The connectors — the future of serviced apartment agency
Serviced Apartment News editor George Sell talks to leading serviced apartment agents about the impact of the Coronavirus pandemic and its potential influence in shaping the sector’s future.
The resilience of the serviced apartment sector during the Coronavirus pandemic has been well documented. The ability of many operators to trade through travel restrictions, often by catering to health and other key workers, thanks to offering self-contained units where self-isolation is possible, has seen the sector’s star shine brightly.
But what effect has the pandemic had on the agency businesses — the middlemen who connect business travellers with serviced apartment providers? And what will its implications be for them as they evolve to cater for an entirely new and as yet unknown corporate travel landscape?
The current, unprecedented, situation has presented agents with a unique set of challenges. Stuart Winstone, group CEO of SilverDoor, says: “Safety and hygiene is now the biggest concern for travellers, and is likely to remain a key consideration for some time to come. The pandemic therefore clearly presents both challenges and opportunities for the serviced accommodation sector. Collectively we have a unique advantage over other accommodation types in terms of controlling hygiene processes for the safety of our clients. Whereas hotels rely heavily on shared spaces, and private rentals lack the professional capacity to ensure the proper policies are followed, serviced apartments undoubtedly provide the safest environment in which the necessary measures and guidelines can be upheld consistently. As long as we can demonstrate these credentials to clients, and deliver on them, the opportunities here are clear for the sector as a whole.”
“The ongoing challenge — and opportunity — for us as an agent is to encourage similar standards of consistency and rigour across our entire global portfolio. In light of the pandemic, we have continued our push for clear and demonstrable safety and hygiene practices across the sector and encouraged all our properties to undertake COVID-specific risk assessments and documented control measures. Alongside this, SilverDoor, like many others, has embraced the opportunity to present a more human side to its business — something that came naturally to our team, both in our marketing approach and our client and partner interactions. Through our outbound interactive marketing and one on one calls — offering our clients the opportunity to talk to our staff members over video call for a friendly chat — we have been focused in bringing people together during this difficult period,” he adds.
Charlie McCrow, CEO of The Apartment Service, says: “Up to the middle of February we were, like most, fairly oblivious to the impending epidemic crisis and its effects. Our disaster recover plans were all up to date and allowed for this sort of incident. The initial challenge we experienced was how to smoothly close our offices and have all the teams work from home, but we were mostly prepared for that already as we have so many remote workers and offices. Also, our systems are all in the cloud. But there was some preparation for staff and the health and safety aspect of home working for those not previously set up for it. The other aspect was the pressure created on the accounts team, as many bookings cancelled and the effects of a different type of work process created extra volume. It didn’t take that long to sort this out and we are finding we have more time to start catching up with any outstanding ‘wish list’ items that we had little time to attend to before.”
Business travel has almost come to a standstill, and is likely to look very different when demand returns. Some of the emerging themes, according to Synergy Global Housing international president Stephen Hanton, include less short-term travel but more extended stay; a slower return for international travel, but increasing domestic demand; further scrutiny of quality standards and accreditation, with buyers looking for trusted partners that they can rely on; and increased pressure for sustainable solutions, driven by Gen Z travellers.
“Technology will be more prevalent, to ease process but also to reduce touch — ironically,” says Hanton. “The ability to control the customer journey and environment will increase, and guests will have more influence than ever on product selection.”
Jo Layton, director of CAP Worldwide, predicts that agents will need to attain new levels of flexibility and versatility to navigate the short- to medium-term situation. “After working for large agents/hybrids for the last 17 years, when we developed CAP we made the decision to create the company around what is possible — not just what is probable. We are all aware that we live in a VUCA (volatility, uncertainty, complexity and ambiguity) world, where in a ‘normal’ environment, we spend a huge amount of our time writing plans, forecasting and budgeting to manage the probable outcomes for our businesses. And, while appreciating that this is a mandatory activity in any business, being focused purely on what is planned can potentially prevent the engagement of leadership to imagine what is possible, and create a barrier to the company being agile enough to change when either something highly positive, or hugely negative, happens to their business. Currently, the business travel landscape has changed so significantly, that only those who have already thought outside of the box will now be in a position to pivot quickly to the next level of structure and service. Demand is unknown, no industry, company or sector can plan currently with confidence for either an immediate bounce-back or a slow burn to the end of the year, so being agile, and being able to meet the critical success factors of space and cleanliness is vital to future-proofing already established businesses.”
