SACO’s new CEO Stephen McCall talks to SAN about rolling out the Locke brand to capitalise on the Airbnb-effect that has boosted consumer awareness of apartments.
• Can you give us some background on your career history before you joined SACO?
“Most of my 25 year career has been spent in hospitality, most recently as COO for IHG in Europe, and I’ve worked across a number of regions and in a number of roles, including finance and operations. In fact my grandfather owned a small hotel outside Manchester so I guess the hotel business has always been in my blood. I’m actually a qualified accountant by background, a fact which continues to surprise me and amuse my colleagues.”
• What have been your impressions of the growth of the serviced apartment sector over the last few years, and what attracted you to join the industry in your new role?
“To be perfectly frank, the serviced apartment sector had always been below my radar. My perception was that it was a somewhat niche, B2B business and predominantly a property play rather than hospitality focused. But I have watched the growth of the extended stay model across Europe over the last 10 years and in particular I have been fascinated more recently by the profound change in the boundaries of traditional hospitality, and the role that brands play in this space.”
“It would be trite of me to say that guests are looking for experience and individuality, but it’s true nonetheless and the popularity of Airbnb and other alternative hospitality models is a testament to that trend. Aparthotels in particular occupy the sweet spot between the flexibility of a serviced apartment with the facilities and atmosphere of a hotel. If you add to that thoughtful and contextual design, common areas activated by collaborations with vibrant F&B operators, and inspirational co-working spaces, then you have our Locke brand. For me, it was love at first sight and joining this business has been one of my better decisions.”
• With Brookfield now backing it, the Locke brand is set for major growth over the next few years. What are the latest roll out plans and what do you think are the brand’s strengths?
“We have extremely ambitious plans for Locke and will be opening four new properties across London and Dublin in 2020, with a very healthy and growing short-term pipeline of developments. The brand obviously offers all the advantages of an aparthotel over traditional hotel models, but we are also very mindful of the importance of creating spaces with identity, distinctiveness and life. This is why we take so much care over the design and programming of our apartments and particularly our common areas – we see them as the beating heart of our properties and the antithesis of the typical hotel lobby.”
• Do you think Locke’s ability to cross over in to the leisure market will translate to the rest of the SACO portfolio? Is the guest demographic changing?
“I think there is a clear opportunity for both the serviced apartment and aparthotel segments to widen their appeal to more transient business, whether that is leisure or corporate in nature. The quality of the offering is obviously key, but there is no doubt that guests are increasingly considering aparthotels as a viable alternative, and in many cases a better option, than traditional hotels. As an industry we have much to do to improve the understanding of the segment, and a great deal to do in creating properties that offer experience in addition to simply shelter, but players such as Airbnb have helped in creating very favourable tailwinds.”
• Coming from a hotel background, what are the main advantages and disadvantages of longer stay business, and is there a sweet spot for length of stay in Locke and SACO properties?
“Many hotel operators would kill for a solid base of long stay business to yield off but generally they do not have the facilities to suit these types of guest. Conversely in traditional serviced apartments, there are not the services and systems to allow them to take advantage of more transient business. Aparthotels bridge the two models and can capitalise on the advantages of both without the drawbacks. So really its all about flexibility.”
“Aparthotels clearly offer more in terms of space and in-room facilities, and this is important for many guests, but it’s the ability to choose how you spend your time and the freedom that comes with that which is key. From a commercial perspective, the sweet spot in length of stay for both Locke and SACO brands really depends on a number of drivers, and we need to apply more sophisticated approaches to price optimisation and yield management to nail the right business mix for each operation.”
• With Airbnb making concerted efforts to attract more business travellers, how can serviced apartment operators best retain their corporate clients, both as organisations and individual travellers?
“Airbnb and similar players are an important part of the broader ecosystem and have helped travellers understand the range of accommodation which are increasingly available, but there remains a significant proportion of corporate and leisure guests who want the security and reliability of professionally managed accommodation. I do not see this changing materially, at least in the medium term. The holy grail then is to offer the locally focused experience, flexibility and authenticity of Airbnb with the quality and facilities of a lifestyle hotel. This is the purpose of our Locke brand.”
• Do you have plans to launch any new brands over the next few years?
“As I’ve mentioned, we see Locke sitting at the sweet spot of a fast growing, emergent sector and this will be our primary focus, but of course we remain open and receptive to the changing demands of this dynamic industry and so I would not rule anything out at this stage.”</p
