• What is the size and scope of the travel programme that you manage at AIG?
“The employee community at AIG is 65,000, and out of that we have 20,000 registered travellers. Of those 20,000, what we are now seeing that is relevant to the serviced apartment sector, is that around 25 per cent of them are long-stay travellers – that means anything over seven nights. It’s a significant number.”
• What percentage of room nights booked are going in to serviced apartments rather than hotels?
“Out of the 25 per cent of stays which are seven nights or more, the percentage was fairly low, around eight per cent, and this has grown to 8.5 per cent over an 18 month period. Before we started our serviced apartment programme there was a lack of awareness and a lack of knowledge. What has happened over the last 18 months is that the market in general has become more aware that there is an increasing range of alternative accommodation options available, and as we have rolled out our travel programme, our travellers are also increasingly aware of the alternatives.”
“We have been helped in our push by coverage in the media – people are more aware of the options now, and the half a per cent growth is quite significant in a relatively short space of time. What I would like to see going forward is the seven-night threshold lowered to four nights. This is for various reasons: comfort and flexibility for the traveller, and a competitive price point – those serviced apartment operators who ‘get it’ are more competitive than a hotel stay because of lower staffing and overhead costs and so on. Our programmes run over two years, so that is the target for the 2016 to 2018 programme – the next contracting period starts on April 1st 2016. The way we look at it is accommodation is accommodation, it all falls under the one umbrella, it’s just a matter of educating travellers about the various alternatives out there.”
• Once your travellers have stayed in a serviced apartment and had a good experience, do they become regular users?
“Yes, because one of the main things that drives them is space, particularly in southern Europe. They have discovered that if they stay in a serviced apartment, they are getting much more space and they equate that with value for money – especially when they compare an apartment with a hotel suite. The limited service aspect of an apartment is becoming less and less of an issue, it’s more about the flexibility of the space.”
“Of those that have caught on to serviced apartments, the younger travellers have been far more adaptable than the older generation. This is purely down to lack of awareness – we still have quite significant work to do internally on the awareness front.”
• Have you noticed any geographical markets where the use of serviced apartments among your travellers is particularly high?
“London would be the main one. Travellers have discovered that, especially in the City, hotel inventory is limited and prices are often driven through the roof for a basic product. Travellers coming to London have realised that you can book an apartment for just one night if you want to, and we’ve noticed throughout the organisation how much that has increased. There is a similar situation in Paris. In Sydney we actually put more business in to serviced apartments than we do in to the hotel space, purely down to travellers’ preferences. So there are some pockets here and there, but it’s not a clear trend at the moment. In the Americas we still have a lot of work to do, partly because of the presence of all the extended stay and aparthotel brands there, which unfortunately don’t all have the best of reputations.”
• What do you think the serviced apartment industry is doing well when serving the business travel sector, and what does it need to improve on?
“What they don’t do well is communication, and they often don’t understand how corporates source and contract business, so it’s down to lack of knowledge and lack of understanding. It’s important to know what your customer is looking for and what they need.”
“On the positive side, there is a lot of creative and flexible space. One of the reasons that we are seeing increased use of serviced apartments is that the way they use the available footprint is great, and it’s very appealing to a traveller when compared with a hotel. The main advantage that serviced apartments have is that their properties can offer much more of a ‘home away from home’ environment. The hotel space has coined that phrase and overused it, but it’s the serviced apartment sector which can really offer that.”
• How do you anticipate the use of serviced apartments among your travellers changing over the course of your 2016 to 2018 programme?
“For us it’s very much a growth market and I think we will easily double the use of apartments compared with where we are today, purely based on the way we have put together and will be driving the programme. It’s about education and awareness, and that’s why we have put together a programme which is identical to the hotel programme. One is pure hotel rooms and one is bedrooms with kitchen facilities – it’s a very clear, black and white distinction between the two. When you compare them from a space perspective, you get more from a serviced apartment; from a flexibility perspective you get more; and from a price perspective you get a way better deal.”</p
