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With the rise of “Innovation districts,” there is a movement in the hotel sector to open properties in specific regions that cater to the pervasive creative/start-up culture that is happening these days.

For example, Proper Hotels, a new lifestyle hospitality brand is attempting to do this by opening a property in San Francisco’s Mid-Market neighborhood, a key innovation district.

According to this Skift article, brands like Proper Hotels are trying to leverage the rise of “urban residential/commercial mixed-use environments that blend historic ‘hoods with high-tech startup firms, DIY culture, low-fi attitudes, and creative influencers of all backgrounds and economic classes.”

While this seems a like a viable growth strategy, it raises the issue that this could actually be another ‘tech bubble.’ For example, many of these areas of revitalization may not have enough people working in them to create a real demand – or it may take some time before this happens.

In addition, many of these brands will want to make an investment in innovation to meet the needs of members of this “new start-up culture.” Automated butlers certainly make for great publicity, but the cost of implementing and managing them could significantly erode a brand’s profit margins.

Furthermore, the cost of living in an innovation district can be high for many of younger professionals. This means that by catering primarily to millennials, hotel brands could miss out on the opportunity to gain revenue from a more prosperous audience: baby boomers.

Finally, what happens if this new technology bubble does burst? Hoteliers may find themselves investing in areas that may never actually become revitalized innovation districts.

Innovation will continue to be paramount for hoteliers. However, with the right expansion and technology-development strategies, it is possible to establish lasting brand loyalty and gain significant financial returns.

It is well worth it, however, to be cautious in these innovation districts.