Innovation back on serviced apartment sector agenda

Thursday’s launch event for the latest GSAIR report ended on an inspiring note, with co-host Mark Harris encouraging delegates to work together to solve the ‘most challenging of challenges’.

Panellists from Ariosi GSAIR 2024 launch

Ruth Holmes

3 July 2024

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Ariosi’s event at the Charlotte Street Hotel in London launched the much-anticipated latest instalment of the Global Serviced Apartment Industry Report 2024 (GSAIR).GSAIR is now in its eleventh year. Widely regarded as one of the most comprehensive benchmarks of activity in the serviced apartment sector, the annual register of corporate buyer, agent (travel management companies, relocation management companies and destination service provider) and supplier (serviced apartment owner/operator) intentions gives a picture of this thriving sector’s direction of travel.Canvassing qualitative and quantitative data, GSAIR combines these with interviews and cross-sector insights, including from Relocate Global.Data is also contextualised in wider commercial, consumer and business trends through expert commentary and includes information on top destinations and rates.

‘Grey skies’ need blue-sky thinking

Perhaps for the first time in the history of GSAIR publication, the key message for this pioneering sector of the hospitality industry this year is one of the need to adapt if it is to remain competitive.“Our industry has had a broadly unfettered run since GSAIR has been going, but now there are some grey clouds,” said Mark Harris, GSAIR’s contributing editor. “Whether the industry tackles those challenges and actually moves on in its current momentum remains to be seen. But it’s going to be fascinating to see if it does.”Talking through this year’s findings, which three regional reports in the coming weeks and months will add to, Mark Harris explored questions including why corporates use serviced apartments and average length of stay; as well as how operators and agents are using AI to transform service levels and regard issues like environmental and social governance (ESG).

Regaining competitive advantage over hotels

Significantly, a key takeaway from GSAIR 2024 was how mismatched supply and demand and legacy booking processes are damaging the appeal of the sector, despite overall optimism.“We believe that serviced apartments have lost a competitive advantage they had over hotels,” explained Mark Harris. “If you look back at the history of serviced apartments, the sector has had two major boosts. Firstly in 2008 with the financial crisis. Then again during the pandemic. We believe that the competitive advantage that they had over hotels has been severely eroded, if not lost.“Travel managers tell us serviced apartments are becoming uncompetitive pricewise and more expensive now than hotels,” he continued.“For the last 15 years, corporates have been saying they can’t find serviced apartments in the locations they need and, crucially, online booking processes fall well short of expectations, thereby risking non-compliance with company travel policies.”

Upgrading tech to draw down growth

On length of stay, Mr Harris said the latest GSAIR survey confirmed the accepted wisdom that trips are longer, less frequent and more expensive. He cited an STR survey that calculated average UK serviced apartment rates were 20% more than hotels, adding weight to the argument that the sector is losing its appeal.Technology was also a major talking point, both in the report and among the panel that followed. The report identifies the most popular areas for upgrades remain around guest communication, mobile apps and self-service check-in, and property management systems. However, the investment gap in new technologies could stall growth.“AI may be a popular talking point, or not, but the serviced apartment industry risks being left behind due to operators lacking, we believe, the knowledge about how AI can reduce costs by streamlining processes,” warned Mark Harris.“As one industry professional told me: ‘The serviced apartment sector overcomplicates things, either because it doesn’t want to catch up with hotels, or because the tech isn’t good enough to be able to deliver.’“Right now there is a major disconnect. Operators plan to use AI mainly on the guest experience. But has anyone actually gone and asked serviced apartment users what they want?“Trade associations have a big job to do here in actually meeting what is a huge knowledge gap now. Through the associations and media owners we need to create an industry-wide vision of how the power of AI should be harnessed.”

Sustainability on the agenda?

Findings from GSAIR 2024 also deepened the conversation around ESG considerations. On this topic, GSAIR revealed over half of corporates in 2024 say they require serviced apartment providers to evidence their sustainability credentials in all RFPS. This figure is up from just over a third 12 months ago. A third require them only in some RFPS, down from half last year.“So you can see the shift here,” said Mark Harris. “From a corporate perspective, ESG is no longer about talking the talk. Operators and providers are required to walk the walk. Agents are citing similar numbers, with comparable shifts.”Panellists Chris Orme, global director of sales and business development at edyn, Leanne Fowler, director of account management at Clarity Business Travel, Nouran Zarroug, founder and director of NuLight, and Steve Lowry, CEO of The Residence were on hand to unpack the findings and take questions from the floor.What followed was a highly constructive conversation around user friendliness and ways the sector can continue to meet consumer and corporate needs in more cost-focused and personalised ways. It meshed operators', relocation professionals’, agents’, corporate and assignee’ views in a way that heightened understanding of the challenges and solutions.Summing up, Mark Harris said: “The world may be a scary place right now, but there still is a great deal of positivity among corporates, agents and operators alike.“We believe that the key to unlocking that optimism according to the GSAIR survey is to deal with the priority, which is to provide robust distribution and sourcing technologies. And here is the salient point: someone needs to be brave and take a risk by doing something fundamentally different.”

Encompassing diversity

For Joanna Cross, chief operating officer of Ariosi, a serviced apartment consultancy and publisher of the report, there are huge opportunities for operators and agents to take up this mantle, listen to what people need and be adaptable in a meaningful way.Talking to Relocate Global, she distilled the complexity of the report’s findings and the panel discussion into a single theme – cost. “Whether it’s GDPR, covid, automation or ESG, over the past six months we’ve been putting this survey together, the one thing that has come out of it is this flavour of cost and not trying to fit all pegs into the same hole. Not everyone wants to buy online or remove human interaction. Not everyone wants to self-serve.”This becomes a question of being agile and open to diverse needs. “We can make representations of the majority, but actually we’ve got to make sure that the products and services we offer to people cater to the 25% who want to buy products in a different way, whether that’s for family accommodation or any kind of accessible accommodation solutions,” continued Joanna Cross.“We’ve tried so hard as a sector to find a one-size-fits-all in terms of classification. Maybe with accreditation too. Why are we still trying to define something I don’t actually believe we can? I think we all need to be more comfortable with the idea that there will always be a majority concept, but that we are also actually listening to people in terms of other needs, now, next year or in five years’ time. We’ve got to be adaptable to that.”

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