The serviced apartment sector had a rare
foray into the UK’s national newspapers in March when Premier League footballer
Wilfried Zaha offered his business portfolio of 50 apartments to NHS staff battling
the coronavirus outbreak in London.
Over the course of the pandemic, it is such
keyworkers that have helped fill the apartments of many long-stay properties
and given the sector cause for optimism that has been communicated by operators
and industry specialists this week.
• London serviced apartment occupancy stood at 61.8
per cent for Q1 2020, down 21.5 per cent on the same period in 2019 as Covid-19
started to take hold in March. Hotels reported a larger decline of 23 per cent
over the same period with average occupancy at 59.4 per cent.
• 9.6 per cent – Average share of hotel stock
accounted for by serviced apartments across the top ten European markets
• Serviced apartments accounted for an estimated
7.9 per cent of bednights across Europe’s top ten gateway cities pre-Covid-19.
This is significantly below the 84.9 per cent allocated to hotels and only
marginally ahead of that for Airbnb.
SOURCE: Savills
Data and analytics company STR reports
that serviced apartment occupancy through April and into May was trading above
hotels at 25 per cent in the UK, while the Association of Serviced Apartment
Providers (ASAP) says some of its members have reported occupancy as high as 45
per cent.
Property specialist Savills said it too
was aware of operators performing well above STR’s figure and attributed this
performance to the sector’s guest profile and the typical configuration of
properties.
The trend is not unique to the UK. In the
US, a report from Kalibri Labs showed that RevPAR across extended stay hotels
performed 14.4 per cent better than other hotels in March. It is the only month
in the last five years this has occurred, it noted.
“Serviced apartments have not been immune to the
Covid-19 crisis but have shown a degree of relative outperformance,” Savills
noted in a report published this week. “As seen historically, this could become
more pronounced once recovery starts to emerge.”
It points in particular to the appeal of
the product in a post-Covid world: serviced apartments have fewer public spaces
than hotels; guests have minimal or no contact with staff; and apartments
present a more comfortable environment in which to spend longer periods of
time.
There is also the cost-effectiveness
aspect for longer stays, a facet that will not be lost on corporates faced with
tight travel budgets.
Indeed, there is a degree of confidence
within the sector that it will find favour among corporates with health and
safety and duty of care now firmly at the top of the agenda.
One player, Synergy Global Housing, claims
more than a third of travel buyers plan to increase their use of serviced
accommodation as an alternative to hotels as a result of Covid-19.
It launched SynergyCares last week, “a wide-ranging global
safety and health initiative”, in the same vein that hotel groups have unveiled
new protocols in a bid to build traveller confidence.
ASAP has also been highlighting its
accreditation standard and the addition of a ninth element to its Stay with
Confidence pledge.
“We took a lot of advice from the World
Health Organisation, government and specialist health and safety advisors.
We’re also trying to align with other bodies and establish a common standard,”
says ASAP chief executive James Foice.
“There is certainly optimism and as an
industry we’re well positioned. We think the sector will get going again before
hotels. It’s an opportunity to open the market to new customers who aren’t
familiar with our product.”
Travel manager Jan Jacobsen of AIG agrees
but adds a note of caution.
“The sector absolutely stands to benefit.
It has served key workers well, and some quarantine restrictions have pushed
people towards apartments too because they’d rather isolate there than in a
hotel. But it doesn’t mean it [the sector] is necessarily going to win new business
travellers right away.”
He continues: “For the sector to continue
its growth path, it needs to take a step up now. It needs a set of truly
global, sector-wide industry standards that helps build traveller confidence.
I’d like to see every operator abiding by these standards, no matter their
size.”
Jacobsen says AIG will only work with
operators who are ASAP accredited in the UK or conform to a comparable
accreditation scheme in overseas locations. Serviced apartments comprise around
10 per cent of the organisation’s total accommodation programme, but he’d like
to see that move towards 20 per cent.
He believes global hotel groups, however,
are also in a strong position, having established new cleanliness protocols
that are standardised globally – something that is not so easy in the more
fragmented long-stay sector.
“Apartment operators must communicate
their cleanliness standards too,” he says. “There is no such thing as over
communication; just bad communication. It must be calm and factual.
“There is too much marketing spiel at the
moment which is just a distraction. It’s as if suppliers are doing something
new, but what they’re actually doing is increasing the frequency of cleaning.
The difference now is that they need to track and document this for us.”
Jo Layton, Director at CAP Worldwide Serviced Apartments, meanwhile, calls for balance and an understanding of the current mix of business being handled.
“The extended stay industry has been incredible at stepping up during this crisis, but it is important to remember that we have been servicing high numbers of ‘crisis’ travellers. This is a moment in time, and the majority of these projects will finish. When this happens, the current demand will change again and we will be servicing a more balanced mix of business, including corporate and leisure travel,” Layton explains.
While the relative isolation that apartments offer is touted by some as a duty of care win, Layton says providing a balance is key.
“Isolation is great sometimes but it’s not ideal for everyone. Some people want or need the support services that come with hotels or to simply have other people around,” she says. “Corporates need to offer a balanced accommodation programme, which reflects the wide variety of travellers needs.”
While Layton agrees the sector could attract new business post-covid, she too calls for an agreed global operating standard for the sector.
“What this [crisis] has done is to, again, put assessment and accreditation firmly back on the table. We should continue to aim at creating a minimum set of standards, internationally, set by a body that measures the success of the accreditors, and that acts agnostically – the accreditors need to be checked too.
“This would ideally not be a commercial environment or a sponsored environment, as this can lead to a bias one way or the other. SAFFAA (Serviced Apartment Forum For Assessment And Accreditation) is trying to support and develop the understanding of this critical area through active discussion and debate.”
The concept of trust and confidence is
also raised by Chris Crowley, partner at consultancy Nina & Pinta.
In a sector that is not particularly suited to
operating in an online environment, there are further signs of encouragement
with some recent technological innovations – both announced within the last
fortnight.
SilverDoor has integrated its Orbi booking
technology with expense management system SAP Concur through a new app
developed in collaboration with the company, while MYSA is releasing new
sourcing and booking platforms to allow corporates to control and manage their
serviced apartment accommodation programme.
“I think the sector’s optimism is well
placed… ASAP and Synergy and others have acted quickly and professionally to
provide companies and travellers with that assurance of supply – reliable
standards – that they can use to keep building traveller confidence,” he says.
“Accommodation is a personal trust issue
for many travellers – where you sleep, where you eat, where you meet, where you
work when you are not in the office. In a serviced apartment you can control
this environment.”
For apartment operators and agents,
translating current optimism into business growth and diversity will depend on
clear communication, building traveller confidence and, in the long-run,
establishing globally recognised standards to unlock the potential of the
sector.