Briefing: The opportunity and challenge of hospitality alternatives

A report by JLL has found that serviced apartments account for less than 10% of total room inventory in London – and in UK regions account for only 3.9%. This highlights that there is still a lot of opportunity for serviced apartments and other types of alternative accommodation to grow. But are these relatively new products less attractive to investors?

Four hospitality experts discuss the performance of hotel alternatives:

JLL’s report found that there are over 1,500 serviced apartment rooms due to open in London between now and 2019. This shows that the sector is only going to become more mainstream, and with that there will be more evidence on performance for investors.

As discussed in the above videos, some regions across the globe, such as the US, have a bigger alternatives market than others. JLL states that the number of serviced apartment rooms vs hotel rooms in Singapore is higher than in London with 10% of total room supply.

In Europe, the market is still developing. According to JLL, the key serviced apartment operators at the moment are AccorHotels, The Ascott Limited, BridgeStreet Global Hospitality, Frasers Hospitality, and Go Native. They also state that some up and coming operators are Staycity, Zoku and Starwood Capital.

If you’ve been sent to this page and you’re not yet on the circulation list to receive these regular briefings and you would like to sign up, you can do see here. It’s free.

Video clips produced by ybc.tv for the Hospitality Channel, including interview from industry conferences such as the IHIF conference as well as specific Hospitality Channel shoots.

Briefing: Serviced Accommodation gets five-star recognition

The AA is now taking applications for its new Serviced Accommodation accreditation scheme. Unlike the hotel scheme, which rates properties from one to five stars, the new scheme only accredits properties which achieve a quality rating of three to five stars. This expansion of the AA’s services is a response to the growth of the industry and reflects the increased consumer awareness of the sector.

In these videos experts discuss customer expectations of serviced apartments, and the similarities and differences to hotels.

There is an existing accreditation scheme within the industry run by the The Association of Serviced Apartment Providers (ASAP). However, this addition could further expand interest in serviced products.

The AA Serviced Accommodation Scheme recognises 9 designators within the sector including Extended stay, Corporate Housing, Serviced Apartments, Budget, Studios and Aparthotel.

Product definition has been a continuing challenge for the industry. In its quality standards, the AA scheme clearly differentiates between Corporate Housing and Aparthotels, while ‘Serviced Apartment’ acts as a catch all designator. A separating criterion, for example, is that Corporate Housing would have a minimum stay and Aparthotels would not. Also aparthotels would have a fixed inventory and corporate housing would have flexible inventory.

The scheme scores the properties across 11 elements, which must all achieve a minimum standard to achieve a star rating. These elements include overall ‘hospitality’ (interaction and customer care), overall ‘service’ (staff performance and information provided), cleanliness, bedroom, bathroom etc.

The AA has been around for over 100 years and is one of the UK’s most recognised and trusted brands. The AA currently accredits Hotels, Restaurants, Guest Accommodation, Self-Catering accommodation, and Caravan and Campsites. The latest version of the AA Hotel Guide has details of over 3,500 establishments.

If you’ve been sent to this page and you’re not yet on the circulation list to receive these regular briefings and you would like to sign up, you can do see here. It’s free.

Video clips produced by ybc.tv for the Hospitality Channel, including interview from industry conferences such as the IHIF conference as well as specific Hospitality Channel shoots.

Briefing: Purpose built products for diverse consumers

A new trend report from Sabre has announced that ‘Demographics are dead’. You can no longer presume what any one consumer group will want, but you can build products that meet new expectations and invite individuals to enjoy them. The report says ‘Consumers love brands with meaning and personality’ and that 63% of global consumers claim to buy products and services that appeal to their beliefs, values or ideals.

These videos discuss creating products to meet consumer needs:

There is a growing consumer awareness of what is possible. There are many niche needs, new trends and individual desires that can be catered to with carefully designed products. The report states that 65% of consumers say bands should take a leading role in supporting individual happiness.

As the above videos reflect, many new products are fighting cater to new consumers’ needs but a strong identity and a unique angle, be it experience or price, can set a brand apart.

The study also identifies helpfulness and personalisation as two key elements of future hospitality products. Generic advertising is losing popularity. Instead brands must connect with individuals and demonstrate an understanding of them.

Trends in Sabre’s report were identified by TrendWatching, powered by a global network of 3,000+ trend spotters.

If you’ve been sent to this page and you’re not yet on the circulation list to receive these regular briefings and you would like to sign up, you can do see here. It’s free.

Video clips produced by ybc.tv for the Hospitality Channel, including interview from industry conferences such as the IHIF conference as well as specific Hospitality Channel shoots.

Briefing: Corporate travel demand is growing

According to Reuters, spending on business travel in Western Europe is expected to rise by over 6% in 2016. This is good news for serviced apartments and extended stay products, which see a lot of demand from this sector.

