Supplier consolidation, new technology and increasingly diverse products are the hallmarks of a maturing industry, says Catherine Chetwynd
For the burgeoning serviced apartment sector, high demand and low supply made 2017 a good year for operators, while their corporate guests absorbed rising rates.
“The hospitality sector overall is growing in the UK and that affects serviced apartment and hotel performance,” says Director of Business Development for data and analytics company STR, Thomas Emanuel. “Operators were able to continue to push average rates, leading to REVPAR increases; and for the most part, the country seems to be absorbing new supply,”
There were some 50 new properties across the UK last year, bringing 1,000 extra keys across the serviced apartment industry and occupancies are averaging 81.7%. This is not the norm for most cities and in London, Edinburgh and Manchester this is despite growth in supply. Serviced apartments have yet to make their mark in secondary or tertiary towns and cities but hotels in those locations are trading at over 75% occupancy, so serviced apartments will follow.
Suppliers are responding to this: “We have seen an uptick in interest from corporate clients and we are adding more serviced apartment inventory at our deepest corporate rates,” says Managing Director for HRS UK & Ireland, Douglas Green.
“The demand from business travellers for more flexibility and choice has been a major boost for players like Airbnb and serviced apartments,” says Senior Analyst for Euromonitor, Miles Agbanrin. “Airbnb is now the largest player to make a distinct move into business travel and own serviced apartment properties.”
Many business travellers are keen to have Airbnb properties in their programme and IMG is responding to that: “We are talking to Airbnb because travellers want to book this sort of accommodation but it is against policy currently as our risk people don’t like the thought of our people staying in homes that don’t have strict safety checks in place,” says Global Travel Manager, Hero Trew.
PWC brooks no argument: “We do not promote Airbnb through PWC,” said Sam van Leeuwen, Head of Hotels and Venues, at the ASAP conference. “Our global security teams see it as an unmitigated risk and that message has gone out globally.”
Meanwhile, ASAP, the Association of Serviced Apartment Providers, continues to emphasise and promote members’ point of difference, with a move to being an 100% accredited-only organisation.
“Our key focus for this year is getting corporate buy-in for duty of care and quality accreditation,” says Marketing Manager Joyce Cawthorpe. “We are in discussion with Reviewpro, which aggregates customer reviews, and that will give us real-time feedback about how everyone is performing – it really enhances the quality accreditation programme,” she adds.
Market consolidation SACO’S recent acquisition by Brookfield is the latest in a raft of movements in the sector. Last year alone, Hua Kee invested in Cycas, Choice Hotels purchased Woodspring Suites, The Ascott raised its stake in Quest Apartment Hotels to 80%, Q Apartments bought Skyline International and Mapletree bought Oakwood Worldwide.
“We are at the very beginning of the growth of the sector – there is definitely potential for further acquisitions,” says Managing Director of Hospitality for JLL, Max Thorne. “Those businesses that have invested in property and in technology to enhance their operation will be of particular interest. I see 2018/19 being an opportunity, largely in the Brexit turmoil, for capital investments to take advantage of foreign exchange rates and consolidation.”
Tom Meertens, Managing Director of EMEA for Oakwood Worldwide, says: “Our acquisition by Mapletree Investments has helped accelerate the growth of our portfolio and we have more than 20 Oakwood branded properties in the global pipeline.”
Chairman of Quest, Paul Constantinou, adds: “This type of investment is good for the industry as it will see the market share of serviced apartments grow. They still comprise only 5% of the accommodation market in the UK, whereas in Australia, for example, apartments make up 25%.”
And regarding Ascott’s investment: “Quest is now able to compete on a global scale. We are able to establish stronger relationships with corporate clients located in key geographic hubs where Ascott’s brands operate such as Singapore, India, China, UK and Europe, which is having a flow-on effect to our properties in Australasia,” he says.
The booking bug Technology continues to be a contentious subject in the serviced apartment sector and despite increasing claims of live availability, as soon as a customer wants to extend a booking, they need human intervention.
Habicus’ online booking tool Orbi has been in development for a year. It allows buyers to log in, book, manage the reservation, see MI and pull off reports.
“We have customised the booking of serviced apartments for travel managers and guests, and travel managers can set approved properties so that they are highlighted when users search for an apartment. The system shows live availability and we bring online and offline, booked through account managers, together, reducing fragmentation,” says Caroline Saunders, Group Head of Marketing for Silverdoor. The company bought Citybase in 2016 and the two now operate together under parent brand the Habicus Group. If a guest needs to extend their stay, they are transferred to their account manager.
Bridgestreet’s technology operates in a similar way. There are more than 140,000 properties on the site, with another 200,000 to load this year, and some of this is available in real time, according to whether the supplier has released it. In addition, “If someone is extending a booking, they can re-book on line, via the call centre or go through to the account manager – there is always the choice between self-service and someone to help,” says CEO Sean Worker.
