SERVICED APARTMENTS
two big M&A deals. In 2017, Oakwood was acquired by Mapletree Investments, while Brookfield’s £430 million purchase of SACO was confirmed last year. As 2019 dawned, news came that real estate lender ZSL Capital plans to invest more than £100 million in serviced apartment projects by the end of 2020 – further proof that investors are buying into the serviced apartment opportunity. Cheval’s Westwell believes consolidation will come soon. “Some of big brands have said they wish to grow their footprints but the only way they can do so is to acquire others. I believe the gap between the large and small operators in terms of volume will get bigger with fewer mid-size players in the market. This will make the segment even more competitive to hotels because of conversion rates and greater profitability.” So, with micro apartments and new con- cepts proliferating, should we be referring to serviced apartments as alternatives to hotels? “No,” says McCrow of The Apartment Service, “because most of these new extend- ed stay products are types of hotel run by major hotel chains. The real point of differ- ence in a serviced apartment is the lounge, fully equipped kitchen and their locations outside city centres.” However, Oakwood’s Moore believes the definition of serviced apartments is already too fragmented. “Serviced apartments
cater to business travellers by providing a space that reflects their lifestyle. They allow relocating and travelling guests to settle more easily by giving them a stress-free transition.” The challenge for the serviced apartment sector is a lack of understanding about its product due to its sheer variety. It’s hard to communicate these differences consistently across all channels – especially for long stays. An evolutionary process is well underway but, as Billy Hughes, area general manager (UK) for The Ascott, points out: “There’s still lots of work to be done with The Association of Serviced Apartment Providers to classify each type of accommodation so that we can achieve greater clarity and understanding.” SilverDoor’s Saunders believes greater
transparency is needed. “The relationship between the operator brand and the agent is defined, and bookers tend to un- derstand the market, but the disconnect occurs with the guests themselves.” The sector will no doubt continue to aim higher, offering better connections to travel buyers, agents and guests alike.
BUYER’S PERSPECTIVE
Jan Jacobsen is global accommodation manager, AIG. He was voted Serviced Apartment Travel Buyer of the Year at the 2018 Serviced Apartment Awards
“AIG HAS DEVELOPED a tool that compares the prices of hotels and serviced apartment by apartment type and length of stay, in different destinations. For example, a four-night
stay in a serviced apartment in New York was 37 per cent cheaper than a hotel. A four-night stay in a studio serviced apartment in London on the same dates was 26 per cent cheaper, and 22 per cent cheaper in a one-bed apartment compared to a hotel. “We are doing a lot of education internally within AIG to drive
buyingbusinesstravel.com
serviced apartment usage. Our travellers like them because they have space and flexibility, al- though some say too much space makes them feel lonely! “As well as being very cost-con-
trol conscious, serviced apartment adoption is also driving traveller satisfaction. Our target is for ser- viced apartments and aparthotels to account for 40 per cent of our total accommodation usage. “Serviced apartments are be-
coming over-complicated, or they are so vanilla they end up pleasing nobody. A good serviced apart- ment is maintained to the same standard as a hotel. Issues get
fixed. The kitchen and bathroom are of a high specification. “The furniture should be as
good as the traveller has at home because their expectations are based on their home environment. “Sourcing is not as much of
an issue as it was. New players are coming into the market with the necessary understanding of corporate sourcing. “My frustration is the big hotel
chains’ systems do not have the same flexibility. No one is prepared to spend the money on a ‘Clapham Junction’ to which everyone con- nects and buys from – effectively, a GDS for serviced apartments.”
2019 MARCH/APRIL 123
SilverDoor’s OrbiRelo online booking platform
Oakwood Chicago River North Living
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