SERVICED APARTMENTS
AT YOUR SERVICE?
Content fragmentation has long plagued the extended stay sector, but new tech and tools are helping to connect the dots and make serviced apartments more accessible to corporates
By Lauren Arena (published 19 July 2024)
After coming into its own during the pandemic and its aftermath, corporate demand for serviced apartments has levelled off this year, according to the Global Serviced Apartment Industry Report (GSAIR) 2024.
The number of corporates booking serviced apartments for business travel has dropped 11.2 per cent year-on-year, according to the report, while usage of this accommodation type for relocation is also down year-on-year, with 56 per cent of corporates booking apartments for this purpose, compared to 74 per cent in 2023. However, the number of bookings for assignment or project work has increased slightly to 63 per cent, up from 58 per cent in 2023.
According to the report, which is based on a survey of some 3,000 corporates, serviced apartment operators and booking agents, the competitive advantage enjoyed by serviced apartments post-pandemic has been “eroded by hotels” that are expanding their own extended stay brands and, importantly, come with built-in GDS connectivity.
“People were accepting of a more complex booking process [in the aftermath of the pandemic] because there were so many different factors to consider,” says Danny Cockton, vice president, global travel services at engineering and consulting firm Wood PLC.
“As we've come out of that, people want to revert back to what we were all striving to achieve pre-pandemic, which is a simple, single point for [all] content that is really easy to pay for and really easy to reconcile,” he explains.
Based in Aberdeen, Cockton oversees Wood’s global travel programme of 36,000 travellers – 6,000 of whom are ‘active’ travellers – where the average length of a trip is 3.3 nights. But, given the project-based nature of the business, longer-term assignments are also part of the mix. Nevertheless, Cockton says his programme features more aparthotels rather than traditional serviced apartments because the latter “isn’t readily available at the point of sale”.
“At Wood, what we ask our suppliers – and our TMC in particular – is to give us the same content offline as they would online and make it just as simple to book. And it's not just about the booking, it's payment as well. Payment has to be as simple as the booking and I think sometimes we overlook that factor,” says Cockton.
In fact, the GSAIR 2024 report found that compliance is now the most important factor for travel and mobility managers when it comes to choosing a serviced apartment, above both location and traveller safety. Last year, the top three factors were traveller safety (1), location (2) and cost (3).
“I think there was a real opportunity [in the wake of the pandemic] for the serviced apartment sector to really press the TMC sector [to make this content accessible],” Cockton adds. “Hopefully, what we're going to see now is a drive from buyers to push the supply chain to make that possible. Without that push from us, it won't happen.”
Travel industry veteran and former global head of travel, meetings and events at EY, Karen Hutchings, said TMCs will likely “wake up to the opportunity” when corporates start using serviced apartments more, but that traveller education remains a critical piece of the puzzle.
“What we used to find with travellers at all the companies I worked at was once they had used a serviced apartment, they gravitated towards that [accommodation type] for their longer stays, because they understood it and liked the extra space and independence it gave them,” says Hutchings.
This chicken-and-egg scenario has undoubtedly contributed to the inertia around content fragmentation in the sector. But new digital tools are helping to connect the dots and make serviced apartments more accessible to corporates.
Specialist booking agency SilverDoor, for example, launched a new API earlier in the year that enables TMCs and direct corporate clients to access the content of more than 2,600 serviced accommodation providers worldwide.
Once connected to the API, companies can display the aggregated content on their own platforms alongside hotel content and provide comparisons of nightly rates, facilities and carbon emissions. Users can also make enquiries and instantly book the serviced apartment content as well as track spending in real time.
SilverDoor’s chief information and technology officer, Hanish Vithal, said the API can “seamlessly plug into everything that TMCs and our direct corporate clients currently use” when booking travel.
“We've really tried to make the solution flexible because we recognise that there are so many solutions out there and that we needed to build something that fits everyone's offering already – as opposed to them changing their technology or spending additional resources to make it work with our technology,” he explains.
“For the end user, the experience should stay the same, they should not notice any difference in terms of where that information is being plugged in from or where it's been pushed to.”
Following an initial launch in January, the company is now looking at ‘phase two’, which will include “increasing our connectivity, more integrations and working directly with our supply chain to connect property management tools”.
Moving forward, however, Vithal hopes SilverDoor’s API will become the industry standard. “We would like to have a universal API for the sector whereby everyone has access to it, they can use our content and also contribute to it… I know the GDS has played a part [in moving the accommodation vertical online], but I think that's old technology and it's probably not [best] suited for the serviced apartment sector,” he says, adding that “we actually want to compete with the hotel sector. We want to give you that level of technology.”
On the operator side, SilverDoor SVP of partner relationships Alex Neale says “there’s still a lot of work to be done” to encourage property partners to digitise booking and management systems “and there are a lot of different operators on a lot of different products”. But, he says, “it’s certainly developing quickly”.
