Precocious genius, or problem-child?

1000 word Article on the State of the Serviced Apartments Market

Title:

Serviced Apartments: “Precocious Genius” or “problem-child”?

Dealing with the “New Arrival”

How can we gain a sense of where the Serviced Apartments sector is right now, within the Business Travel Accommodation and Hospitality Industry?

Everyone knows that the “Family” is model which has proven potential to adapt successfully. Families take many forms these days. In families there is always subtle change, because members are growing, personalities are emerging, and elder siblings are adapting to the younger generation as they take on their own identities.

If the family is to thrive, it needs to have a valued role in the wider community. We all know of notorious families who are always feuding, and we know of positive examples where each member feels valued and there is interplay between the generations, which lifts the reputation and standing of the whole family.

The accommodation industry has such a new member of its family. The Character of the relative New Arrival, known as “Serviced Apartment”, or “SA” (as well as many other terms of endearment), is still being formed.

Even if some of the family can be more difficult to deal with – is this a Bad Thing?

A bland family cannot involve itself in the community, in the way that a characterful family naturally puts in as much as it gets out. We all know members of our own families who reward good preparation and a flexible approach, yet we would not do without them.

Are SAs experiencing inconvenient growing pains, as a maturing family member which won’t conform? (Children should be seen – on GDS - and not heard) Or do they enrich the whole household, contributing ideas and justifying their place, making the other family members richer by their unique attributes?

Like all new arrivals, some people experience them and catch on earlier.

Assignees have figured this out, and the message has reached their Travel Managers: People live in their Business Travel Accommodation. It’s Autonomy – not Astronomy! (or Rocket Science) The accommodation should enable the people to be productive – whether this is short or long-term.

Now, how can the New Arrival become a full, well-adjusted part of the industry?

We can see how each organisation which has a travel policy has in effect, it’s own “family – squabbles” to get through, in relation to Serviced Apartments.

Familiarity and COMMUNICATION lead to acceptance and mentoring, and then the “family” of accommodation types can achieve more, with each member focusing on it’s natural contemporaries (Business Travellers). After all, the alternative to Business Travel is …videoconferencing!!

OK, you say, but staying in a serviced apartment is the easy part. Booking them seems to present a challenge to the un-initiated. Clearly, in order to achieve the benefits from the New Arrival, there are some “behaviour issues” to work through:

Real-time Access to crucial (useful) availability – is it possible?

Flexibility combined with Autonomy – this is the recipe which combines the key ingredients of serviced apartments. But delivering this delicacy is a challenge faced daily by reservations staff. Genius is 1% inspiration, but 99% perspiration…

It’s an acknowledged convention of the whole accommodation industry that availability has to be managed actively, to maximise occupancy, in order to make buildings viable and sustainable as businesses.

Serviced apartment inventory and availability has sprung from businesses based in either Hotels, Conventional Lettings, or Property Development.

Inventory is much more fragmented than the equivalent for hotels, and apartment occupancy percentages also have to be allocated in larger parcels. This is because hotels tend to be bigger than serviced apartment buildings.

What’s different about availability in Serviced Apartment buildings?

The Reservations manager is working strategically with a “distressed inventory” in dynamic profile of ‘gaps’, formed by remaining availability. However, unless later bookings or requirements are 100% reliable and perfectly fit the gaps, buildings will soon be looking “marginal” or nervous on occupancy, even two weeks prior to any given date. This, most crucial of all availability cannot be (and is not) surrendered to the GDS!!

Comparing the alternatives:

Whereas an hotel may have 100 identical rooms, giving 2,800 room-nights in 28 nights, the average serviced apartment building may have 10 comparable apartments, giving just 280 room-nights in the same period, for example.

A typical booking for an hotel may be as long as four nights, which in the above example is a mere 0.14% of that hotel’s total occupancy for the 28 nights the reservation manager has to sell.

In comparison, a typical booking for a serviced apartment may be 14 nights, which is 5% of that serviced apartment building’s total occupancy.

So …the typical serviced apartment booking is more than 30 times a “bigger deal” than the hotel reservation. This is why booking serviced apartments requires the additional dimension of customer care provided by the reservations staff and management, over that required for a hotel booking to be made online.

In hotels, where the overwhelming bulk of stays are very short indeed, there is a high percentage "churn" each day, accepted as a fact of life, because the business-world is geared to need this flexibility. There is also therefore, a high likelihood of last-minute arrivals. This makes it much easier to react to cancellations and late bookings.

Serviced apartment reservations managers will "juggle" bookings several times before arrival, in order to maximise occupancy, they will also have to apply a realistic cancellation policy, to mitigate potential risk of losses, because serviced apartment buildings cannot simply wait for the perfect guests to “walk-in” at the last minute, and then stay for 14 nights or more!!.

What can I do to take advantage of Serviced Apartments and obtain their value?

The better the lead-time, the better the result will be.

It’s better to start REALLY EARLY, with a sensible - but postpone-able, set of dates.

Then, with good communications (and, crucially, well-established relationships) the best path can be found to balance commitment with flexibility.

 

The Scale of Key stakeholders and their perceptions of Serviced Apartments:

Delighted Assignees who can live the way they want to - Home from home, leave me alone. You can snack, you can do your laundry for next to nothing, you can even have visitors over.

Happy CSR Director - sees a better balance between business travel & carbon emissions.

Contented Financial Director who sees an Austerity Sales pitch on rates - More space for less cost, but ALSO savings on Food & Beverages - Assignees buy food cost-effectively

Approving HR Director – sees key staff more willing to travel to a Home from home,

…. And a Stressed Travel Arranger (TMC/Relo/Travel Manager/Procurement) because they still have zero reaction time and feel insecure because they can’t book online!!

A good Serviced Apartments Agency therefore needs to act like a Family Therapist, enabling the organisation to find a place in the Family, for the “New Arrival”.