Serviced apartment developers are taking a partnership approach to innovation and new openings
Forging partnerships and innovation
"The demand is there. People love to try something new and the big companies are trying to develop brands to meet that need"
The serviced apartment market is still small compared to the global supply of accommodation, but as suppliers take on new inventory in cities as distant as Sao Paulo and Southampton, it is apparent that the model works anywhere.
To facilitate this growth, new business types are coming into play. Cheval Residences has traditionally owned its apartment buildings in London but has a management contract on its forthcoming Qatar property and is looking at others.
BridgeStreet has a management contract on the forthcoming Stow-Away near London’s Waterloo and, “We are looking at franchised and managed operation models to help develop our brands; financially it makes sense,” says managing director EMEA and APAC, Steve Burns.
Ascott is also considering this route: “In Europe we are predominantly an owner-operator because real estate value is stable but we have just started a franchise agreement in France and are looking at agreements in Brazil. In the Gulf, where as a foreign company we cannot own property, we will have more management contracts, and the same in Asia,” says area manager, Marc Sandfort.
This flexibility will help suppliers set up easily to fill gaps in locations, notably in Liverpool, Leeds, York, Brighton, Bournemouth and Oxford. Supply is also lacking in London, something Urban Stay hopes to help address with a planned expansion from 62 to 100 apartments by the end of 2018.
And increasing emphasis on customer experience means there will be investment in anything that facilitates that – creativity, technology and staff in particular, with continued emphasis on safety and security.
“Developers and designers are coming up with an ever more diverse selection of accommodation types to provide a
fusion between home, hotel, apartment, warehouse, retreat and loft styles,” says head of corporate sales & relationships EMEA and APAC for Q Skyline, Lorna Keen. “The demand is there. People love to try something new and the big companies are trying to develop brands to meet that need.”
Oakwood predicts a growth in alliances and partnerships between suppliers in response to economies of scale and an increase in businesses sending employees on international assignments.
“As millennials enter and lead the workforce, research shows that more expect an overseas placement at some point during their career,” says Tom Meertens, referring to the PwC Global Mobility Report 2020. And demand will continue to grow: “In EMEA during 2016, we saw a 19% increase in move-ins compared to the previous year and we expect this trend to continue,” he says.
Dual-branded properties will also proliferate. “For the investor/hotelier, one of the main attractions is the potential to utilise land more efficiently,” says Cycas’s John Wagner. “Where it may not be viable to have one 400room hotel, two 200-room hotels of different brands and varying in price is much more feasible in terms of filling rooms. And the guest benefits from a choice of two brands and a range of shared amenities that are often of a higher standard due to the costeffective nature of being able to share.”
If growth in inventory is matched by growth in demand, the sector will be hard pressed to stay ahead of the game. Interesting times.