- ABODA Global Housing Management – Lee Curtis
- BridgeStreet Global Hospitality – Steve Burns
- European Holiday Home Association (EHHA) – Carlos Villaro Lassen
- Oakwood Worldwide – Patrick Hegan (Moderator)
- STR – Thomas Emanuel
At the ASAP 2017 Serviced Apartment Convention, the ‘Global Business Update’ panel on 7 December explored the global issues and challenges facing the industry.
1. How have issues surrounding safety & security affected our industry?
STR’s Tom Emanuel commented that the industry across Europe had delivered a stoic performance in spite of the terrorist attacks over the last 12 months but that from 2018, with the new data protection laws coming into effect, businesses need to ensure they are fully data-compliant. Following on, Steve Burns, BridgeStreet emphasised the need to offer full connectivity ie for the operator’s systems to be able to talk to the systems of the big corporates to be able to fully deliver on duty of care so, for example, in the event of a terrorist incident companies can immediately report that their employees are safe.
Lee Curtis, President of ABODA in the USA, agreed with this position commenting that his organisation is doing everything they can to protect clients including being plugged into the Dow Jones compliance tool so they are continually checking their owners’ operations, background of landlords etc. He also commented in terms of the competition from the sharing economy that he does see signs of corporates moving away from Airbnb in view of the importance of companies’ knowing who their employees are staying with so they fulfill their duty of care obligations.
2. How have labour conditions changed?
The shortage of labour in the run-up to and post Brexit is a concern and does mean that the sector is increasingly looking to more automation and for clients to do more things for themselves eg self-check-in.
Steve Burns, BridgeStreet, explained that in view of the cost of living pressures and people commuting long distances in major cities, they are recruiting now from different sectors not always within hospitality and this diversity is positive for the sector (especially for sales and technology roles). He is noticing a shift in people now choosing to join our sector. He also commented that consistently their guest feedback shows that the quality of their housekeeping is the most critical of all the guest services they deliver.
Tom Emanuel, STR, commented that the sector does need to be more proactive to shout about the effect that that loss of EU nationals will have on our sector commenting that when this issue is reported in the news it tends to focus on ‘fruit picking in Lincolnshire’ and not on people working in hospitality.
Lee Curtis similarly commented that even with, for example, a 15 dollar minimum wage in Seattle, that the ability to retain staff is an issue and ‘you’d still be working 2 jobs’ because of the high living costs in the city.
Note: the recent KPMG/BHA report confirmed that 75% of waiting staff in the UK are EU nationals and in London the percentage is even higher.
3. Have consumer expectations changed and, if so, why?
Tom Emanuel, STR commented that the strong 2017 year-to-date occupancy figures confirm that the UK serviced apartment sector is delivering well for consumers and is more than meeting consumer expectations, as it’s achieving above average occupancy at 82.4% (UK hospitality overall is 78%). It’s so positive that the travel industry continues to grow so strongly as people’s desire to see the world keeps growing. He also commented that with 17% growth in the new development pipeline by 2020 – this confirms that the serviced apartment sector is a booming industry, more than meeting today’s challenges and that its future is bright.
Steve Burns, BridgeStreet commented that their guests are looking for 3 key things:
- Arrival process works seamlessly and is hassle-free
- Wifi is stable
- A clean and comfortable apartment
In addition in terms of the booking:
- Honesty and trust: we need to ensure the customer that the apartment they stay in fully meets the promise they have been sold.
- Comprehensive choice of location is crucial: the right location is absolutely critical.
- Speed of booking: booking needs to be easy and possible on a mobile platform
In terms of consumer protection, Carlos Villaro Lassen of the European Holiday Home Association (EHHA) confirmed that it was the British who had invented this for outbound travel. He warned of the danger of regulating the short term rental sector which could involve an increase in taxation for operators.
Lee Curtis referenced that buying patterns are changing significantly – there are, for example, 3,800 Airbnb rentals in Manhattan where Airbnb has been declared illegal. And although in the beginning the sector used to rent furniture so it had a standardised feel, now the trend is towards boutique, design-led properties which are fun and sexy. He commented that millennials are driving the future buying patterns. He felt in the UK the sector is competing more head on with hotels, which isn’t the case with extended stay in the US.
Technology is playing a big part in shaping the future of the industry but equally brand recognition isn’t there yet as consumer awareness of the main brands is low.
4. As competition continues to grow, how can we contain costs without sacrificing quality?
Tom Emanuel commented that millennials are fully accepting, for example, of weekly cleaning, and don’t need daily cleaning. Steve Burns referenced that the serviced apartment model does lend itself well to controlling costs but operators must invest in a few key things – great technology, a strong sales force (BridgeStreet have a 100 strong sales force worldwide as the corporate traveller is their focus) and in the supplier partner community. Key to it all is to offer a great product in a great location at a great price.
Carlos Villaro Lassen commented that competition is ever-increasing and the operator who wins will be the one whose property is closest in terms of the desired location. He believes the customer is willing to pay for good quality and that operators do compete on quality.
Lee Curtis commented that the US model is different to the UK. He talked about the importance of both creativity and yield and above all being flexible, listening and adapting to clients’ needs. He referenced one client where the drive to reduce costs was such that they had to look for alternative lower-cost solutions and secured accommodation at the University of Washington as an alternative to keep within the allocated accommodation budget.