Serviced apartments
independent companies to a situation where they retain their independence but come under one umbrella organisation. There was a clear need to build alliances, and that is just what we have done.” Oakwood’s Claire Barrie hints at another development which may accelerate the development of alliances. “The market has changed significantly over the past couple of years,” she says. “Corporates are now looking at global programmes rather than region-by-region deals.” Guy Nixon, a GDS convert since Go Native’s “hugely successful”
“Corporates are now looking at global programmes rather than region-by-region deals”
decision to go live last year, has yet to be convinced. “One of the challenges for corporates is ease of booking and, historically, serviced apartments have taken a lot longer to book. Now that we are moving into much larger buildings that are licensed for short stays, we are able to put these on the GDSs and make the booking process far simpler.”
And he concedes that while extended-stay clients remain the backbone of the business, transient traffic is increasingly important. “Most corporates will start mandating serviced apartment use around the three- or four-night mark, but the demand for one- and two-night stays is growing,” he says. SACO’s Ben Harper agrees that
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bigger buildings make a stronger case for a GDS presence – SACO now has six big aparthotels on its books, in Bath, Birmingham, Bristol and Manchester, with two in London, but has words of warning for those contemplating moving on to the systems. “You have to invest in it,” he says. “If you are going to do it, do it properly – just launching it isn’t good enough. And from the serviced apartment point of view you have to be aware that it will drive transient business.”
Silverdoor’s Chris Gee is unmoved.
“We don’t really touch the transient market – we have always had a different dynamic. We have a 34-night average stay, some of which is five-
HOTEL HYBRIDS
IF THE IMMEDIATE FUTURE is looking rosy for the serviced apartment sector, the longer term is looking even better – even though providers seem likely to face increased competition from the major hotel chains. Extended-stay aparthotels have been
around for years, but while they have enjoyed considerable success in North America, they have still to make much of an impact elsewhere, and with good reason, according to the Ascott Limited’s Joanna Fisher. “The challenge for hotels is how they position their extended-stay product against their hotel product – in many instances they are competing with themselves,” she says. And Go Native founder Guy Nixon suggests
that the mega-chains have been slow to respond to the serviced apartment challenge. “I would be surprised if they don’t [respond], but it will be interesting to see what they do,” he says. “Up to now, the only reaction has been to stick a few apartments on to a hotel, but if they are going to move into this market, they have to do so with a very distinct product.” ASAP managing director James Foice hints that the reaction will come. “I think that a lot of the business being won by serviced apartment providers is coming from the mid-scale hotel market,” he says, “because mid-range hotels haven’t really moved with the times.” Steve Thorne, director of sales and
marketing at Grosvenor House Apartments by Jumeirah Living, believes the hotel giants are fighting back – but that there’s still plenty of room for all. “It is perhaps natural for hotel companies increasingly to see the benefits of serviced apartments to the corporate travel community, and to want to have an increased share of that opportunity,” he says.
BUYER’S VIEW
“When we first started trying to capture this spend/activity about four years ago, there was a massive growth in the use of apartments, mainly due to the fact that we now had transparency. Employees became more aware of apartments, and many preferred them to a hotel. However, I now feel that the novelty has worn off a little, and numbers have flattened out.
“The initial appeal was not necessarily due to longer trips. There are some long-term assignments/projects that are making an impact, but a lot of it was down to personal preference – even for one-night stays – where travellers like the increased living space and the convenience of a kitchenette area. And in the case of our company, they’re not sharing – they are almost exclusively lone travellers.”
EMEA travel manager, financial sector
Grosvenor House Apartments by Jumeirah Living, London
“The growth of aparthotels and hotel- hybrids is one notable advancement by some of the larger multi-brand, multinational hotel operators, and one which continues to blur the lines between serviced apartment and hotel room. This is perhaps as a response by such operators to retain market share from the threat of the purer serviced apartment sector.” However, he adds: “The serviced apartment
sector still only accounts for a fraction of the total accommodation market – for London it is estimated at around 7-8 per cent of available stock – so it would be natural to assume there is still potential for massive growth in the sector for years to come. Thorne says the bulk of the opportunity
still lies in targeting the mid-level corporate market, but the biggest opportunity is for apartment operators to identify the needs of that market and deliver an apartment concept that meets the demands in terms of space, service and price – and to deliver something that truly identifies with its market. “There is opportunity for all sides,” says Thorne. “The strength of the serviced apartment sector for me remains in it being true to its original cause – that of providing a home-from-home environment for those away from home for extended periods.”
MARCH/APRIL 2014
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