Investor confidence, more transparency and technology, and increasingly educated travelers are adding up to a bright future for the extended-stay/aparthotels segment in Europe, according to CEOs at the Serviced Apartment Summit Europe.
LONDON—The extended-stay segment will soon be heard.
Whether this sector’s products should be labeled serviced apartments, extended stay or aparthotels, its leading companies feel the next few years will bring significant growth, perhaps at the expense of traditional hotel companies, sources said at a panel tilted “CEO hard talk: Unlocking the future” at the Serviced Apartment Summit Europe.
CEOs from five companies in the segment said technology, investor confidence, social media and increased supply and education will be catalysts for change. Now is the opportunity to make solid leaps, sources said.
“How travelers/consumers think about travel has dramatically changed, which is great for us,” said Sean Worker, CEO of BridgeStreet Global Hospitality, the Reston, Virginia-based extended-stay firm with seven brands, including Mode Aparthotel and Living by BridgeStreet. “The change has been quantum, and we’ve seen travel managers looking for alternative supply.”
Karim Malak, deputy CEO of Adagio City Aparthotel, said the segment has room to grow.
“The forecast will be more supply for our sector, as some markets have low penetration,” Malak said.
He added that while his brand has product scattered across Europe, the Middle East and Brazil, it has a high penetration in France. “(The) Paris market has been like a washing machine,” he said.
Worker said that while the segment is lagging behind traditional hotel companies, certain companies have ample room to accelerate.
“There is opportunity for those who know their true north,” he said. “The industry was homogenized three years ago, but now there is clear differentiation, and in the industry we’ve seen more PropCo/OpCo deals than just reselling.”
Worker also said he sees more interest from the investment community, which has become more familiar with the segment, and more confidence as benchmarking becomes more prevalent in extended stay.
Tom Walsh, CEO of Staycity Serviced Apartments, which in the days before the conference debuted a new premium brand, Wilde, said extended-stay operators have reason for optimism.
“We’re very optimistic, as we see underpenetration and have institutional backing that recently was not there,” he said.
Guus Bakker, CEO of the Europe, Middle East and Africa region for Australian firm Frasers Hospitality, said the extended-stay sector is seeing improved levels of capital expenditure, too, which will improve guest satisfaction.
George Westwell, director of Cheval Residences, said companies are investing more in technology, which is one important component to improving guest reviews, although he added it has to be treated in the correct manner.
“We have a lot of information, but the problem is that it sits in silos. We’re far behind (traditional hotel companies),” he said.
Worker said extended-stay brands have the potential to make up the gap.
“We can catch up quickly, and we need more technology so that we can be embedded and have booking in real time, which travel managers want,” he said. “We want our product to be as focused and delivered as fast as Amazon Prime, with personalized delivery.”
One recent initiative from BridgeStreet was its February launch of BridgeStreet.com, which Worker said is the first online travel agency for business travel.
“(The OTA has) signed 30,000 units in the last 90 days, driving revenue and connectivity to responsive customers,” he said. “We only do business with other businesses.”
Malak said that the sector will stand out in consumers’ minds as extra development resources are budgeted.
“Then there will be product differentiation, and that differentiation includes design, marketing and communication,” he said. “We’re also seeing more branded apartments around hotels.”
Malak added AccorHotels’ recent forays into alternative accommodations are evidence of the market share moving over to the serviced-apartment sphere.
The future beckons
In some customers’ minds, the sector sits closer than traditional hotel product to upstarts such as Airbnb, which Westwell said is impossible to ignore.
There are other clouds peppering the horizon, panelists added.
“Airbnb has been brilliant at educating the consumer, but (our sector has) definite opportunities to introduce new initiatives, although we can be slow to do this,” Westwell said.
Staycity’s Walsh said his company tried listing on Airbnb and warned the audience about one of the San Francisco-based firm’s rumored initiatives.
“Airbnb is looking at instant booking, and Booking.com is going hell for leather on this, too,” said Walsh, who added Staycity is “heavy on social media reviews.”
Frasers Hospitality’s Bakker acknowledged possible threats but stated that Airbnb’s supply is a lot more impressive than its market share.
The panelists saw other murky weather patterns:
- Adagio City’s Malak: “In some markets, lease levels are a little high.”
- Bakker: “Interest rate increases are affecting valuations.”
- Westwell: “Brexit.”
- Walsh: “Growing teams and spreading culture are challenges.”
- Worker: “The lagging of understanding from government and municipalities. We’re seeing that in Barcelona, Paris, New York City, San Francisco.”