Criton‘s Julie Grieve looks at some of the potential alternative post-Covid business models for serviced apartment operators, and how technology can help them adapt.
Almost without warning, we have moved to a new world where sayings such as “stay safe” and “you are on mute” have become extremely common. I have no doubt that eventually we will stop saying “stay safe”, but “you are on mute” is likely to be here to stay as businesses and families around the world have realised they can meet, transact and socialise using online tools. Similarly serviced apartment operators around the world are considering how their guest expectations will have shifted and what will be the likely impact in the short term and what will become permanent.
Predictions are problematic in what seems like an ever-changing situation, but many operators are already looking at what will have to change in their business model to meet those expectations and continue to operate profitably.
What operators need to address over the short term
In the short term, I believe there will be two key themes operators must address: guest confidence and guest personas. STR is forecasting that international travel will not recover until 2022 with domestic travel recovering next year. As yet I haven’t read studies that divide that into corporate and leisure, I believe it’s a fair prediction that initially there will be reduced corporate travel and only those who must travel will.
As many serviced apartment operators focus specifically on corporate, this may mean that their focus needs to change to businesses who are closer to them because they don’t want their employees to use public transport or taxis. Signposting information for new guests such as local food recommendations, both takeaway and restaurants that you personally know and can recommend, will become a crucial part of building trust.
However, if your business was already reliant on travellers from local corporates which are no longer travelling, it may be necessary to pivot to gain more leisure guests. The key with leisure is to accept that many of the first-time bookings may come via an OTAs, but you must have the structure to capture directly any subsequent visits. This is where it is crucial to ensure your own website and booking engine is as easy to use as an OTA – check out Avvio and its AI booking engine Allora which can help you make the transition. Your CRM is also key in this, capturing email addresses can be tricky for serviced apartment operators with limited staff but you must build a process to do so as your future booking strategy relies on it. I would recommend For-sight CRM.
And finally, revenue management tools may not be something that you have used previously if you have been working in the longer-term corporate market, but with transient business your pricing strategy must be agile and a revenue management tool is a cost-effective way to ensure you are ahead of the game. Tools such as Right Revenue can help you achieve this goal.
As we initially come out of lockdown, we will inevitably see lower occupancy levels, with corporate guests who may not really want to be there and some leisure guests who are treating themselves. Both are going to be trickier to please particularly as operators endeavour to staff appropriately whilst not burning precious financial resources. In its recent fundraise, Airbnb argued that short term rentals are in a strong position during recovery because guests would have more control over their environments for sanitary purposes, the same is true for serviced apartments. How you ensure and promote cleanliness will be of great importance during recovery. We are used to promoting experiences but we must change our messaging to ensure guests trust our ability to keep them safe. There is an understanding now of how long the virus can live on surfaces and so technology which helps you remove in-room collateral, tent cards, guide books, magazine and so on will be a must.
Furthermore, providing a means of communication with reception or concierge to avoid guests needing to touch your phone or in-room tablet will be key. Guests trust their own device, they know who has touched it and where it has been. Giving them the means to use it to communicate with you will be essential. You can also use it to communicate about your cleanliness and safety programmes to reassure them that you are on top of it.
The great news for serviced apartment operators is that they usually run lean organisations, it’s their business model, but if they are pivoting to leisure it is important to ensure that their cost to serve doesn’t increase. Their offering needs to be very clear, so they are setting guest expectations at every possible interaction point, pre arrival and during stay.
The hospitality world one year from now
In the longer term, it is hard to believe that the world won’t be significantly different. I believe that again there will be three key themes: sustainability, cost management and sector blend.
During lockdown the obvious positive impact on our planet, of humans not travelling has become obvious, therefore how operators ensure they are as sustainable as possible will become a key differentiator, rather than a nice to have. We can’t continue to pay lip service to something which impacts our children’s children. Environmentalists will now have the proof they need to drive government policy and companies will feel able to respond because during the crisis we proved that much business can be done online.
Cost management will be key because investors and lenders will be asking, as a standard, about your ability to survive during another lockdown. And finally sector blend, with every change comes a new opportunity. Prior to COVID-19, hotels and serviced apartment operators were moving into co-working and serviced office operators were starting to offer living spaces. There is no doubt that the world of work is going to change again, which probably means more people will start to work from home full-time or more regularly. What opportunity does that offer you? Will they need somewhere to host meetings where their kids can’t be heard in the background? Might they want to bring their team to them once a week or month? How can our properties adapt to meet these new demands? Or will coffee shops and play areas be required as one partner is working from home?
Fundamentally it’s unlikely there will be a brand new, never seen before technology launched to help operators overcome this crisis because the technology already exists. Smart operators are taking this chance to review their guest journey and understand where they can implement or embed technology which delivers what their guests now want, while allowing them to reduce staffing and operational costs.
When Coronavirus arrived in the UK, the team at Criton immediately started to consider how our technology could help the industry in the short term and in the longer term. Our technology has proven invaluable to those businesses which have remained open, because guests trust their own devices and what to use them to engage. We are well placed to help other operators reduce the risks associated with in-room collateral and move to a world where their guest journey is partially or fully digital as their guests choose.
