For the serviced apartment and coliving industry, Covid-19 is less a passing comet than a meteoric impact. Giles Horwitch-Smith of res:harmonics looks at how to mitigate its impact.
From the immediate effect on bookings, cash flow and staffing to the long-term ramifications of social distancing, the coronavirus presents a host of immediate and lasting operational challenges. However, “Innovative Living” companies can successfully ride the Covid wave by focusing their energies on these four business areas.
• Prioritise revenue management
The post-lockdown message is clear: continue to use online travel agents (OTAs), but don’t depend on them. OTAs showed a serious disregard for operators and highlighted where their loyalties lie. Operators whose income was mainly OTA based suffered much more than those with direct relationships. It highlights the business risks of having all your eggs in one basket.
Companies need to seriously look at direct bookings tools, their brand messaging and ensure they’re building direct relationships with customers or working with agencies who look after their supply chain. In the short-term, companies must target those who are most likely to travel as the restrictions ease. In the business sphere, these include workers who must collaborate in person for their work, require specialised workplaces or can’t halt production, for example scientists performing lab work or contractors working on-site. Think who you are selling to and where.
The same goes for leisure travel and relocation. For leisure, the expectation is that younger travellers, who are less at risk, are more likely to move first. Executives that needed to relocate pre-lockdown will still need to relocate post-lockdown. Companies need to think about who ‘needs’ to travel when thinking about revenue management.
OTAs will recover, serviced apartments and coliving are expected to recover faster than hotels, with a new segment of customers who were traditionally loyal to hotels. Companies should take bookings from a variety of channels, diligently checking their lead times and cancellation profiles, and diversify their portfolios between long and short stays to keep the revenue stream flowing.
• Diversify your portfolio
Covid lesson number 2: diversity is a strength. We all know that short stays provide high margins when running at high occupancy, but the Covid tide has wiped out the market in the short-term. In April, many companies lost more than 70 per cent of reservations with some losing up to 90 per cent, highlighting the fragility of an exclusively short-stay business model.
A blend of short and long stay provides greater business diversity and resilience against issues like Covid-19. It also underpins a shrewd revenue strategy. Companies can promote medium-long stays over quieter times and pitch short stays in peak season. Similarly, companies can offer short stays in long stay units to offset long-stay seasonality. Companies can bring long-stay units back to the market at high demand periods boosting revenues by five to 10 per cent.
Over the next few years, the virus will spike and fall. Restrictions will spike and fall. Now is the time to widen your portfolio to ensure your revenue remains more resilient to these challenges.
• Embrace automation
Traditionally, the hospitality industry thrives on face-to-face interaction, but Covid has turned the tables and now reduced interaction is seen as a positive. Companies should take the opportunity to use automation to improve efficiency across their business.
Take housekeeping, for example. With automation, companies can save time, improve cleaning standards and reassure anxious guests. Housekeepers can follow digital checklists on mobile apps to ensure Covid-quality hygiene standards are being upheld. Housekeeping staff can provide real-time updates on the move, giving companies effective oversight of the day’s progress. Companies can manage by exception and can even notify guests of cleaning times to aid social distancing and notify them when their apartment is ready.
Let’s look at maintenance. Automation simplifies and streamlines both reactive and proactive maintenance. Housekeepers and guests can notify maintenance issues in real-time by uploading a photo and description. Maintenance teams can use this info to prep the repair without a pre-visit and solve the issue quicker whilst keeping the customer informed automatically. Apps track time spent, ensuring you are maximising performance and managing time effectively.
Then there’s financial processes, with an automated process, invoices are generated accurately and payments are transferred automatically between PMS and the finance system. This saves staff time, reduces human error and cuts the admin burden. It also increases communication between the reservations and finance teams, while giving customers easy access to all their transactional data through PMS customer portals.
• Improve the customer journey
Post-Covid, serviced apartment and co-living companies need to inspire confidence in their existing customer base and the wave of new arrivals previously loyal to hotels. This starts with detailed communication addressing safety concerns and guiding the customer through the arrival process. Sending a steady stream of emails and / or text messages with maps, directions and door codes gets the client in the door with a smile on their face. Online guest portals / apps – where customers can securely access all details relating to their stay – provide a one-stop shop for key information.
In the wake of the pandemic, customers will be more anxious renting an apartment, but detailed communication gives them control over their booking and instills trust. Email chains also allow for last-minute changes without adversely impacting customer satisfaction. Informing a short-stay client they will be upgraded to a better space in advance (to make space for a longer more profitable stay) keeps them happy and boosts profits.
It’s also time to review the meet & greet and in-person check-in. Some companies already use key safes, but onward-looking companies need to implement online door entry systems, check-in, check-in kiosks and mobile keys. They’re easy to retrofit, easy to manage and enhance customer experience for tech-savvy guests.
Setting door codes remotely and using mobile apps for access also cuts internal costs, minimises interaction and enables companies to keep track of arrival and departure in real-time. What’s more, it allows serviced apartments and co-living businesses to make last-minute room changes and cuts the chances of human error (lost keys) and theft (duplicate keys). Covid has further reduced lead times on bookings and automated systems allow companies to stay one step ahead.
• Embrace the future
Covid-19 might seem purpose-built to reap havoc in the industry, but the virus also expedites the need for change. Digitally-agile firms will adapt to the ‘new normal’ more successfully and embracing remote data-led management will help companies remedy operational heartache, keep costs low, improve efficiency and maximise profitability.
