After a welcome from ASAP CEO James Foice, and an entertaining and thought-provoking key note speech from mountaineer Cathy O’Dowd – the first woman to climb Mount Everest from both sides – a panel on the global outlook for serviced apartments got underway.
The first topic to be debated was safety and security. STR’s Thomas Emanuelsaid that during 2016, terror attacks in cities such as Brussels, Paris, Nice and Istanbul had an instant effect on the hospitality markets there, which took considerable time to recover. In 2017, he said, the attacks in Manchester, London and Barcelona, barely had any effect.
“There has been a shift in attitude and people are more stock,” said Emanuel. “People are more accepting that we live in a dangerous world and that if you travel to a major city, there is a chance that there will be a terror attack.”
Steve Burns of BridgeStreet said: “Business are judged on how they react when things go wrong – that’s why it’s so important for us to fulfil the duty of care that we owe our customers.”
As the topic moved on to labour conditions in the industry, Lee Curtis of Abodagave a US perspective: “There has been a wave of nationalism in the US which is affecting recruitment. There are fewer people to choose from, and a real fear of deportation. The illegal immigrant community are a big element of our economy in the US and we are starting to feel their absence. It’s a problem that is going to last for generations.”
Burns said that BridgeStreet is looking beyond the hospitality sector when it is recruiting, particularly in the sales and technology fields. “There is lots of new blood coming in to the industry,” he said.
Brexit is going to be a big challenge for the sector in terms of recruitment, said Emanuel, before the session moved on to talk about consumer expectations. Steve Burns highlighted three words he considers key to the modern consumer – honesty, choice and speed. “Real-time booking is essential,” he said.
Lee Curtis said the arrival of Airbnb has pushed serviced apartment and corporate housing providers to incorporate better design in their units – “a lot of what we offer is boring in comparison,” he said.
A travel buyer panel cast a spotlight on what is still the biggest source of business for many serviced apartment providers, the corporate travel sector. Jon Bolger of Capita said there is “still a lot of head scratching going on among corporate travellers when serviced apartments are mentioned.”
When Airbnb’s efforts to grow its corporate business were mentioned, PwC’s Samantha Van Leeuwen said: “there is still too much unmitigated risk associated with Airbnb for PwC to use it. We looked at it last year and decided against it.”
Bolger added: “The world is getting smaller but it’s also sadly getting more risky to move people around – the corporates are very aware of that.”
When asked what the serviced apartment sector should do to promote it self better to corporate traveller, Van Leeuwen said: “It needs to come up with a very good marketing plan.” Bolger concurred, saying: “There is a massive opportunity to educate corporate travellers about serviced apartments because there is still very little awareness of the product. The variable quality of serviced apartment inventory is also an issue.”
An panel focusing on investment in to the sector began with Savills’ Marie Hickey stating: “Institutional investor interest in serviced apartments is due to declining yields in mainstream hotels.”
The imminent purchase of SACO by Brookfield was spoken of as a significant milestone for the UK sector, and AHV Associates’ Andrew Harrington predicted a steady increase in M&A activity over the next few years,” while SACO’s Stephen Hanton spoke of the opportunity to eventually have at least four brands under the SACO umbrella.
Panellists were asked to name what they thought of as the top investment hot posts for there sector. Hickey opted for Germany, Harrington the UK and Germany, while Hanton said he would love to take the Locke brand to Asia and to the US tech centres of San Francisco, Boston and New York.
Mohammed Almarzooqi of Cheval Residences predicted that incentive-only management agreements would enter the Middle East serviced apartment market, if they have not already.
John Wagner of Cycas Hospitality outlined some of the attractions of the model for investors: “Serviced apartments and extended stay hotels are more resistant to cycles than mainstream hotels – they dip later and less sharply and they recover quicker.” He cited the example of the areas of the US and Caribbean recently affected by hurricanes. “The leisure hotels in those areas have been hit really hard. The extended stay hotels are all full with construction workers and other projects staff, and will be for years.”</p