Prompted by the difficulty of putting together guest information at serviced apartment operator Lateral City, Julie Grieve founded Criton Apps. It allows operators to turn guest information into an app and update it as required. “Guests use the app to interact with guest technology such as online check-in, controlling air conditioning and ordering room service,” says Grieve. PMS integration follows.
Criton is building an app to contain those for each of Mansley Serviced Apartments’ six locations. Guests can choose what is relevant to them and, “It will also allow the operator to upsell their locations,” says Julie Grieve. Mansley introduced apps to digitise bookings and posted on it videos of staff demonstrating how to use washing machines or change the heating, for example, which is popular with guests.
Prestige Apartments uses online booking platform Elina, which is designed for serviced apartments, holiday rentals and lodges. “It shows live availability and you can add cleaning, airport transfers etc,” says Managing Director Alex Wood. “We had to have consecutive availability, so that the system did not split a booking between apartments to fill available space.”
And SITU, with a global network of 36,000 apartments, introduces booking with live availability this year; properties offering this will be identified with a lightning bolt symbol. TMC Clarity has appointed SITU as its preferred apartment provider worldwide.
SACO’S mission is to become a major operator of aparthotels in Europe and use technology to do it, according to CEO Stephen Hanton. This is partly driven by Brexit, which threatens a huge shortage of unskilled labour. Robot cleaners are taking over corridors in SACO’S Amsterdam and
Bristol properties and, in a trial at The Cannon in London, guests have been using a mobile app to check in online, access the building and open apartment doors. Large numbers of guests also used it to communicate with staff.
SACO plans to deploy that and other technology in its Manchester Locke aparthotel, which opens with 160 rooms, four restaurants and two bars. “We will have check-in kiosks where guests can access their reservation and cut their door key,” says SACO’S director of IT Dan Dickinson.
“We will also offer reception but the automated element will help reduce the number of people at the front desk, which is especially useful at properties where the number of rooms and F&B outlets means a lot of activity in the reception area.”
The company will add almost 1,000 units between 2018 and 2020 and further aims to more than double its footprint under its new ownership with an expansion programme targeting 12 major cities across Europe including Berlin, Dublin and Paris.
Staybridge Suites Amsterdam will have mobile check-in and Ascott has trialled this in France. It is also experimenting with mobile messaging, allowing guests to use Whatsapp or Wechat to make reservations direct, for example. Chatbot trials follow. Mobile check-in and room key are also available at Lamington Apartments’ Room2 property in Southampton, where a selfcheck-in counter is another option.
The spice of life The evolution of the sector continues apace. Aparthotel Adagio Access has experimented with micro apartments – smaller rooms and a communal kitchen – in Frankfurt and plans more. This year, Lyf enters the fray with two openings in China, and now Yotel is also a contender.
facilities offered by a full service hotel such as restaurants and meeting rooms,” says Cycas Director John Wagner.
Adagio Birmingham reflects the brand’s latest thinking, with a communal working space and an Object Library, allowing guests to borrow items such as a guitar, rice cooker or mobile charger.
Meanwhile, with the imminent launch of three aparthotels this year, Go Native has emerged resplendent under new brand Native. Empire Warehouse opens this spring on London’s South Bank with 24-hour check-in, free Wifi, communal work space and free pantry. The Anchor Line in Glasgow opens in the summer and London Warehouse in Manchester follows.
Lamington opens its first Room2 aparthotel (comprising 78 units) in Southampton in March. “We have been inspired by Hoxton and Citizenm and the design has references to cruise ships,” says Director Robert Godwin, who is currently in discussions about a building in Glasgow.
Never short of dynamism and creativity, the market is hosting a newcomer in the form of MY Serviced Apartment Consultancy, which handles all aspects of constructing a service apartment programme for those wanting to take advantage of direct sourcing and pricing, with potential for considerable savings over booking via a third party.
All properties are assessed to ensure duty of care, safety, quality and comfort, and client portals allow buyers to book and correspond directly with operators in their programme. “We believe that operators are more accountable if they own the relationship with the corporate, paving the way for greater client service,” says the consultancy's founder, Gary Hurst. The initiative is one more sign of the serviced apartment sector's maturation.
A new-look property from top to bottom, Aparthotel Adagio Edinburgh Royal Mile is the first aparthotel to feature new apartment designs with lighter, brighter and altogether more dynamic living spaces. The public space is a welcoming, comfortable and stylish living area where guests can meet, share and collaborate. The design is inspired by the architecture and nature of the Edinburgh landscape. Located on the world-famous Royal Mile, minutes from Edinburgh Waverley station, the aparthotel is perfectly located for business and leisure in Edinburgh. adagio-city.com