BTN Europe presents an overview of business travel and MICE predictions for this year
Despite the competition from Airbnb, serviced apartments continue to flourish in the corporate travel sector
Should one wish to contact the Association of Serviced Apartment Providers, do not google ‘ASAP’. Apart from the Army Substance Abuse Programme and the AIDS Society of Asia and the Pacific, there is also an outfit called the Association de Sauvegarde at d’Accueil des Perroquets – the charitable organisation for concerned French parrot-lovers. The ASAP that concerns us can be found at theasap.org.uk and bills itself as “the voice of the serviced apartments industry”.
All of which preamble serves to highlight the fact that there’s considerable confusion about the serviced apartment sector. Some providers are operators, who own or at least manage their properties; some are agents, flogging other people’s properties.
Some properties are aparthotels, and some – heaven help us – are ‘condotels’. Some providers offer ‘corporate housing’, which basically makes them letting agents, while others offer extended-stay properties (letting agents again, but with a slightly shorter attention span).
Most offer what is generally required by the corporate travel sector – an upmarket crash-pad where one’s employees can sleep for a couple of nights, and where the staff don’t snort contemptuously if guests order in a Domino’s stuffed-crust with extra anchovies and wash it down with Lambrusco.
ASAP attempts to speak for all serviced apartment providers. Joyce Cawthorpe, ASAP’s marketing and media manager, freely admits that the perplexity goes even deeper. “There is still confusion out there,” she says. “It’s got better, but there is still an educational piece to be done as to what a serviced apartment actually is. Certainly, I think, we as an organisation have to do a bit more to talk about our Quality Accreditation Programme (QAP).”
Launched in 2014, the QAP is essentially a grading system – accredited providers have to show that they are compliant with all legal, health and safety requirements, and that they offer a high standard of best practice and of the overall guest experience.
It’s not easy to administer – ASAP has 189 members in 17 countries with a total of more than 100,000 apartments, all of which have to be assessed – but the organisation is moving towards a situation where the award of the QAP marque is a pre-condition of membership.
“We all need to be speaking with one marketing voice,” says Cawthorpe. “It’s at the discussion table at the moment, so it’s early days, but we hope to have it in place by 1 September this year.”
Nevertheless, there are plenty of positives – not least, strangely enough, from the growth in the mega-chains’ aparthotel offerings and, more recently, the emergence of Airbnb and its ilk as serious hospitality industry players.
Not a problem, says Cawthorpe. “Airbnb has flagged up an alternative way of staying,” she says. “While everyone was a bit worried initially, I would say it’s overwhelmingly positive – we are seen as the respectable arm of the industry.”
Perhaps surprisingly, the serviced apartment sector is unstinting in its praise for Airbnb. Steve Burns, Bridgestreet’s managing director for Europe, Middle East, Africa and for Asia-Pacific, harbours no doubts about the company’s positive impact. “I think we have got a lot to be grateful for,” he says. “Airbnb has made us think differently. If it wasn’t for them, I don’t think we would be getting to where we are going at anything like the speed that we are.”
Sarah Gaze, Go Native’s director of business development, agrees. “The phenomenal explosion of Airbnb and subsequent rapid growth in a number of markets proved beyond doubt there was a demand for hotel or traditional stay alternatives,” she says.
And then there’s Marc Sandfort, area manager UK at The Ascott Ltd. “Airbnb has opened traveller minds to alternative travel options, besides the traditional hotel offering,” he says. “As the serviced apartment sector is still a niche market compared to hotels, any opportunity to promote other stay concepts is positive.”
And Jo Layton, managing director at TAS Global, says: “We actively welcome new disruptors to the industry. We continue to be a disruptor with the growth and development of our global agency model – this model is not replicated by any other company.
“Our belief is that disruptors help to move all industries forward – they help the serviced apartment industry to understand and embrace the new opportunities, thought processes and development requirements of our current models, our technology and our people. Disruptors are recognised for helping to keep industries moving, learning and creating.”
Caroline Saunders, group head of marketing with Silverdoor Apartments, is almost as enthusiastic, although she does add a rider. “Airbnb has done a fantastic job of popularising the use of apartments as an alternative to hotels. It had initially eaten into the market share of serviced apartments for leisure stays, but there has been a resurgence as consumers become more aware of the potential pitfalls of Airbnb and look for safer, better-regulated options.
“As a corporate serviced apartment provider, Silverdoor has seen little impact. Airbnb boasts some great business travel tech, but the product is too much of a risk for most corporate clients. Off the back of Airbnb and the awareness it’s generated, many business travellers are going to their travel managers requesting an apartment and being directed to their preferred serviced apartment provider.”
Juliet Howie, Oakwood Worldwide’s recently appointed director of sales for EMEA, has a somewhat different perspective, suggesting that Airbnb may not be the driving force. “In many ways,” she says, “new products and business models entering the market are emulating the success of serviced apartments by offering alternative choices to consumers.”