“It will take time for serviced apartments to catch up [to hotels] in certain elements, but there's quite a strong online offering in many markets already and we have a number of corporate programmes that are already committed to using online availability alongside our offline service,” Neale adds.
Meanwhile, serviced apartment specialist Mysa in June rolled out a new tool that allows corporates to “build-your-own” serviced accommodation programme by enabling direct connectivity with property operators.
Known as ‘Build’, the platform is powered by Mysa’s Myo online booking tool (first launched in 2022) and provides a suite of modules that can be tailored to specific policy requirements. This includes real-time rate negotiation and booking capabilities and different tiers of permission for different users. All properties within the tool are vetted by Mysa for safety and security.
“The tool provides a blank canvas so corporates can create a serviced accommodation programme that fits in with the company’s procedures,” says Mysa founder and CEO, Gary Hurst. In order words, to ensure compliance with due diligence processes and existing back-office systems for invoicing and expense claims.
“[Our] system is built of many different functionalities what are all connected by APIs, so that gives users the flexibility to integrate into other technologies – whether that’s a connection to another booking platform [via a TMC] or feeding data to an expense management system or to a travel security company,” Hurst explains.
“The biggest challenge for buyers is to gain visibility into the serviced apartment sector – and to know who the operators are,” he adds. “By providing the ability to have direct contact with operators, you not only remove the cost of third-party bookers, but also create opportunities for customer care to flourish.”
Hurst insists this will also streamline procurement and booking processes because “operators are feeding directly into the tech and essentially own a piece of it with their own little portal”. Whereas third-party aggregators “are still reliant on their supply chain to feed them the availability that is then fed to the client”.
Another relatively new entrant looking to shake things up is extended stay accommodation platform AltoVita, which is set to launch a new AI-powered rate forecasting platform in early 2025.
Unveiled at the company's recent summit in London, the Alto360 data intelligence tool will analyse historic pricing and market trends “in seconds” to predict future rates, and allow travel buyers and global mobility managers to benchmark policies against market data for cities across the world. This includes breakdowns of average daily rates by location, length of stay, property type and travel dates.
The tool will include rate forecasts for both hotels and serviced apartments, and enable corporate clients to compare average daily rates and budgets, according to the company.
Speaking at the summit, AltoVita CEO and co-founder Vivi Cahyadi Himmel said the company is also looking to combine short and extended stay accommodation. “We want to consolidate extended stay and short stay, and remove the GDSs entirely from the equation,” she said.
Meanwhile, serviced apartments operator Frasers Hospitality in June partnered with Sabre to implement the latter’s SynXis retailing tool, which allows operators to sell tailored ancillary services.
“[This] enables us to offer additional services directly to the customer at the time of booking, and to curate more personalised and tailored guest experiences,” says Frasers Hospitality COO, EMEA, Rebecca Hollants Van Loocke.
And while Frasers content is bookable via traditional distribution channels, Hollants Van Loocke concedes the GDS “was always built around hotels, so I would like to see that evolve to enable us to give a lot more detail and more specifics around different lengths of stay”.
That evolution – and the integration of serviced apartment content – whether via the GDS, the cloud or through API plug-ins, may very soon materialise.
Hutchings, who formed her own consulting firm earlier this year and is also a strategic adviser to SilverDoor, said the slew of new entrants “is a big demonstration of the fact that serviced apartments are a viable option beyond the mobility/relocation sphere and can be a part of the overall transient business travel programme, especially as sustainability drives less frequent but longer trips.”
Even so, Wood PLC’s Cockton warns: “Buyers need to be brave enough and courageous enough to push the supply chain to deliver what they want. We can make these things happen if we work collectively [and] that's part of the challenge.”
SOURCING REMAINS LARGELY OFFLINE... FOR NOW
• The number of corporates booking serviced apartments through TMCs has almost doubled in the last year (increasing from 31 per cent to 63 per cent of surveyed buyers), according to the Global Serviced Apartment Industry Report (GSAIR) 2024.
• Fewer corporate buyers use a specialist serviced apartment agent – 38 per cent in 2024, compared to 50 per cent in 2023 – while 12.5 per cent now book via a bespoke enquiry portal and a further 12.5 per cent book direct.
• Most of these intermediaries (73 per cent) report serviced apartment bookings are made manually, direct with the property, compared to 40 per cent in 2023, while just over half (55 per cent) source serviced apartments via a specialist agent, compared to 67 per cent in 2023.
• Most buyers (75 per cent) said their serviced apartment costs have risen compared to 2023, while just 12.5 per cent said costs remain unchanged.
• SilverDoor’s latest quarterly report, covering January 2024 to April 2024, found the average daily rate (ADR) for apartments globally increased by 4.98 per cent to £150.11 year on year, but fell by 4.75 per cent compared to the previous quarter.
• Booking data from the serviced apartments specialist suggests global rates will fluctuate throughout 2024, but an overall year-on-year reduction in ADR is expected, including in key cities such as London, Chicago and Singapore.
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