29 April, 2018

Serviced Apartments - finally arriving in Switzerland for the benefitof all

Accommodation models are becoming increasingly hybrid. What began with the rapid spread of B & B continues with a growing number of serviced apartments. Thus, a globally widespread form of accommodation (finally) sets foot in Switzerland - for the benefit of the guests as well as the providers.

To the surprise of some hoteliers, (serviced or non-serviced) apartments over the Christmas break were clearing much faster than normal hotel rooms. Apartments also enjoyed an increased popularity. In my opinion, one should not puzzle over the reasons for this: in the cold season and when someone stays longer, people obviously look for more space than a hotel can normally provide.

What applies in the winter in the mountain area, applies much more in our business centers: accommodation concepts deviating from hotel type accommodation literally mushroom and absorb the increasing demand by an increasing number of global nomads for alternative quasi-residential types of accommodation.

This business is dominated by a number of major international providers, led by the Ascott Group in Singapore. This group alone currently has more than 43,000 units worldwide, in mainly capital and major cities. 80,000 units are planned by 2020, with rumors of expansion also being sought after tourist hotspots. The next largest supplier, Fraser Hospitality, is in the market with more than 25,000 units. In addition, many hotel companies grow their respective serviced accommodation brands.

Switzerland is a laggard in this business. However, this gives us the opportunity to learn lessons from the past. Let me build a two-fold case for this: (1) learning for the own implementation of the logic of the business models of these providers; (2) conclusions for the future classification of (such) accommodation providers.

Ad (1). The business models are as plausible as they are logical: focus on the core business, i.e. overnight accommodation, and thus the most profitable area of the business! Services are available as a supplement and only produced in the quality and quality that the guest really wants and, in particular, is willing to pay on a case-by-case basis. If these services can be provided externally or by outsourcing partners, one is in the best of all worlds: Minimal stand-by costs combined with low-cost revenue generation. The key here is to know exactly which services in which quantity and quality which guests/ groups of guests want which access and what they are willing to pay for. Learning from Serviced Apartments = Learning to Win? I answer this question clearly with YES.

Ad (2). However, the above considerations have consequences for the classification of such establishments. The classification of infrastructure and service availability can no longer be generically combined with each other but must be dealt with separately. In consequence, one needs a dual classification, differentiating between (1) quality and extent of the hardware (e.g. room size and equipment or the number of rooms per "Key" = the privatized unit by the guest) and (2) quality and availability of different services. This gives the operator maximum freedom to align his keys and services with real (in the sense of "willingness to pay") needs. Example: ***** - rooms and infrastructure facilities (e.g. spa and wellness) can be combined equally with ** - services. Or *** - rooms are “pimped” with ***** services, etc.

Time will tell, to what extent such a logic would be applicable to other forms of accommodation, such as hotels. In principle, one should make use of the logic of an adapted classification to provide ideas for business models of other types of accommodation and thus for innovation. Apart from the fact that humans like to rest in a horizontal position, there is nothing, but nothing at all to consider as given! Start from the bed and innovate everything around it. Go figure!

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