As for the big chains’ aparthotels, they are generally only commercially viable in centres of high demand. “Location is everything,” says ASAP’s Cawthorpe, “and you are not going to get the big brands going into places like Milton Keynes or Luton. Smaller operators should be able to thrive in niche markets and compete in destinations where demand outstrips supply.”
Even so, is there not a risk that travel buyers might feel more comfortable with a familiar company and, where demand for something bigger and better than a hotel room is established, switch to a sub-brand?
“That all depends on the travel manager,” says Silverdoor’s Saunders. “They’re the ones who ultimately decide what accommodation they use. Some are just starting to get their heads around serviced apartments and may feel more comfortable going for a brand they recognise from working with their hotels.
“Other travel managers have been using serviced apartments for years and, I think, to them, the big brand entrants are just another option to choose from. Aparthotels are certainly more approachable for corporate clients that want to book in a similar way to hotels. They’re set up for shorter stays, which are easy to book online.”
Ascott’s Sandfort doesn’t see big-name aparthotels as competition. “Seeing large hotel operators entering the aparthotel market shows how attractive the serviced apartment sector is,” he suggests. “It also adds to the credibility of the sector, helping open corporate traveller minds to the serviced apartment offering and, therefore, increasing demand for this kind of accommodation.
“Ascott has had the opportunity to build good TMC and buyer relationships for over 30 years. Any increase in demand can only further strengthen these relationships.”
Sandfort goes on: “For new entry and existing players, I believe that clear differentiating selling points are key to attracting TMCs and buyers. The rise of bleisure travel shows that even corporate guests are focusing more and more on experiences during their stay. Accommodation products offering a variety of experiences are therefore needed, in my opinion.”
TAS Global’s Layton takes a broadly similar view, but touches on the thorny subject of distribution. “Every accommodation programme should ideally include a good selection of safe, quality-assessed suppliers and products, each of which providing very different products that match all kinds of users, whether on an extended business trip, relocation or a project,” she says.
“Qualifying whether an extended-stay guest requires ‘more space’ than a big brand ‘aparthotel’ may provide for their three-month stay could currently cause a few headaches for a TMC – but who is to say that it won’t be a key growth area of development in the future?
“We are certainly providing these services for many agents that require this particular support,” adds Layton. “We are all aware that an extended-stay booking can be more emotive than a flight for 12 hours or a hotel stay of four nights – hence the serviced apartment arena has remained slightly more ‘offline’ and consultative than the normal GDS bookable products. The cancellation terms can also be more costly.”
What do TMCs think?Alexander Blunt, head of land product at FCM Travel Solutions, has seen growing demand from clients. “We have partnerships with several serviced apartment companies and our sales have been growing at a steady rate with all of them over the past three years. We are keeping a very close eye on the sector as we strongly believe it is only going to continue to grow.
“From a TMC perspective, the benefit is that we can offer our customers more choice and accommodation options that some travellers feel are more suitable when they’re away on business for longer durations. There are challenges in distributing the inventory as a lot of the new start-ups are not available in the major GDSs or OBTs.”
Mark Bevan, head of strategic relationships at Business Travel Direct, has had a similar experience. “We have seen a steady rise in the use of serviced apartments in the last few years. This has been mainly driven by our clients taking on long-term projects such as retail refurbishments or software installations, which require staff to be away from home for longer periods.
“Serviced apartments come into their own where more than one person can share with other members of staff. In such circumstances it becomes a very commercially viable proposition for a corporate to use a serviced apartment, and travellers can use them to work from, even if they are in between meetings, as they can come back to them and work just as they would do when they are nearer home.”
Providers appear to be in a relatively bullish mood. According to an ASAP-commissioned study conducted by property giant Savills and published late last year, 47.7 per cent of those questioned said they were more positive about business prospects than they had been six months earlier.
The Operator Sentiment Tracker Survey also revealed that almost 41 per cent of respondents said they intended to accelerate expansion programmes this year, compared with barely 28 per cent who said the same in November 2016. Almost two-thirds (63.6 per cent) said they expected 2018 business to be better than in 2017.
ASAP chief executive James Foice takes a glass-half-full stance. “Last year was a phenomenal year of growth for our serviced apartment sector right across the UK and it’s particularly encouraging to see operators confirming in our Sentiment survey that they remain committed to their future expansion plans.”
Tom Meertens, Oakwood Worldwide’s EMEA managing director, says he’s still celebrating his company’s ‘best serviced apartment provider’ triumph at January’s Business Travel Awards. “It’s a reflection of the hard work and dedication of everyone at Oakwood Worldwide,” he says. “Our business continues to grow and there are exciting developments to watch out for in the coming year.”
We can all drink to that.