As the number of distribution channels for serviced apartments continues to grow, how can operators maintain brand awareness and avoid their product becoming commoditised?
As well as booking directly with the operator, serviced
apartment users have a proliferation of OTAs and other online
platforms at their fingertips. Add to this a growing use of GDS,
agents, TMCs, relocation companies and others, and it becomes clear
that the serviced apartment product is in danger of being
commoditised, with buying decisions based solely around
So what can operators do to ensure their brand remains a genuine draw? What will encourage bookings to them rather than a competitor with a similar price point and a similar product in any given location?
• OTAs - friend, foe or somewhere in between?
The rise in prominence of the OTAs and their effect on the hotel
sector has been well documented but as the serviced apartment
sector grows and matures, a similar scenario is appearing in this
Frank Reeves, CEO of direct booking specialist Avvio says: "Commoditisation is best understood in terms of market maturity - involving higher adoption levels and greater product and service standardisation. But there's an inherent danger of being lost in the noise and becoming a highly substitutable product. The result is often a race to bottom on price. Over the last 10 years, the serviced apartment sector has grown rapidly and has opened up to new channels. OTAs offer the chance to retain brand identity and grow some awareness (often referred to as the billboard effect). However, expect much more competition at the top of the funnel. If you succeed to convert on those platforms, expect the OTA to gain equity with that customer for helping them find a great place to stay."
To counter this effect, Reeves says product and service differentiation is key and highlights six questions operators, should ask themselves, namely:
• Can your potential customers find you?
• How are you showcasing your direct channel?
• Is it distinct?
• Is user experience informed by data, partially or none at all?
• Are you rewarding loyalty?
• What does your brand promise look like vs. through an intermediary?
"By breaking this down, you'll begin to uncover the product and service gaps that will keep you in front of the market. It will also help build the competencies required internally and with partners to drive your direct channel," says Reeves.
Darryl Walker, head of e-commerce and distribution at SACO, says that operators need to box clever when dealing with the OTAs to keep their own brand visible: "It is true that OTAs typically limit the content you can display and have their own editors who work on your property listing, so it makes branding more challenging to get across. The key to the brand adoption and flexibility here is working with OTAs like any other client, rather than holding them as an awkward partner. The relationship with these channels is crucial to get across brand messaging, increase live market knowledge/opportunities and build a successful channel strategy."
"For example when treating OTAs like clients, plan trips for their copywriters/account managers to ensure they see the product themselves first hand, understand the benefits, understand the brand and consequently present it in its best light. Regular performance reviews allow you to work with your account manager to grow your revenue, how and when you need it; whether for increasing rate/length of stay or coverage in markets they have expanded into. In terms of reputation, OTAs generate far more reviews than any direct surveys conducted, their breakdowns per segment are more advanced and they're seen by more lookers than anywhere else, so as long as your'e providing a great service they help amplify this to their lookers. B2B cooperation with the OTAs can yield wider benefits than most are aware of, we must stop commoditising them in order to make the most from the relationship for mutual benefit."
The introduction of the meta-search sites to the equation can make things really interesting, and opens up new options for circumventing the OTAs to encourage more direct booking.
Frank Reeves says: "The rise of meta-search websites such as TripAdvisor and Trivago has made price comparison easier than ever for travellers - something that was painfully time consuming before. Most serviced apartments, however, are only represented on these sites by OTAs meaning the consumers are routed down these high-commission paths. Connecting your direct website to these meta-search sites is an absolute must in order to ensure that OTAs don't get all the action. Caveats apply here however in that you must have a strong direct booking conversion (to convert this expensive traffic) and rate-parity must be managed to ensure the direct channel is competitive (monitoring tools like OTA Insight are very useful here)."
"But price-comparison is no longer restricted to meta-search sites," says Reeves, "with companies like TripTease enabling the direct channel (ie. your own website) to also offer OTA price checking to customers. Avvio have seen encouraging uplifts in booking conversion where this is available and where parity is correctly managed. Developing a strong online reputation will deliver stronger brand awareness, growth in loyal consumers and ultimately brand advocates for your product. Moreover, research from Cornell and Reviewpro points to a positive correlation between online reputation and pricing power. With thousands of reviews across several channels it's essential to also use a good Reputation Management product such as Reviewpro to stay on top of things."
• Content is king
Darryl Walker's colleague, SACO marketing director Jo Redman stresses the importance of content and imagery to ensure your brand's visibility among the noise and competition. She says: "Operators have to work really hard at conveying the key features and benefits of serviced apartments in a succinct, easy-to-read manner that suits the channel audience they are targeting. One size does not fit all! There is also the challenge of what the channel partner chooses to upload and use. It's worth the time and effort to review what they have written, and challenge and query when you are not happy or believe it's not accurate.
"It's the same with imagery - you need lots of it and really good quality photos not 'iPhone snaps'. The more imagery you can provide the happier the channel is and ultimately the better you can help the customer to understand what they are booking and why they might choose a serviced apartment over a hotel. It's essential to showcase the kitchen and living room facilities in the first instance and then the bedroom and bathroom - which of course are more akin to a hotel."
