Jonathan Humphries, Professor at Ecole hôtelière de Lausanne, hosted a panel of students from top hotel management schools to discuss one of the hotel industry’s most dynamic sectors: serviced apartments and extended stay, at the Serviced Apartment Summit in London on July 12-13th. One of his students, Daniel Bischof, shares his perspective.
Increasing choices for serviced apartments
These days, browsing through Airbnb can reveal interesting listings such as “The Penthouse” conveniently located in upscale Midtown New York City and available for 7,500 euros per night. A few years ago this would traditionally be found through intermediaries specialized in exclusive, luxury apartments.
Today the market is shaken up and so is customer behavior—evidenced by the recent partnership between Airbnb and BridgeStreet Global Hospitality, a corporate serviced apartment service with 50,000 apartments in 60 countries. In the United States, the sector is led by chains such as Marriott, Hilton, IHG and Choice Hotels, which differentiate their brand portfolio with upscale and mid-priced categories. The business model runs on adapting yield management techniques to enable different pricing according to length of stay. In Europe, serviced apartments have long been treated as niche products mainly focused on business travel, and few seem to grasp the potential to capture leisure travelers. Despite the under-development of this sector in the region, it is in the midst of a transformation driven by increasing traveler demand.
Blurred lines between brands & concepts
A converted breed of travelers is shaping the new context of the European serviced apartment industry. When visiting a new destination, whether the trip is leisure- or business-related, they want to experience the location’s best offers in terms of restaurants, meeting spaces, attractions, shopping, etc. – and this quest has to do with value, convenience and quality. Due to increased lodging alternatives and boosted professionalism, they are keen to choose private apartments and limited service hotels. In tandem with that behavioral shift, diversified offers and listings now appear on unified platforms such as Booking.com, Airbnb or TripAdvisor.
Booking & decision-making process
In the traveler’s mind, decision-making criteria in selecting a lodging solution are evolving. By way of an example: for a trip in London, rather than deciding to stay in a Hilton-type hotel and then searching for the best deal, the quest starts with exploring the options available. That happens on different platforms depending on the motivation: for a holiday with kids, one might begin with TripAdvisor, while the search for a business trip often starts at Booking.com. Customers are likely to see London’s Hilton Park Lane next to limited service boutique hotels with similar price ranges. They might still choose the traditional hotel, but their options are numerous and brand loyalty doesn’t always come first.
This is a unique opportunity for serviced apartment providers to optimize their visibility in a manner similar to hotels, beyond the corporate niche. As a differentiation point, rather than “hard factors” (room size, amenities, services, etc.) brands should focus on “soft factors” such as atmosphere, communication and brand style.
Being visible in a landscape of listings
A closer look at booking behavior reveals the role of intuition: the process starts with meta search sites (Google, Trivago, etc.), booking and review sites (Booking.com, Expedia, Trip Advisor) and non-internet based distribution channels (magazines, TV programs, advertising). The final booking might still happen on a hotel’s website or via a phone call – but only if people develop brand awareness during the process.
While a powerful tool and advantage of established players such as Marriott’s Residence Inn and IHG’s Staybridge Suites, brand recognition is not sufficient for future success. For instance in terms of corporate travel, providers must identify who makes the initial filtering of extended stay and apartment options: associates, personal assistants or HR officers? What options are they looking for, and which channels do they consult first?
Platforms and behavioral context
Not only have the channels changed but so have the devices through which they are accessed. Beyond responsive design solutions for websites and tablets, content can be adapted based on devices to efficiently capture today’s client and offer listings to the right person at the right time.
For instance, users tend to use smartphones to browse, explore and find inspiration, while they traditionally prefer to use a laptop or phone call for the final booking. There is potential for the hospitality industry at large to become more efficient and make use of techniques beyond yield management. A serviced apartment should not be a service-limited, stripped-down alternative to a hotel; rather, it could be recognized as a new preferred way of guest accommodation.
Grasping the potential for the sector
A key success factor for the serviced apartment industry is cross-distribution throughout different channels, enabling visibility for today’s traveler. There is a need to collaborate more closely with different platforms and providers to close the gaps within their supply chain.
Players in the serviced apartment sector should make better use of this macro-context and shifting traveler behavior. At the end of the day, they should focus on one priority: the end customer who sleeps at their venue and ideally leaves with positive memories. At this stage it does not matter to guests whether they stayed at a hotel or apartment—but service providers can do their best to be at the center of a memorable experience.
About the author
Daniel Bischof is a Bachelor student at Ecole hôtelière de Lausanne. He wrote this piece with guidance from Jonathan Humphries, Senior Lecturer at Ecole hôtelière de Lausanne.