“When we created the business, we recruited a leadership and operations team who are able to flex their efforts across all areas of the business which, in turn, has ensured that when all hands were needed on deck, everyone was able to pull their weight effectively in any position, and ensured that CAP was able to ride the initial wave of this crisis,” adds Layton.
In recent months, two of the largest global operator/agent hybrids — Oakwood and BridgeStreet — have taken divergent paths in adopting new business models with Oakwood focusing solely on property management, and BridgeStreet exiting its branded managed portfolio in the US to focus on agency business. Is this the beginning of the end for the hybrid model? It’s a questions that divides opinion sharply.
SilverDoor’s Winstone says: “We’ve always believed that it’s necessary to choose an operator or agency business specialism and focus on that single aspect. This is because clients need the assurance that you’re either an expert independent agent or a fantastic operator — bolting on an agency division or some of your own properties takes away from your operation focus. Most clients don’t want to risk being pushed into an operator’s apartments because it suits them; they want the best option for their particular stay. Operating a global agency is a very specialised undertaking and requires a great deal of hard work, effort and dedication. To truly succeed as an agent, you can’t do it part-time. You need to be able to invest in customer service and technology, whereas operators understandably want to invest in bricks and mortar and deliver a unique accommodation option on the market. Hotel companies offering agency services died out decades ago; so we’ve always expected to see the same evolution in the serviced apartment sector.”
Charlie McCrow agrees: “I believe trying to mix the two will end, with companies either focusing on their property portfolios, like Oakwood, or on their agency activities. There are enough good sources and reasons now making it is easier to find what you want via networks or growing numbers of services providing information about good quality operators. Agencies can excel in this but as the world is very large and global coverage is a giant hurdle requiring large resources it will be hard for any one player to cover. I think though it is inevitable that strategic alliances will play a significant role here.”
But Stephen Hanton has a different take, and predicts the opposite. “We think that buyers will want the security of knowing that operators are managing duty of care and that supply chain is being measured. It’s more likely there will be a reluctance to enter into heavy lease commitments or to have high infrastructure costs around delivery. Basic business fundamentals stay the same but the need to adapt and change is constant.”
So looking beyond the current crisis, how is the agency business likely to evolve over the next few years?
Jo Layton says: “The future for agency, being a relatively low margin business, is in the agility and ability to adapt to the market forces that define the extended stay space. There are core requirements for any successful agency business, and many of these elements are reflected across all industries, and these will not change, but to be able to move quickly to fill the spaces left by others as they reassess and reimagine their businesses will provide opportunities and will shape the future of the extended stay industry.”
Charlie McCrow predicts better times ahead for those who can navigate the next few months: “Agencies are going to find it hard to not tighten their belts over the next 12 months at least but there are opportunities there and the promise of eventual return of demand at previous levels,” he says. “Less agency competition in the short term will help those that survive the pandemic — there will be lower overall demand but the opportunity is always there to get a larger share of what business there is.”
Stephen Hanton says we will see “increased use of technology to provide an easier and more efficient customer journey, increased use of data, stronger procedures and management of delivery, stronger relationships with philosophically aligned partners, as well as increased partnership and consultation in selling approaches and a focus on brands”. “We suspect that buyers will take less risk, they will seek reassurance,” he adds.
“With more travellers considering the benefits of serviced apartments at this time, it is likely that new audiences have been introduced to the market,” says Stuart Winstone. “Building on the aforementioned standardisation of health and safety across the board, agents will also need to evolve to develop the level of collaboration with partners to adjust to the ‘new normal’ of hygiene and distancing — something that our industry in particular is well equipped to achieve. Features such as contactless check-ins, traveller tracking technology and the complete digitisation of the entire booking process will be key aspects of the agency business over the coming years. Developing customer interest in apartments for short stays, for example, is one area of growth that can only be achieved at any scale via online availability.”
“Building trust within the industry is crucial at this time — clients need to be certain that the accommodation we source and the service we provide is infallible. Bringing serviced accommodation to the forefront of business travel, and indeed wider travel, will enable agencies to flourish,” he concludes.
This story was originally posted a year ago on ServicedApartmentNews.com
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