"Brand is even more difficult as some channels won't always permit the use of brand names," adds Redman. "Where they do - ensure its used correctly and within company brand guidelines, when it's not - the best you can do is to try and maintain brand integrity through tone of voice and imagery.Choosing your channels is also important - which ones align to your brand and target audience rather than using them all and especially ones that maybe focus only on price."
• Communication and trust
Claire Barrie, sales director at Clarendon Serviced Apartments, says clear communication and consistency are key qualities for any operator: "For successful business partnerships, whether directly with the client or via agencies, it is paramount that there are clear guidelines and expectations regarding engagement, addressing gaps and capturing new opportunities, making for a solid and trusted partnership and therefore, program. For this to happen, regular supplier/administrator/agency reviews (as would happen with the client directly), are essential to collectively deliver a successful program, recognising that this relationship is reciprocal rather than a constant pressure of unsustainable margin erosion, through multiple layered pricing."
"For any business, consistent, successful service delivery, flexibility and client satisfaction should be recognised by preferred supplier loyalty. With the increase of administrators or agencies utilising, understandably necessary e-procurement bidding systems, there is a risk that operators lose their identity and ability to demonstrate their competencies or 'sweet spot', resulting in decisions being made purely on price, heightening the risk of product commoditisation. This ultimately has to impact response times, service delivery and product investment."
Barrie also thinks that loyalty from the operator - in the form of consistently good service - will be rewarded with loyalty from customers: "Loyalty shouldn't be a myth. The cost of attracting new customers is significantly more expensive than maintaining a relationship with existing ones. Yet too often businesses neglect customer loyalty in the search for new ones. It is important that we give clients and travellers a reason to come back. Offering the right product, in the right location, at the right price is the minimum requirement to do business. This doesn't affect the emotional experience of the traveller. Doing what you say you will, delivering on time, minimising administration, demonstrating flexibility, issue resolution - making the guest feel appreciated is what impacts the emotional experience. Internally, your business needs a clear mission and an aligned company culture with a common business objective ensuring a synchronised path for success."
• Agents, TMCs and relocation
In such a competitive environment, how do companies and individuals who book serviced apartments through an agent differentiate between the various offers? Stuart Winstone, commercial director at SilverDoor, says: "All of our clients work to budgets that have an effect on their serviced apartment programme, however, price alone isn't the deciding factor when selecting accommodation. Travel managers are responsible for the well-being of their employees when they're away on business and, as well as health and safety, this also includes the quality of the apartments they're staying in. We have a number of service level agreements in place with clients that stipulate a certain standard or configuration of apartment is required. Some just book one-bedroom apartments instead of studios to provide their employees the space the need, while others only book apartments that have a more homely feel with high-quality soft furnishings. Clearly rates are important, but if an operator is able to differentiate their offering, it's an attractive proposition, even if it's at a slightly higher price point. Consistency, however, is key. Our clients are repeat customers and if one of their employees has a bad experience then the travel manager will be hesitant to book the same property."
On an international scale, Andrew Hopgood of Bloom Mobility Consulting says that mobility companies are increasingly looking to buy globally, not locally, when sourcing serviced apartments. "This is for a variety of reasons, including the need to offer a consistent service experience to travellers; to gain a single source of management information; and the ability to track travellers in case of a critical incident," says Hopgood.
"In addition, serviced apartment booking is not seen as a core service for relocation management companies; they generally do not have the resources to manage a large network of serviced apartments globally, in addition to the other service lines they coordinate. They are looking for a single source solution which brings the global expertise and supply chain required to successfully support a global programme - which may increasingly include the need for supply in second and third tier cities in locations worldwide."
"It has been great to see the raising of standards across the board in the sector over the last few years, along with the significant increase in supply. The latest GSAIR reports that global supply has doubled over the last eight years, which shows the sector has reacted quickly and positively to increasing demand, especially in secondary locations," says Hopgood. "Given the nature and requirements of global programmes and the changing buying patterns these have driven, operators may perceive these opportunities as closed to them. However, they will not ultimately lose business in their local market; my advice is to connect with the third party companies that manage these global bookings to ensure their product is available to these buyers."
Clarendon's Claire Barrie concludes: "Operators are ultimately responsible for the buildings and apartments, the maintenance and end service delivery. Guest care and welfare are at the centre of all we do. We offer immediate availability, fast response times to enquires and bookings, 24/7 emergency support, and the added value of dealing with people who have unrivalled knowledge of the product. Ultimately there is direct accountability.
"The market is saturated with booking agents and OTAs, some are well established as the 'go to' agents in our market, but others less so. It's a myriad of options and to the less informed corporate or booker it can be a very confusing space. Specialist serviced apartment agents offer choice and can cater for the global needs but localised operators can offer unrivalled knowledge of a specific area and the buildings which they own or operate."
In an environment which is only set to get more competitive it is more important than ever for operators to function efficiently and profitably, by ensuring they develop effective and mutually beneficial relationships with third parties, growing direct bookings, encouraging and rewarding loyalty, and most fundamentally of all, offering a consistent and outstanding guest experience.