Serviced Apartments: A Growing Solution for World Wide Extended Stays

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1 A serviced apartment is a type of furnished apartment available for short-term or longterm stays, which provides amenities for daily use. Serviced apartments typically include soft furnishings and cooking utensils so that short term tenants need pack their own. Serviced apartmetns strive to provide a home-like environment to the business and leisure traveller. Serviced apartments include cleaning services in the rate. Most serviced apartments do not have restaurants or 24-hour reception. Some of the benefits may include more space and privacy, a convenience when travelling with a family, as well as the savings and personal satisfaction of cooking one's own meals when preferred. Serviced apartments represent a business travel lodging sector on the rise. A Growing Sector: This is a sector that is growing rapidly as indicated by the Global Serviced Apartment Report. This report observes that the demand for Serviced Apartments globally outstrips the existing supply. For example in a bustling metropolis like London there are 1.2 apartments per 1,000 business visitors. The chart below, courtesy of Oakwood Worldwide, clearly depicts this trend of increased demand for serviced apartments.

2 Further evidence of this growth and its optimistic projection comes from a 2013 survey of the Association of Serviced Apartment Providers, which revealed that 74% of operators in the UK and Ireland expected their business to increase during Of those, 50% expected an increase of up to 10% while 20% expected an increase of 10%. STR Global and the Association of Serviced Apartment Providers (ASAP) have reported that in Q1 of 2014, occupancies in London reached 77.8 per cent showing a 10.2 per cent increase on Q (Source: buyingbusinesstravel.com). According to Joyce Cawthorpe, marketing executive at ASAP, this reflects an increased demand despite the growth in the number of serviced apartments. There is a clear preference of serviced apartments for extended stays as a result of the various value propositions that they offer. Advantages of Serviced Apartments: While there are varied value propositions, this document attempts to summarize some key values meaningful to business travelers and travel managers/corporate buyers. Cost Effectivelness: Serviced Apartments usually offer competitive rates, driven by the duration of stay. The cost effectiveness of serviced apartments is making them a second home for expatriates, business executives on the move and even the leisure travelers. More Space to Live and Work: Serviced apartments provide a larger living area than a typical hotel room. The traveller can enjoy more living and working space, inlcuding a kitchen. This allows the guests to relax or work as they wish without having to fit into a tight space. While this is especially useful for extended stay travelers, the preference for space isn t uncommon with short stay travelers. This is especially useful when people travel with their families for both business and leisure simultaneously, thereby, embracing the bleisure principle. Feels Like Home: A serviced apartment is an ideal solution if the stay is for a longer period and if one seeks more privacy. It is properly furnished with appliances for daily needs including a refrigerator, washing machine and television set(s). A living area and kitchen to cook your meals makes it almost like home. Some Serviced Apartments Offer Hotel-Like Benefits: Some serviced apartments combine the flexibility of apartment living with the service of hotels. They offer security and housekeeping services. Some even have a business center, reception/on-site concierge, gym and swimming pool or at least a subset of these amenities. Conveniently Located: Most serviced apartments are in prime locations. This makes it convenient for travel to Prepared by: E: sales@wwstay.com 2

