Serviced apartment supply continues to grow worldwide. Piers Brown highlights his top six serviced apartment trends to watch for 2017.
The sharing economy slides downhill in developed
Despite the sharing economy's contribution to worldwide GDP and some bold forecasts up to 2025 from PWC, the percentage growth rate is slowing in developed countries as Airbnb and Uber, two of the most popular contributors grapple with increased legislation and numerous regulatory clamp downs. Airbnb, whose business model is questionably no longer relevant to the sharing economy has been accused of disrupting residential communities and making Britain's housing crisis worse, with Uber clashing with employment laws and cab firms at virtually every turn.
New figures suggest the average monthly earnings on 'labour' platforms (where people offer to work for companies like Uber or Deliveroo) peaked in June 2014, according to new data from the JPMorgan Chase Institute.
The UK and US has moved into an age of unbroken job growth, where the UK unemployment rate has fallen to an 11-year low - but this is inclusive of people on zero-hour contracts and part-time gigs. This means that many consumers who used sharing economy platforms as a stop gap, have now stopped paying as much attention to them or continue to supplement their income less now as a direct result of their full-time job role requirements.
Expect to see the demise of short term rental 'Airbnb me-too' companies that are not clearly differentiated in 2017.
Serviced apartments and select service hotels converge - the full service hotel becomes obsolete
The growth of serviced apartments and select service hotel offerings isn't slowing down. They're easier to finance, build and design and there's a clear demand for them. In short, it's a sign that serviced apartments and select service hotels are listening to what customers really want, whilst embracing the new on-demand economy. As on-demand services continue to grow, whether for cab-sharing, dry cleaning or food delivery, the need for the full-service hotel will no longer exist.
Greg Marsh, ex CEO for OneFineStay (now owned by Accor), recently said in order for hotels to survive they have to become low-cost leaders and go "ridiculously" select by charging guests for ancillary services or they have to go in the opposite direction and do something "truly differentiated" and boutique or exclusive. Marsh's assessment is becoming a reality, especially if you look at the brands hotel chains appear to be most interested in growing.
For Hilton, it's Tru, Hampton Inn and Home2Suites. For Hyatt, it's Hyatt Place and Hyatt House.
All of these brands fall under the select-service category. These hotels may not have all the trimmings of a full-service hotel, like a spa or full-service restaurant, but they do have the basic amenities that most business and leisure travellers expect in a hotel stay - they generally fall in the mid to upscale price range. It will be interesting to see how Marriott integrates the Aloft, Four Points and Element brands within its portfolio, as the lack of growth of these brands is suspected to have contributed to the abrupt exit of Starwood Hotels' former CEO, Frits van Paaschen, in February 2015 - a hospitality professional we continue to admire (see below).
BridgeStreet's Mode and SACO's more recent Locke aparthotel brand launches, coupled with a pipeline of other competing brands will contribute to the heightened blurring of serviced apartment and select service hotel categories in 2017.
Everyone is one in a million
Former Starwood CEO Frits van Paasschen recently said that "travel is inconvenient, anonymous and uncertain", and digital personalisation is the next manifestation of hospitality brands
Now, more than ever, customers are better informed, more selective, and quicker to say "no". Today's consumer expects instant gratification with a wherever / whenever approach to every aspect of their online experience. This will serve as the activity hub and "home base" for all web channel activities and will become the main interaction channel between brands and customers, especially when it comes to driving conversion.
The winning serviced apartment brands will use best practice from Amazon and Netflix for instance to embark on creating dynamically personalised, highly relevant website experiences based on prospects and customers behaviour, location, profile, and other attributes - whether that visitor is an anonymous visitor, a known contact, or a loyal customer. This means tailoring the website to fit their profile based on who they are and what they do, and ultimately providing the best message, content, or offer-one that is specifically relevant to them.
Download our latest FREE serviced apartment digital marketing benchmark report here
Don't miss IHM's digital personalisation report for hospitality in 2017.
Too many URL's
One could argue travel and hospitality is too transfixed in influencing the consumers' mobile connected journey, meaning guests are likely to place increased value on making the physical travel and hospitality experience easier, whilst engaging face to face with guests wherever possible. Expect to see aparthotels become increasingly popular as the accommodation that best mixes the benefits of managed apartments and service levels of hotels takes hold.
Balance of power heads East
The last 12 months has seen Serviced Apartment News feature more stories on much of 'the balance of power' in hospitality heading East. Whether that is the influence of Chinese travellers, the rise of Ctrip and Alibaba, or the emergence of the Middle Eastern serviced apartment investor and increased air carrier routes. Ctrip's purchase of Tujia and recent acquisition of Skyscanner are moments that mattered in 2016 and demonstrate many Chinese travel company ambitions
Democratization of fairness
The serviced apartment industry has been greatly impacted by the Democratization of Fairness. Simply put, this is a millennial ideology that emphasizes the value of equal access to brand experiences and more, and Airbnb is the perfect example of what happens when this ideology is applied to the hospitality industry. Millennials see travel as a vital piece of their life journey and we expect serviced apartment brands to think more creatively to facilitate bespoke and tailored ways for them to have international and domestic travel experiences at an affordable price.
Regardless of the apartment trend forecasts above, don't believe for a minute that transporting your guests' luggage to the airport is what will make you successful. The real answer lies in doing what you do well with a smile.