A report from the Association of Serviced Apartment Providers states that UK businesses registered an 86% increase in the use of serviced apartments in recent years. They also say that Booking.com is experiencing strong growth demand for serviced apartments.

These videos discuss corporate travel and serviced apartment demand:

A report by Accura Media Group found that four out of ten business travellers surveyed said they will travel more in 2016 than last year, while more than half say they will travel more than they did two years ago.

According to Reuters, Germany is the largest business travel market in western Europe at an estimated $57.9 billion, and spending is set to rise 9.5 percent in 2016.

In contrast a new report from the Global Business Travel Association found that business travel volume growth in US is slowing in 2016 due to global uncertainties, but the report still says there are reasons to be optimistic for 2017.

Association of Serviced Apartment Providers found that occupancy figure for serviced apartment across the whole of the UK were high. London was at 84% and the rest of the UK just slightly lower at 83.1%.

If you’ve been sent to this page and you’re not yet on the circulation list to receive these regular briefings and you would like to sign up, you can do see here. It’s free.

Video clips produced by ybc.tv for the Hospitality Channel, including interview from industry conferences such as the IHIF conference as well as specific Hospitality Channel shoots.

Briefing: How the world is adapting to the sharing economy

Airbnb has met a need on both the consumer and host side of its business model. It is up to date with the latest technology, and has even recently created an app for the Apple Watch. But regulation of this, and similar sharing economy business, has been an ongoing discussion. A trade body for sharing of economy businesses was started in the UK last year, and in January the New South Wales government in Australia, announced plans for a new regulatory framework for businesses like Airbnb.

In these videos an Airbnb executive and three hospitality experts discuss the success and future of Airbnb:

Tourism Accommodation Australia has announced strong support for new regulations to be created in New South Wales. They have emphasised that the, “’Collaborative’ economy must be about ‘contributing’ to the economy.” Airbnb offers 15,000 listings in New South Wales.

In the UK, according to Airbnb, 52,500 hosts shared their homes in the past year. The typical host earned £2,000 by sharing their homes for 46 nights a year.

Last year in the UK a law was passed making it easier for people to share homes. Also in March 2015, the trade body, Sharing Economy UK was launched following the recommendation of the Wosskow 7 Report, a Government-commissioned independent review.  SEUK has a code of conduct that members must sign up to, which according to the website, “was designed to enhance the operation, image and reputation of the sharing economy industry.”

A recent report on the SEUK website highlights statistics that show the growth of the sharing economy in the UK:

  • The number of businesses with no employees has risen by more than 70% since 2000.
  • 3% of the UK workforce is providing a service through a sharing economy platform.
  • A quarter of the UK population has engaged in a sharing economy activity.

If you’ve been sent to this page and you’re not yet on the circulation list to receive these regular briefings and you would like to sign up, you can do see here. It’s free.

Video clips produced by ybc.tv for the Hospitality Channel, including interview from industry conferences such as the IHIF conference as well as specific Hospitality Channel shoots.

Briefing: New entrants keep industry in flux

Last year Amazon entered and left the hotel booking sphere in a matter of months. The hospitality industry is in flux with new players of all kinds entering the hospitality industry at different angles.

Google has also made several ventures into hospitality with its now defunct hotel finder page, and more recently added hotel booking function on Google Maps.

When companies from outside the industry enter hospitality, this brings new challenges and opportunities. In these videos hospitality experts share their reactions to new entrants:

In April 2015 Amazon opened its amazon.com/destinations page, on which customers could browse and book accommodation form a variety of brands. However, this service was stopped just six months layer on 13 October 2015. No reason was given but a message was placed on the website and booking that had already been made where honoured. This was not the only change in Amazon’s business last year, in December Amazon Local also stopped its daily deals.

Google has made several ventures into hospitality with its hotel finder, and Google Hotel Ads through which hospitality companies can buy ad space that appears globally on google.com and Google Maps, wherever customers look for hotels.

A search for a hotel on Google Maps brings up a list of hotel and price estimates, in the side bar and on the map. An extra search bar allows the user to select holiday dates and then click through to a hotel site to complete the booking.

With these frequent changes, and more sure to come from big digital players, the industry must continue to keep its eyes open and be ready to adapt.

Video clips produced by ybc.tv for the Hospitality Channel, including interview from industry conferences such as the IHIF conference as well as specific Hospitality Channel shoots.

Briefing: Industry unclear on customer acquisition costs

According to Kalibri Labs customer acquisition cost is now upwards of 15%-25% of room revenue.

The shift from direct booking to multi-channel booking means that cost of acquisition has become more of a cloudy issue in hospitality. Businesses must now take into account; fees, commissions, marketing cost, revenue, and effectiveness of each channel.

