Peer to peer puts on the pressure

As serviced apartments continue to come under pressure from new short-term accommodation solutions, Fiona Murchie finds out how some of the industry’s key players are forming new alliances and thinking outside the box to stay ahead of the game.

serviced apartment
With truly global coverage that can match assignment programmes in most regions, BridgeStreet Global Hospitality is one of the largest serviced apartment providers in the relocation sphere. Its journey has moved from establishing the brand to differentiating by price point and offering its properties to the traveller and business user.Back in 2010, the challenges for serviced apartment providers were ratings, quality and consistency, which varied across countries and regions. BridgeStreet's solution was to make clear to its users that its six brands offered high-quality service and high-quality apartments at different levels.Its sleek portfolio extends from 'Studyo', the budget offering, to 'Exclusive'. Relocation users are well catered for by the three brands that range from luxury to classic, and from stylish comfort to no-frills. With the addition of ApartHotels, which readily accommodate business travellers, the company appeared to have ticked all the boxes.Exploration of themes, from 'Bleisure' (a blend of business and leisure) to charting the needs of Millennials, reassured corporate decision-makers that BridgeStreet understood the talent mobility world in which its clients operated.

Partnering Airbnb

In October, to coincide with the Worldwide ERC Symposium in Boston, BridgeStreet announced a partnership with Airbnb. There has been lots of talk about Airbnb across the industry in the last year. I caught up with BridgeStreet's CEO, Sean Worker, and asked him why the company had embraced a home-sharing disrupter that was not only shaking up the hotel market but also had the potential to make inroads into the serviced apartment industry."For today's traveller, it is all about choice – immediate choice," he explained. "Airbnb is outstanding in the sharing economy. They believe in living like a local. The experience is about where their guest stays, which is the same for us. It's about creating memories."Where our guest stays is also about experience – about 'me', 'my travel choice', the world of Instagram. The logical step is giving choice to a traveller who already has an immense amount of choice, but in a more structured manner."It was therefore natural, Sean Worker believes, for the two organisations to open a conversation.Airbnb attended February's Business Travel Show and had already signed up Grant Thornton as a client, so there was obviously demand, if not for the whole of the assignment proposition at least for certain levels and demographics, or as a business travel option.

Impact on the industry

At the Association of Serviced Apartment Providers' (ASAP) Annual Convention, held at the end of the year, there was much talk about Airbnb. Interestingly, a new report from Savills and the ASAP reveals that the growth of Airbnb, far from being a threat to the serviced apartment sector, has actually helped it by raising awareness of serviced accommodation as an option.Comment from the floor alerted the audience to Airbnb's intention to invest heavily in its business travel offering, stating that it was 'going all guns blazing into the business market'. As Airbnb has raised billions of dollars in finacing, one can't discount the impact on the corporate housing sector, especially terms of marketing spend, where there is no contest.ASAP members are putting much faith in their accreditation, which goes global in 2016 following a partnership with the US-headquartered Corporate Housing Providers Association (CHPA).It is thought that Airbnb's approach will be for 'hosts' to be self-certifying against basic criteria for business travellers, such as clothes hangers, space to work in, and 24-hour access to check in. It will be interesting to see how things pan out over the next year, but there is certainly no room for complacency.As Airbnb's model is all about global scale, the company is desperate for accommodation and needs to source it wherever it can. It is not surprising that serviced apartment providers are already filling its gaps. One speaker pointed out that, ironically, 40 per cent of Airbnb suppliers were buy-to let investors, not residential owners.Speaking at the conference, Elizabeth Winkle, of STR Global, reminded the audience that Airbnb was not a low-cost provider based on its advertised prices and the cost of additional extras. However, properties with multiple bedrooms could be cost-effective.But areas that were undersupplied would prove attractive, she felt, citing Hackney as an example of a London borough in which Airbnb was already being used by corporates because there were few other options.

