Around 170 delegates attended the third annual So! Apart conference last week, at the Best Western Premier Hotel MOA Berlin. The audience was made up of around 30 per cent investors and project developers, 45 per cent operators, with the remainder made up of service providers and press.
Event organiser Anett Gregorius set the scene with a snapshot of the German market, which is set to get 1,000 additional units in 2015, with 2,500 in the pipeline for 2016.
International brands are beginning to make their presence felt in the market, which has until now been dominated by domestic operators. Frasers has recently opened a Capri property in Frankfurt, and Starwood has an Element-branded property at Frankfurt airport.
A video of street vox pop interviews conducted in Berlin showed a low public awareness level of serviced apartments in Germany, and a survey compiled by Boardinghouse Consult concluded that there is a lot of work to be done to raise awareness of the sector.
Gregorius said a separate survey of travel managers found that online bookability is the most crucial area for improvement. She then teamed up with Dennis Spitera of STR Global for some more facts and figures about the German market.
The market comprises 460 operators with a total of around 23,000 apartments, recording an average REVPAR of €80 and an ADR of €110. Occupancy across the country was up 7.1 per cent in 2015 and in Berlin, occupancy has reached an average of 81 per cent.
Around 60 per cent of operators polled were positive about the next 12 months, with another 20 per cent very positive.
New concepts are starting to enter the German market, including budget brands such as Adagio’s Access concept, Smartment’s micro apartments, and mixed use schemes such as iLive’s serviced apartment and student accommodation developments.
Gregorius was joined by Arlett Hoff of HVS to compare and contrast the German and UK markets. Key takeaways were that the franchise model has yet to be used in Germany, and that the majority of German operators are looking to expand domestically rather than internationally – UK operatirs have a much more international focus.
The chief challenges facing the German sector are defining the business to customers and investors, and modernisation of stock. Gregorius said German banks don’t understand the model and don’t know how to deal with aparthotel and serviced apartment projects.
A range of sessions followed, some presented by experts from outside the industry, and covering topics such as staff recruitment and retention, customer service. The importance of good staff was stressed – they are much harder to replace than guests was one message, so look after them and ensure they are satisfied in their work.
Jorg Neumann of Neumann Zanetti and partners spoke of the need to amaze your customers. He asked the audience: “Are your customers actively or passively satisfied? There is a big difference. Passive satisfaction doesn’t build customer loyalty. Active satisfaction means your customer’s expectations have been exceeded. If customers become fans – they will forgive you if things go wrong.”
The first evening of the conference saw the presentation of the So! Apart Awards, with day two including a session on the European market chaired by Piers Brown of Serviced Apartment News. Joining him were panellists Jo Layton of The Apartment Service, Vangelis Porikis of Aparthotels Adagio, Georgios Ganitis of Adina Apartment Hotels, and José Luis Hummels of Vision Apartments.
Brown introduces the session by providing some background information: European companies spent $350 billion on business travel in 2014, a figure that is predicted to rise by three per cent a year for the foreseeable future. The main challenges to the serviced apartment sector across Europe are a lack of benchmarking and performance data, low deal volume, and a lack of brand awareness.
Moving on to distribution, Jo Layton said the sector as a whole doesn’t market its product well online, particularly to long-stay guests. It’s essential to research who your guest is and provide the accommodation product which is most suitable for them, she said.
On the subject or long-stay business, Porikis said the definition of extended stay varies between operators. For some it is 28 nights, for others anything over four days. He added that business travellers are shifting to online booking, with Adagio seeing a rapid growth in customers doing research on their mobile devices, but the majority still book via email or over the telephone.
The conversation moved on to OTAs and short-term rental platforms. Hummels said Vision Apartments uses OTAs to fill gaps around the long-stay customers who make up 90 per cent of its business. OTAs only account for one- to three-night stays.
Ganitis noted that in Australia, Adina is already listing properties on Airbnb and using it like an additional OTA. This was not possible for its German properties due to legal restrictions, he said, adding that the serviced apartment sector can learn a lot from Airbnb, particularly how to use big data, and how to minimise the number of clicks needed to make an online booking.
Porikis said he likes Airbnb a lot because it is raising the general awareness of the concept of staying in an apartment rather than a hotel. “But we are better adapted to provide for the needs of certain groups of clients, including business travellers. We can play to our strengths,” he said.
Layton said OTAs should only be used for distressed investory in the short-term. “If you are running at 75 per cent occupancy, throw the other 25 per cent on an OTA – if it doesn’t sell it won’t cost you anything,” she said.
The focus of the session shifted to the various markets in Europe, which are performing well, and which are the up-and-coming markets. Porikis said France is a very mature market, with 60,000 units compared to Germany’s 23,000, and its own official classification for serviced apartments. Around 60 per cent of the French inventory is in the budget sector, and supply is slowing down, he added.
Ganitis said Copenhagen is a very strong market for Adina – it has the UN European headquarters and strong cruise business, while Hummels said Vision Apartments is looking for opportunities in Poland, and already has one project in the pipeline, in Warsaw.
Following some further presentations, the event concluded. Organiser Anett Gregorius said: “We met the different needs of our guests with a very differentiated programme. The further increase in the number of investors and project developers, who participated in the conference, shows the immense interest in this absolute growth market.”
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