So which channels overall are more cost effective? Our experts discuss:

The issue of Rate Parity has been contentious between hotels and OTAs. Any difference in the rate offered on each channel certainly affects the overall cost of customer acquisition. Any new channel, be it an OTA, Metasearch site or new entrant that a hotel or alternative accommodation decides to display rooms on, adds new factors and makes cost harder to keep track of. Not forgetting the bookings that still come in through non digital channels.

According to Travel Click, the Average Daily Rate from customer booking directly with a property either in person or over the phone is growing 5.6% in Q1 2016. In Q1, ADR is also growing 4.0% for CRO (phone calls to a brand), 3.3% for OTA, 3% for GDS (in-person travel agents) and 2.3% percent for ‘Brand.com’ (a company’s website).

If you’ve been sent to this page and you’re not yet on the circulation list to receive these regular briefings and you would like to sign up, you can do see here. It’s free.

Video clips produced by ybc.tv for the Hospitality Channel, including interview from industry conferences such as the IHIF conference as well as specific Hospitality Channel shoots.

Briefing: The real estate perspective

A survey by Berwin Leighton Paisner earlier this year found that, 70% of hotel professionals believe hotels will continue to outperform “traditional” commercial property investments.

A separate survey by PwC ranked hotels number 6 for investment prospects in a list of 20 real estate sectors. 62% of respondents to the survey said hotels had either good or very good prospects. Serviced Apartments came at number 9 with 59% of respondents saying the prospects were good.

This briefing features professionals from the hospitality industry whose focus is on investment and ownership:

The Emerging Trends in Real Estate Report from PwC showed that London was the most active European real estate market in 2014. A global ranking showed New York was the top city for commercial property investment in 2014 with a sales volume of $57,012, and London was second with $42,889.

The report also highlighted issues and concerns in the real estate industry. 47% of property professionals said a ‘shortage of suitable assets to acquire’ was a significant issue impacting real estate business. 78% of European respondents and 80% of US respondents said ‘demographics and social change’ would have an impact on business decisions in the coming years.

In the US, real estate business prospects for multifamily developers were rated as good (3.9 out of 5). Business prospects for real estate brokers where rated at 3.91 out of 5, and private local real estate owners had prospects of 3.86 out of 5. Prospects across all business sectors listed showed an improvement on the previous year.

Within the hospitality industry, BLP’s European Hotel Market Survey 2015, found that; 80% of hotel professionals say hotels are becoming more of a valued asset class for investors, but are still perceived by many as risky. In the survey, 89% of respondents foresaw increased competition from the residential market with short term lets.

If you’ve been sent to this page and you’re not yet on the circulation list to receive these regular briefings and you would like to sign up, you can do so here. It’s free.

Video clips produced by yBC for the Hospitality Channel, including interview from industry conferences such as the IHIF conference as well as specific Hospitality Channel shoots.

Briefing: Business, Leisure, Community – Hospitality for millennials

New hospitality brand Zoku launched this week. This and other brands are responding to the needs of the millennial business traveller. BridgeStreet’s Bleisure Report 2014 found that the line between business and leisure travel is blurring as more people are looking for ways to include leisure activities into their business trips. In the survey ‘Nearly half of respondents (46%) add personal travel days to business travel “every trip” or to “most trips”.’

Young business travellers want to experience the city they are in and socialise and want to stay somewhere that enables them to do this, as discussed in these videos:

BridgeStreet’s survey of 640 international guests shows that instead of only exploring cities on leisure trips, ‘83% of respondents use time on business trips to explore the city they’re visiting.’ The report also states that: ‘The top reason for bleisure travel is a desire to see the world and gain cultural experiences’. This is also shown in TripAdvisor’s Trip Barometer 2015, in which 29% of people said their reason for visiting a specific destination was that they ‘love exploring the area’.

Zoku is aimed at people who need short or extended stay accommodation in a new city for work. The accommodation incorporates social spaces, events, and app to help guests to make connections. Zoku’s launch announcement goes so far as to proclaim the ‘end of the hotel room’. Instead of bedrooms there will be ‘lofts’, which are designed to be living and work spaces rather than just places to sleep, and are intended to be more homely and social in the same sized space as a hotel room. There is a new take on the holiday rep as ‘Zoku Community Managers’ will help make introductions between guests. The first Zoku will open in Amsterdam in autumn 2015.

Services apartment brand SACO is also targeting the bleisure traveller. Their research shows that Millennials are 50% more likely to have travelled for business in the past two years than people over 35. It says that 14% of millennials see travelling as an important networking opportunity (as opposed to 7% of their older peers), and that ‘millennials look for accommodation with shared spaces for socialising in’.

Radisson Red is a new brand from Radisson hotel group which again is promising spaces for Gen Y to work, play and socialise.

If you’ve been sent to this page and you’re not yet on the circulation list to receive these regular briefings and you would like to sign up, you can do see here. It’s free.

Video clips produced by yBC for the Hospitality Channel, including interview from industry conferences such as the IHIF conference as well as specific Hospitality Channel shoots.

Chat Button