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Serviced Apartments are Offering Compelling New Options for Business Travelers

Published: 07/12/2017 - Filed under: Home » News »

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Two things we know about serviced apartments. One, it’s a growing industry segment numerically and geographically; and two, it’s gaining a wider acceptance among business travelers. 

According to the latest Global Serviced Apartments Industry Report 2016/17, prepared by the TAS Alliance, a collection of operators and vendors, 88 percent of companies now used apartments for “one business reason or another.”

The report found there are now over 800,000 units in this sector --- an increase of 10.5 percent worldwide since the last GSAIR report. In the US, according to the report, the sector’s revenues were $2.93 billion in 2015, a 7 percent increase over 2014. 

Even with many well-known benefits, many travelers don’t consider this option. To make themselves more attractive to business travelers – and attract a wider variety of these travelers, from all generations – serviced apartment operators are working hard to strengthen their branding.

“We are a young industry and can still see rapid growth,” says Aneal Sadiq, head of sales for House of Fisher, a UK-based operator of corporate housing. “We have doubled our product offerings in just a few years and the same can be said for our competitors.”

The basic selling points for serviced apartments have remained consistent: more space, privacy and the freedom to cook when you want. They offer the allure of familiar creature comforts and the ability to live more like a local. And of course, there is the cost benefit of lower rates for longer stays, which can result in dramatic savings for the company. 

The business model keeps rates low in comparison to hotels of similar quality, says Jo Layton, managing director for The Apartment Service, a UK-based supplier. “Demand for serviced apartments (with a goal of seven-night minimum stays) can achieve the same discount rates as an air crew accommodation would achieve in a busy hotel, i.e., they give a great occupancy base so their business is welcomed.”

Ironically, some travelers are leery of these housing options because of lower costs. Elle Cane, vice president-business development for Master Key Alliance, a Toronto-based third party provider, says some clients have to be educated about the fact that the product has much lower overhead.

Rapidly expanding sharing companies led by Airbnb are eager for bigger piece of the business travel pie. Just how threatening Airbnb is to hotels in the next few years, however, will likely hinge on the company’s success in converting business travelers into regular Airbnb users, according to a recent report from Morgan Stanley.

“There are now many questions being posed to the large aggregators regarding how sustainable these products are,” Layton says. “The aggregators are having to follow city and environment rules and regulations with regards to restricted maximum number of room nights and/or revenues that can be booked. This will impact on availability of product. And from a corporate social responsibility standpoint, how are the host and their products being checked for health and safety, tax compliance and sustainability as a supply chain for the travelers? There remain many unanswered questions.”

The shared economy may actually play into the strengths of the traditional corporate housing providers, says Patricia Hintze, vice president, global sales for Oakwood Worldwide. “Once people are open to an apartment we see them taking other factors into consideration, including service levels, Duty of Care, consistency in quality, permitted and licensed locations, clarity in pricing, etc., that still make corporate and serviced apartments stand out.”

And some suppliers see Airbnb as just another online travel agency. Global operator Bridgestreet was the first to partner formally with Airbnb’s corporate program, Airbnb for Business, which means its inventory can be booked by Airbnb clients. “Some of us have embraced Airbnb and listed ourselves on their sites,“ notes Sadiq of the House of Fisher. 

The inroads made by Airbnb may be at least in part responsible for the launch of a number of new brands from serviced apartment providers. 

According to a report from Serviced Apartment News, providers will continue to create hybrids incorporating elements of corporate housing and hotels – like BridgeStreet’s Mode and SACO’s more recent Locke aparthotel brand launches. Others include the Prem Group’s Premier Suites and Premier Suites Plus, and Apple Apartments’ Exclusive brand, which features only luxury properties, just some of the brands that will contribute to the blurring of the lines between serviced apartment and select service hotel categories in 2017.

And as with hotels, there is a greater focus on connecting locally. “Even though you’re away from home, you still need to know where the Walgreens is, and where to get a haircut,” says Loren Nalewanski, vice president and global brand manager for TownePlace Suites by Marriott. “We have our interactive map right in the lobby that’s bigger than life and shows where everything is.”

All in all the landscape is changing for serviced apartments. And business travelers who are open to the experience may just be the ones winning the long game.     

by Elizabeth Atkinson 

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