When relocating employees or accommodating those on long-term assignment work a hotel just won’t do. For one, it’s a costly way of looking after staff on long stays, and secondly, it’s only fair that these business travellers have more creature comforts available to them than a hotel normally affords in a standard room.

Being able to spread out in a sitting room or cook an entire meal in a kitchen is far more appropriate than perching on a bed to relax when staying away from home for long periods. It’s these situations that have driven the alternative accommodation sector over the past decade.

“It is as much about wellbeing as it is about cost,” explains Charlie McCrow, owner of The Apartment Service specialist booking agency, the largest in Europe. “It’s about space and an environment with a separate lounge.”

Karim Malek, CEO of Aparthotels Adagio, part of the giant Accor hotel group, believes apartments have another key benefit, of a seamless transition between home and the away-from-home environment. “You can keep your lifestyle habits,” he says.

“You can do your own thing, so not waste time in a restaurant and keep your exercise habits. You can work, cook, sleep, invite colleagues round, and even take your pet with you so it’s a much more flexible environment and it gives you more independence.”

Budget bonanza

Traveller satisfaction is the big benefit for the end user, which also ticks the employer box for traveller wellbeing. But the real benefit for travel managers are the cost savings.

Adagio’s Malek reckons savings can be as high as 40% when comparing total cost of stay (ie. room, food, laundry etc), based on a one to two-month stay. Savings would be more in the region of 10%-15% on shorter stays of four nights or more.

Wesley Shelling, Head of Operations at SilverDoor serviced apartment agency, compares a single night in a four-star London hotel at £197 per night to a one-bed apartment for £162 and a studio at £150.

“Plus a one-bed apartment is twice the size of a hotel room,” he says. “The longer you stay the more the cost benefits accrue. After three months there are really significant cost savings.” VAT dropping from 20% to 4% after 28 nights is another cost benefit.

Long-stay accommodation has come on in leaps and bounds over the past decade which means that some of the challenges for travellers in the early days have almost disappeared.

For example, it’s rare today that travellers have to hunt down the pick-up point for the door keys – previously some-where such as the local newsagent or a safe box – as many have 24-hour receptions.

Similarly, technology has enabled live availability and instant bookings in some cases, so it’s much easier for a corporate to integrate non-hotel accommodation into a hotel policy as a booker no longer has to hang on the phone to secure the apartment.

And there are multiple benefits from major hotel groups entering the fray: it’s easy to negotiate a corporate contract; some soft benefits are available in return for volume; they are present on the GDSs and corporate OTA sites; and can provide live availability.

Keys to success

However, SilverDoor’s Shelling says that the industry is “still a little bit behind compared to the hotel sector in terms of offering live availability”. SilverDoor provides online availability for most of its supply and blends offline with online, depending on what the client wants. It also offers MI and standardised cancellation policies and payment options. 

Inconsistent quality was another potential pitfall, but today the majority of the larger operators have standards equivalent to hotels. The Apartment Service agency has a database of some 1.17million apartments in managed buildings in its global portfolio spread across 15,500 locations – but the agency only deals with those operators that have been verified. “We know who the operators are, shape our portfolio by the feedback we receive and offer after sales support,” says McCrow.

SilverDoor says 24-hour reception, meet and greet, and online check-in are the norm today across its 170,000 properties. “We are striving for consistency,” says Shelling. The company recently achieved ISO 27001 and ISO 9001 accreditations, which goes a long way in this regard.

Furthermore, ASAP’s efforts to introduce a specific serviced apartment accreditation programme will further promote consistency.

Small glitches remain in what is an increasingly fragmented marketplace as some of the small serviced apartment operators may provide 20 units in the same building but are different sizes and different prices.

In these cases, online booking can be challenging. “Serviced apartments are not a commodity generally and these smaller operators usually only offer offline booking and are probably from a property background,” says McCrow.

Consistency of product tends to come  from the larger operators. TMC Reed & Mackay, for example, works with SITU,  City Apartments and Edyn.

