The Covid-19 is a gentle reminder to the people that pandemics reoccurring events that had happened in the past and continue to happen in the future. The current outbreak has a serious economic impact. As we are in the middle of the pandemic, it is difficult to determine long term effects. The Covid-19 had brought many businesses at the extinction. Many businesses shut down due to the unprecedented situation.
The business model prevailing now is changing as businesses are changing their agreements with property owners regarding the revenue sharing agreements instead of fixed lease commitments or minimum assurance options. Before the pandemic, most landlords preferred fixed lease commitments and minimum assured guarantee. The revenue-sharing model emerged as the most accepted contractual agreement between the operators and property owners.
Jitendra Jagadev, CEO of Hello stated that there will a change in mindset after post-COVID-19. The revenue share structures are rising as no one is acting as a buyer or seller in the deal anymore, everyone wants to be partners now. Due to the nationwide lockdown, businesses are having a major impact. It is challenging for the companies to keep their financial wheel turning due to the uncertainty in the global financial environment.
NestAway technologies have acquired about 5000 beds in the past two months. Many property owners found that the fixed lease commitments and minimum assurance clauses are not good to open up revenue-sharing deals. The right way to share the revenue with the operator with no guarantee will become common, the landlord will collaborate with brands that can deliver the promises. This can be a new model said by Kahraman Yigit, CEO of Olive by Embassy.
The International hotels don’t lease buildings, they prefer management agreement or license their brand as a franchise. Most of the operators in India adopted the strategy of the entire block or residential units from the property owners and subleasing it to users. The co-living operators had to find new marketing strategies in order to cope up with the pandemic situation. The deadly virus has hit each and every sector in the economy. In order to keep their business moving many have changed their business model.
