I was honoured to take part in a Distribution Debate on ‘Beyond the OTAs’ at the recent Serviced Apartments Summit Europe, held in London 1-2 July.
The panel was moderated by Carl Weldon, COO Europe of Hospitality Financial and Technology Professionals (HFTP).
What will the distribution landscape look like in 2025? Will Google and Facebook be the dominant channels or is there a new wave of distributor specialists going to take more market share? How will apartment agencies adapt? These were just some of the hot topics up for discussion.
My fellow panellists - Shabina Awan, Director of partnerships and alliances, The Apartment Service; James Burrows, CEO, Rentals United; and Jeff Swanson, Managing director, EMEA - RMS - The Hospitality Cloud - all felt, like me, that now is the time for the extended stay sector to come into the 21st century.
3 Ways Serviced Apartments Can Evolve
Our discussion focused on three areas of opportunity for serviced apartments:
Cryptocurrency and Blockchain – Very much the buzz words of the moment. And while many of my fellow panellists agreed that this is not something we will see in the near future, cryptocurrency definitely has potential to revolutionise the serviced apartments sector. While the panel admitted it was still early days for cryptocurrency, the consensus was that this could have an impact in the years to come.
Benefits to a crypto-based distribution system included a reduction in commissions, lower costs of acquisition and real-time booking data. However, these were balanced with concerns over holding the currency, connectivity, security and availability.
Segmentation - There is potential for serviced apartments to optimise on revenue by evaluating which segments drive the most profit. First, revenue teams need to take a deep dive into historic data to highlight business trends and identify which segments to focus more attention on. This may come down to various lengths of stay, types of customer, or pre-negotiated accounts.
They need to identify where their is business coming from and then look at what they need to do to focus on the segments driving the most profit. From here, they can look at displacement analysis, pricing rules, lead times and booking curves, and create a strategy designed to optimise on profit.
In order to fully capitalise on this, extended stay providers need to look beyond the typical 90-day window and start forecasting up to 365 days in advance to be sure of capturing future opportunities.
Marketing & Distribution - As Google and Facebook continue to look at new and innovative ways of attracting traveller attention, marketing and distribution channels will shift. The serviced apartments sector has, until now, worked with a predominantly offline distribution model. But now, management teams need to start looking at the various platforms available to them.
Google may not be merchandising accommodation yet, but serviced apartments, along with the hotel industry, need to ensure that they are maximising the opportunities Google presents. This includes having a good description, working to secure prime positions in the search results pages and using hotel ads.
Facebook, similar to Google, also presents accommodation providers with the opportunity to convert business on brand.com though Facebook Dynamic Ads. In conjunction with Duetto, Facebook Dynamic Ads allow hotels to display real-time rates in Facebook ads that fluctuate in line with supply and demand changes. This ensures Facebook users that click on the ad and are redirected to your site see the same rate or offer listed in the ad, rather than the common bait-and-switch frustration.
A December 2017 survey of ad buyers by financial services firm Cowen and Company showed Facebook as the second-best platform for ROI on ad spend, behind only Google. Nearly half of respondents named the platform as offering the highest ROI. Facebook ranked second, named by 30% of those polled.
Recent research in the UK has shown that the use of serviced apartments by companies has grown 86%, with 60% of UK corporate travel policies including serviced apartments, a figure which rises to 77% of TMC-managed accounts. This shows us that the demand is there.
And now supply looks set to catch up. The serviced apartments sector is set to outpace traditional hotel development in Europe over the next three years, according to HVS. For those working in the sector that means lots of new, fresh and exciting competition. Serviced apartments operators need to raise their game if they are to compete with this new supply.
The serviced apartments / extended stay sector is on the brink of change, and huge advantage will be found to those companies taking the first leap.