Today, the market embraces a plethora of alternatives to hotels, including home stays, corporate housing, branded residences, extended stay and aparthotels. It’s not only a burgeoning market but one in which the lines between them are being blurred by the day. 

Defining factors

“There is tons of confusion out there,” says McCrow. “What is a serviced apartment? At one end is a hotel with 150 apartments and at the other end is a property owner with 15 units.” Call them market growing pains but these characteristics can manifest themselves in non-standardised quality.

Traditional serviced apartment operators are reinventing their products and launching new brands. For example, SACO launched the Locke brand, which has drawn in clientele from the fashion and tech industries, Cheval created Cheval Maison, Staycity added Wilde, Ascott has Somerset and lyf, while Frasers has Capri and Modena.

In London, Lamington launched room2 as what it calls a ‘hometel’ brand, combining the best of Airbnb, serviced apartments and boutique hotels.

Meanwhile, the home rental market, popularised by Airbnb, has widened to include more upmarket equivalents such as onefinestay and Under the Doormat.

Airbnb has had its challenges in terms of duty of care to satisfy the corporate sector.

The deaths of five people in an Airbnb single-night rental in California on Halloween last year hasn’t helped their cause in this regard.  Airbnb co-founder and CEO Brian Chesky has at least announced a change in company policy as a result, to screen and flag potential high-risk reservations across its 7million listings by the end of 2020. Whether this action will be enough to woo risk-averse corporates remains to be seen.

Merilee Karr, founder and CEO of Under the Doormat, operates 300 homes in London and plans to triple that number by 2025. Part of the Expedia global partner network, it offers live availability through Expedia or via its own website.

”We vet every home and having a licensee ‘lite’ arrangement with Marriott means that all our systems, health and safety standards and quality was vetted thoroughly,” she says.

Onefinestay is part of Accor and offers a curated hospitality experience with a personal welcome, 24/7 guest support and the option to add tailored amenities and services such as chauffeurs, grocery deliveries and bespoke destination experiences.

Accor is one of the major hotel players to have launched a long-stay brand, Adagio, while the other key players in this sector are Marriott with Residence Inns and IHG with Staybridge. Adagio provides 112 aparthotels currently and plans to double that figure by 2024. A newcomer is budget hotel operator Yotel with its extended stay brand Yotelpad, currently with three locations in Switzerland, all with meeting and co-working spaces.

Co-living accommodation units are another growing part of the market. Targeted at young professionals, developments tend to be multipurpose with a co-working element. Accor has already got in on the act with the Wojo co-working brand, which will appear in hotels including Adagio as well as in standalone Wojo properties. Developments are focussed on Europe’s capital cities.

Increasingly, property companies are behind many of these developments. For example, Oakwood is now owned by Mapletree, a real estate investment company. Entities called REIT – real estate investment trusts – are also appearing in the marketplace, which own and invest in hospitality assets. It seems likely that real estate, hospitality and travel will converge and this could also be good for industry-wide standardisation and quality control.

According to findings in the bi-annual Global Serviced Apartments Industry Report 2020/21 (GSAIR), apartment operators have shown improvement against five benchmarks: online reputation, revenue per available room (RevPAR), achieved rate, average length of stay and occupancy levels.

The report says the number of serviced apartments included in an annual hotel RFP is growing conservatively year-on-year but two-thirds still do not include them. Those that do are spending just under 10% of their accommodation budgets on serviced apartments. Corporates tend to book via an agency channel (53.8%) or self-booking tool (42.3%), says the report. 

Market growth is something all industry observers agree on. Adagio’s Malek says:  “The penetration rate of aparthotels within the hotel sector in Europe is only 3% but in the US it’s at 10% so there is huge potential.” 

It’s easy to be optimistic about long-stay options for business travellers as the growing pains will be outweighed by new developments of traditional and new players, by greater choice and, ultimately, by a market that works seamlessly alongside hotels in terms of quality and booking processes.