Using extended-stay hotels can make for significant savings – so why don’t corporates use them more? Gary Noakes finds out
It's perhaps a combination of geography and high land values that the extended-stay hotel concept has not really caught on in the UK in a big way.
Serviced apartments are more familiar, but offering a similar thing within a hotel is a lot rarer here than in countries like the US, where land is cheaper and, because of huge distances, there is more demand.
To the expert, there is a distinct difference between an extended-stay hotel room and serviced apartments, which are often conversions or purpose-built units.
Chris Gee, executive commercial director of accommodation agency Silverdoor explains: “Extended stay is what you would generally expect, like-for-like, in a hotel. It’s not just about size – the kitchen is often a key differentiator, and a full-serviced apartment is what you would expect in a one- or two-bedroom flat. Extended-stay hotels may not have ovens – just a small hob, plus a limited range of utensils, and there is often less of a split between the kitchen and the bedroom.”
The extended-stay niche is usually from one week to a few months, as anything longer than this and the serviced apartment concept works out cheaper. Anything less than a week and costs are comparable with hotels, although the client’s daily expenses will be lower.
The sector may be small, but it is growing as the cost advantages become apparent. Ricky Kapoor, chair of the apartments sector committee of the Hotel Booking Agents Association (HBAA), puts the differential for stays ofbetween one week and one month at around 20-30 per cent less than a hotel. For one to three months this increases to a 40 per cent saving and for more than 90 nights it peaks at 50 per cent. Put simply, the concept offers more space and saves money because the incidental costs can be controlled.
“Instead of a £25 dinner allowance, you can give a £10 shopping allowance, and things like washing machines mean you aren’t paying ridiculous laundry costs,” said Kapoor. “Once a corporate is aware of the alternatives to a hotel, and you dispel some of the myths about long leases and security, they see how viable it is.”
The HBAA puts expansion rates in the sector at around 40 per cent ayear, although this is from a relatively small base.
“There are a lot of independents, but the big brands are becoming very interested because they see that it has worked well in the US, Australia and Singapore,” said Kapoor.
COST SAVINGS
Gee says hotels generally define two to four weeks as an extended stay, but said Silverdoor’s average was probably longer. “I would call it ‘mid-stay’. There is that gap between staying in a hotel for maybe five nights and being able to take a standard let in the market which is perhaps six months.
“It’s cheaper, gives you more living space and the expenses are a lot lower. If you don’t want breakfast and a daily room-clean, that reduces the price; if you do, that does become more of a hotel-style price.”
What, though, of the aggrieved employee who demands all the bells and whistles that a top-class hotel offers? “Once someone has been there for a week or so they are happier serving themselves,” says Gee. “A lot of companies we deal with use this type of accommodation for anything over five nights because staff are more productive in an environment that gives them more space.”
Extended-stay hotels have another advantage over serviced apartments in that they are generally more secure, an issue in many locations, particularly for female staff. Gee concedes that many business travellers like having someone on reception and says it is important to take this into consideration when booking.
SIZE DOES MATTER
Finding an extended-stay option in the UK can be a challenge. There are only a handful of big-brand properties and perhaps three or four medium-sized suppliers. Because of the small size of the UK and its good transport links, it is easier for buyers to select a hotel Monday to Friday and for staff to travel back at the weekend. Things are different in countries like the US and Australia, wherehuge distances mean the big-name hotel brands have invested in the concept and there is ready availability on global distribution systems (GDSs).
For buyers, there is another confusion to cope with. In its annual industry report, The Apartment Service makes anobvious but important point about the relative lack of transparency in the sector and flags a warning to buyers: “At first glance, the only difference between the four-star and five-star products is the frequency of housekeeping. The problem is that the serviced apartments sector does not yet enjoy a level of product awareness (so) that consumers can discern the subtle differencesbetween their brands.”
ADDED BONUSES
Just as with normal hotels, what you get is often quite different depending on brand and location. Towneplace Suites, for example, is a Marriott brand that operates in 190 US locations. Its format includes a simple central lobby with vending machine and free wifi only in the public area. A bonus, however, is the free breakfast. IHG’s Staybridge Suites offers free breakfast and wifi throughout, but from Tuesday to Thursday at its 184 properties (which include three in the UK in London, Liverpool and Newcastle) free drinks and snacks are provided in the public areas to encourage guests to mingle. Staybridge has another 77 properties in the pipeline, but only three of these are in Europe, more proof that the concept has not caught on as much here. Things are changing, however, as hotel brands move into the market to capture business they would otherwise have lost to the serviced apartment sector.
“The challenge is that they do not have the coverage at the moment,” said Margaret Bowler, HRG’s director of global hotel relations. “With the US brands it’s a case of them trying to find land to build in the right areas or buildings to convert.”
She believes buyers and travellers alike could better understand the extended-stay concept. “People traditionally have used hotels and that is all they know, but in the last five years or so some have started to question whether they could get a better price. As more of these developments evolve, extended stay is becoming bigger and bigger – a lot of them are on the GDSs and will take one-night bookings.”
Bowler believes there is an increasingly blurred distinction between extended-stay hotels and serviced apartments, but advises: “Generally, an extended stay will be one room, whereas a serviced apartment is more than that.”
BRIDGING THE GAP
Rebecca Hollants van Loocke is UK regional general manager of The Ascott Limited, which owns the Citadines Apart'Hotel brand. She describes the extended-stay concept as a bridge between a hotel and a serviced apartment with the average stay at five to seven nights. The concept came into its own during the Olympics, with some guests staying for the duration. “We’re gearing the product towards longer stay – around two weeks – whereas the others are looking at one month plus,” she says.
Citadines’ expansion programme stretches into Thailand and Asia and revolves around its Prestige properties that boast higher service levels, lounges and an upgraded breakfast. Citadines has four properties in London, but the chase for new ones is on. “Two key cities are London and Paris, but we are forever searching for more,” says Van Loocke.
And she makes one final point that might swing the concept one way or the other for those who actually stay in them: “You’re buying the apartment, not paying according to how many people stay in it, and once you go beyond a seven-night stay the price goes down, so a lot of clients invite their families for the weekend.”
For some households, it seems, having a family member away on business could suddenly become very popular.