The trust factor

I was intrigued by the trust issue. One of the pillars of the proposition for serviced apartment use in the corporate context for relocation, and increasingly also for business travellers, is the safety and security factor. There are connotations for duty of care in an uncertain world, plus compliance around immigration and tax, and expenses management.Technology and accommodation tracking help companies to keep abreast of employee movements, which can be a corporate risk, with penalties for the individual, too. Hard-earned trust is built up by established serviced apartment brands that employees and their dependants are safe and accounted for.Jason Parry, of Brookfield Relocation Services, operating across 120 locations and with 80,000 moves per year, made the point at the ASAP Convention that his company's clients were looking for global consistency and accountability. When there was an issue on the ground, it was really important that it was resolved quickly, as clients didn't have time for "back and forth" conversations.Gina Quin, speaking for the Dublin Chamber of Commerce, reminded the audience that serviced apartments were not well known as a sector, even in Ireland. The country's corporate clients wanted to be sure their employees were safe and secure, particularly since the atrocities in Paris. She pointed out that hotels had brands and reputations that were easily identified. Serviced apartments were a step back from that, but Airbnb was way behind."Trust is fundamental to both of us," said Sean Worker when I raised this point in October. "Airbnb have 1.3 to 1.5 million listings on any given day, so there is considerable trust in their brand."He pointed out that Airbnb was not only for Millennials, but attracted a wider variety of travellers. The average user is in his or her 30s, not 20s, and this age group is using the BridgeStreet product, too. The partnership is not about a solution for the Millennials, but about marrying the two propositions.Sean Worker believes there are "very real advantages" in other global mobility areas, such as lump sum, which is "vaguely being satisfied" and is a difficult area for corporates to deal with."The Airbnb option is an ideal way of accommodating employees and provides another option," he said.What BridgeStreet is focusing on in the partnership with Airbnb, Sean Worker told me, was "choice with a branded safety net. We'll talk to your assignees or business travellers 24 hours a day, seven days a week. We want you to have a great experience; it's a global relationship."

Benefits for serviced apartment industry

The peer-to-peer recommendation is also something BridgeStreet will have factored in, with the potential to reach potential new corporate customers. It is also about keeping the occupancy high in an increasingly competitive market, where margins are tight with the last-minute online travel agencies.As Jo Layton, MD of group commercial sales at The Apartment Service, pointed out, "Airbnb is offering two potential routes for the serviced apartment industry. For operators, it offers a further distribution platform for their products, much like the online travel agents, or OTAs, such as, Expedia and Laterooms. It therefore becomes an additional channel to provide a base for business or distribute distressed inventory into the market."For agents, Airbnb could potentially provide additional supply in markets where there is a limited natural corporate housing or serviced apartments coverage. I would stress, however, that if this route is adopted, the required supply checks should be completed for these products – the same as would be completed and signed off for your normal supply-chain models."There will be the natural early adopter community that will immediately grasp the benef its of the Airbnb platform. There will also be those who wait and see, but we do know that, from a distribution perspective, if you are either buying or selling, the model is already very successful."

Innovation and reinvention

I put it to Jo Layton that the industry needed to be innovative and agile. She agreed. "The Apartment Service is continuing to evolve its services to meet the needs and requirements of a fast-moving buying community."The differing models of serviced apartment booking agents and a serviced apartment management company have been refined over the last 18 months. These are ensuring that buyers have a very clear and transparent view of their
programmes, and can fully enjoy a sustainable supply chain for the future, one that has a life after a contract."The pace of our industry is so fast that our research teams are already working on the sixth edition of our Global Serviced Apartment Industry Report, to ensure we capture all the innovations, thoughts and ideas that are moving and shaking our sector."Jo Layton pointed out that "continued confusion" surrounding the serviced apartments industry about whether a given provider was an agent, an operator or an operator/ agent was being challenged by savvy buyers, who were asking much more far-reaching disclosure questions of their providers. The Apartment Service, she said, was continuing to demystify the market for these buyers, whether in relocation or corporate environments, to ensure clear definitions.She added, "The TAS Alliance has grown exponentially in the last two years, and has fast become a preferred platform for buyers to access some of the best operators across the globe. Its members and partners are enjoying the opportunity of being able to offer to their local buyers services which include the provision of a fully connected buying platform and booking solution."Mergers and acquisitions within the hospitality sector will hopefully provide further opportunities to expand the footprint of the industry. We will learn more about the strategy behind this acquisition during 2016."