3 various points of interest, not to mention the worksite. An easy commute is a frequent preference, especially for longer stays. In addition to commuting concerns, travelers want to be close to grocery stores, cafes, restaurants etc. Many serviced apartments offer a location advantage. While there are clear value offerings Serviced Apartments aren t without their challenges. Challenges with Serviced Apartments: While there are several challenges, five categories are listed here for easy identification. Visibility/Accessibility: One of the main challenges is locating a serviced apartment that suits one s requirements. Many good quality options may not be asialy found, as they may not be listed in online portals or other sources such as the GDSs. Moreover, even with apartments being listed in online portals, they receive mixed responses in terms of a satisfactory experience. A glaring factor in an unsatisfactory experience is the lack of prompt updates regarding availability. Reliability of Information: Sourcing apartment inventory isn t the only pain point. Reliable information about specific serviced apartment properties persists as yet another challenge. For example whether or not laundry is inside the unit or shared is not readily available in several cases. There is also a lack of standardized quality assessment in this sector, like star ratings in hotels, which is further cause for concern in assessing quality. Terms and Conditions: The terms and conditions of serviced apartments vary greatly from property to property and from location to location. For example, certain serviced apartment providers charge in terms of days stayed instead of nights. As most people are used to being charged on a nightly basis in hotels, daily charges can be a source of confusion. Additionally, the procedure of booking can be quite tedious and even require signing leases and bulk payment, including deposits for stays shorter than six months. Interpreting Check-In and Check-Out Instructions: Many serviced apartments have a self-check in process where there are no front desk personnel to assist with the check in. This can be a new experience for first time travelers and seasoned travelers alike. For example after a long flight even simple instructions sometimes get overlooked, like pressing a button before entering a code. In some cases these instructions include a different key pick-up location, which may come as a surprise to the unwary traveler. With no 24-hour available support, the traveler can find her/himself at a loss of what to do. The check-out times in serviced apartments are often more strict than hotels. As many serviced apartment buildings do not have reception staff or a concierge, the guests may learn Prepared by: E: sales@wwstay.com 3

4 about the strict check-ou ttime when the cleaning staff knocks on the door. Late check-outs may cause unexpected and unnecessary surcharges. Breakdown in Amenities: If there is breakdown in an amenity such as internet access, it may lead to inconvenience for the business traveler. In some cases the solution may be as simple as trying another internet code mentioned in a folder or calling an emergency contact specified either in a folder or in the check-in instructions. The traveler may, however, not be well-informed and such things aren't necessarily obvious. In some cases, the solution isn't a simple one. Without the right support in the event of a breakdown in amenities like internet access, climate control etc., it can be a bad customer experience. Booking and engaging serviced apartments can vary widely from basic hotel lodging. This is elaborated upon below. Booking & Engagement Process: Booking: Many serviced apartments do not have an online presence. Even those that do may not list or actively update availability online. How does one book a serviced aparment if the data is not easily accessible? One of the options is to call the serviced apartment directly if one knows the contact information. The other option is to work with a Serviced Apartment specialist/partner, who knows the global serviced apartmetn sector, and who can secure apartments in your specific markets of need. The latter is suggested as there are many issues involved in booking serviced apartments: The terms and conditions vary from property to property and location to location. For instance, in certain locations the tax breakdown may vary based on the length(s) of stay. Many serviced apartment bookings require immediate and full prepayment and detailed lease agreements. Confirmation isn t instantaneous and a good serviced apartment partner can expedite the confirmations. Apartment bookings can entail a lot of communications with myriad details and phone follow-up. The payment procedures and booking procedures may be cumbersome with a lot of paperwork involved. A good serviced apartment partner can expedite both the search and the booking process. Engagement: Apart from booking there is also an engagement process that merits mention. A trip begins long before one goes to the airport. This is even more evident when traveling for an extended Prepared by: E: sales@wwstay.com 4

5 period. Further, the accomodation engagement process goes on even after booking and checking in. The engagement process starts at the planning phase with the search for accommodations. Without expert support, it can be challenging to find a suitable extended stay solution. Locating serviced apartments when no industry standardized accreditation exists, makes quality a real issue. A good serviced apartment partner would conduct quality checks and shortlist good options suitable to a particular requirement. After check-in, issues may arise and be difficult to resolve. A good serviced apartment partner not only eases the booking process; they assist you throughout the engagement experience, from sourcing quality apartments to traveler check out and data reporting. Conclusion: Serviced Apartments is a growing sector and there is enough information to suggest continued global growth. While availability is increasing for serviced apartments, demand in many locations is increasing a faster rate. This is because serviced apartments offer many advantages for extended stays. However, there are significant challenges throughout the engagement process, including sourcing, booking, traveler service/assistance and reporting. Do the advantages outweigh the challenges? The growth does seem to suggest this. With the right support from a serviced apartment partner many of these challenges can be mitigated while maximizing the benefits that serviced apartments have to offer. Prepared by: E: sales@wwstay.com 5