innovative and cost-effective ways of accessing operational expertise and innovation, or face diminishing returns.”
The brokerage houses were keen not to be left behind. Last year saw JLL join forces with specialist startup investor Seedcamp and Starwood Capital to launch Concrete, an initiative to help identify and support the most promising proptech startups.
The group also signed an agreement with German legal and real estate AI company Leverton, relating to its automated lease abstraction software, which enabled the identification, extraction and management of key terms and data from corporate documents, such as leases and contracts, in more than 20 languages.
It was hoped that JLL clients will benefit from optimised data management, more efficient processing of documentation, reduced operational risk and a more robust audit trail.
Vincent Lottefier, global president, integrated portfolio services, JLL, said: “Technology is transforming the world of real estate. We strongly believe that the combination of mind and machine represents the ultimate frontier in unlocking real estate portfolio insights.”
Gareth Barlow, executive director, Colliers International, commented: “Is this evolutionary process a threat to the industry? In the short term, I think not. In the medium to long term, I believe we are going to see a reduction in some of the workforces that we are used to seeing today, and the creation of new professions penetrating the real estate market.
“Trades such as drone operators, VR & AR operators, operators of 3D printing technologies, coders, engineers, people who can create and develop technology solutions, and people who can operate, collect data, analyse and interpret the data to offer human advice and opinion to real estate owners and occupiers, will be the professions that only human can perform.”
HA Perspective [by Katherine Doggrell]: Even just a small rummage in the technology available to the real estate sector revealed multiple vendors offering an array of data-crunching, time-saving, cost-saving, people-saving delights. For the brokers, it’s a matter of showing the shiniest to the owners to convince investors that they are ahead of the game.
But first things first. Mark Essex, head of public policy, KPMG, told us that a good place to start would be building management, and ensuring that the properties themselves were more efficiently used. Usage of meeting rooms sprang to mind, and other extraneous areas in hotels which may not be pulling their weight. These things may be obvious, but, as we hear from, say, Paul Slattery at Otus & Co from time to time, there is not always a convincing business case for a ballroom. You can convince an owner that they need a basement conference suite, you may have to work harder to convince a machine.
As for the brokers themselves, they have been hearing the clock ticking on the traditional let-me-unlock-the-door-and-explain-what-a-bathroom-is operation for some time, as has been witnessed by both JLL and Colliers beefing up their asset management teams and both JLL and Christie & Co hiring bankers. As PwC’s Euan Cameron told delegates at the Hotel Distribution Event, hosted by Hotel Analyst, last year, those who thrive alongside the machines will be those who can bring human intuition to bear on the information garnered by the robots.
Of course, sometimes the solution is staring you in the face. Faced with the most perplexing of hotel real estate issues – who will work in it – Essex said: “Offer staff accommodation onsite. Who wouldn’t want to live in central London for GBP20 a night?”
Unused basement space? Sold.