Hybrid market opportunities

The hybrid market has been highlighted by BridgeStreet and others. Sean Worker explained, "The transferee on assignment wants to take a long weekend, and is open to something more experimental in Barcelona or Frankfurt, for example. People live split lives; one is work, and one is play."In May 2015, a new brand, Zoku, was launched, shifting the focus from sleeping to living and working space. Zoku, which is Japanese for family, tribe or clan, could be ideal for the internationally minded, wanderlust Millennials and interns, and for budget-driven sectors, creatives or technology project teams, consultants and the entrepreneurial-spirited, who crave a hub experience to explore ideas, work and socialise.As space becomes scarcer in urban living, the concept of hybrid living has emerged, Hans Meyer, co-founder and managing director of Zoku, explained to the audience at the ASAP Convention.Zoku is aimed at serving the new generation of business travellers. This home-off ice hybrid, also suitable for long stays, with the services of a hotel, comes with "the social buzz of a thriving neighbourhood". It will be a relaxed place in which to live, work and socialise with like-minded people while getting "wired in to the city".Its founders worked with London-based futures consultancy The Future Laboratory."Today's business travellers are rewriting the rules. Their outlook on work and play demands new services and a new approach to the hospitality sectors. The business hub will be the opportunity of the next decade in terms of hospitality value creation," said the consultancy's Chris Sanderson.Hans Meyer explained, "The advance of technology has changed personal and professional lifestyles. Boundaries between work and leisure are fading, and blurring borders have made people more mobile than ever."At Zoku, we realise that your wellbeing is vital to get the most out of your travel experience. It's easy for global nomads, whose work forms an essential part of their lives, to feel ungrounded and disconnected from what inspires them. Zoku is going to change that. The Zoku Lofts offer an efficient work space without losing the comfortable, flexible vibe of home, while the Zoku community provides a social structure."Opening in Amsterdam in spring 2016, Zoku is aiming for a fast international rollout in the world's most creative cities, which include London.

Collaboration and brand synergy

Aimed at the premier end of the market, Frasers Hospitality is also recognising work and leisure requirments in its new offering to meet the needs of fast-paced global living.Just as old and new coexist in the fast-changing business world, Fraser Suites Kensington, the first property in the company's new collaboration with Mercedes-Benz, marries the fabric of Victorian apartments with masculine grey-and-white glossy interiors and aerodynamic lines that exude contemporary sophistication and speed.The property is positioned conveniently for jetting in or out of Heathrow, with easy access to Knightsbridge shopping and central London or the City for business or pleasure.Called Mercedes-Benz Living @ Fraser, this alliance of brands is clever positioning that states the ambition of the global Frasers brand and roots it firmly in a European context of precision engineering. The statement has been made. Luxury, innovation, and life in the fast lane, but at a pace you set in your downtime.Six apartments have been unveiled in London. Nine are to be launched in Singapore in early 2016.The collaboration aims to bring the functionality that is associated with Mercedes-Benz into the realm of luxury living and working. Developed in partnership with Burmester and Swarovski, the overarching concept unites clean, flowing lines with state-of-the-art media and entertainment technologies that reflect the advancements and exclusivity of a Mercedes-Benz car.In the apartments I viewed, the living areas boasted generous sofas in unusual sculptural forms, with shimmering silver, luxurious velour and soft leather upholstery that replicated the comfort of the Mercedes interior – perfect for lounging on while watching the high-performance TV.A Swarovski crystal chandelier above the glass dining table has been designed to reflect the S-shaped curve that stands for Swarovski or Mercedes S-Class. Artwork throughout the apartments is from the Mercedes archive collection and completes the cosmopolitan feel.This kind of detail will be appreciated by the people who stay in these apartments for business or pleasure. The bedrooms even have a sleek brushed-steel-effect headboard, which transition seamlessly into brushed-steel bedside tables.Just as James Bond is appreciated at many levels, so could these apartments be – for fun, or for the glamour of their stylish interiors. They represent life in the fast lane, with a touch of humour that will brighten any business trip.These two-bedroomed apartments also cater for families with young Mercedes enthusiasts, who will enjoy the swivel mock headlamps as they drift off to sleep, no doubt dreaming of highspeed driving in exotic locations.

UK serviced apartment sector set to double

The Savills and ASAP survey confirms that the sector will be the UK's fastest-growing hospitality segment up to the end of 2017, with average annual growth of 8.4 per cent in both 2016 and 2017. Even more impressive are the growth targets of the 48 operators surveyed, which are planning to increase stock globally by 145,000 units by end of 2018 – a 52 per cent increase.This is good news indeed for relocation users, who will welcome growth not only in London and the regions but much further afield across the world's emerging relocation hotspots.Watch out for Re:locate's 'meet the buyer' events in 2016.
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