Serviced apartments – freedom and the path-to-purchase

Speaking at the Serviced Apartment Summit earlier this year, I was pleased to report that the brands operating in that sector are gaining recognition among consumers. Many have extended their focus beyond the traditional extended stay, but appealing to multiple segments comes with its own challenge. Voxpops conducted for the Summit revealed that there is a lack of clarity about what serviced apartment brands stand for. Most importantly, the sector is missing an opportunity to tap into the core reasons for using a serviced apartment.

Better recognition

Our Hotel Guest Survey data bears out the growing recognition of Serviced Apartment brands.  Among business travellers, average awareness for Serviced Apartment brands in the UK has grown 50% in less than two years, from 6% in 2013 to 9% in Q1 2016.  However, there’s still some way to go among leisure travellers, where awareness levels have stabilised at around 5-6%. There is the sense that serviced apartment brands are struggling to stand out from the crowd in a saturated industry where new brands are popping up all the time.

We wanted to hear more about the level of knowledge and understanding of serviced apartment brands. So we tested the general public in London with a mix of brands, including those owned by the global players such as Staybridge Suites and Adagio Aparthotel, as well as smaller groups such as Staying Cool. We also took the opportunity to test their knowledge of homestay brands, such as Airbnb and OneFineStay, and here’s what they said…

Of course we were only able to ask a limited number of people, and central London is by no means a representative sample, but these interviews revealed that serviced apartments are a much more emotional purchase than their current positioning would suggest.

What are serviced apartments, anyway?

Some of those we interviewed said they see them as hotels with more space and more amenities (or an ‘unhotel’ as Accor’s recent acquisition, OneFineStay, term themselves). They would expect them to appeal more to traditional hotel users who are looking for a bit more independence.

Others think they are essentially an Airbnb, but with the benefit of brand standards. In this case they would appeal to typical Airbnb guests for the extra space and independence, but who would really like more consistency in the product.

Some also think they are just regular rental accommodation with extra services.

Whilst the definitions vary, the most interesting outcome of the interviews is the emergence of core needs which serviced apartments can meet.

We heard words like ‘freedom’, ‘living’, ‘privacy’ and ‘homely’, which all are emotional keywords and are much more about the experience than the product. It shows that all the seemingly functional reasons for choosing a Serviced Apartment, such as more space, cooking facilities, etc. are actually underpinned by travellers’ core needs. Serviced Apartments can tap into these emotional aspects to target their audience better, particularly the leisure market.

Developing an offer

Developing an offer that truly resonates with the leisure market is all the more important given that the long-break market (which we categorise as a break of 5+ nights) has been in decline since 2011, (looking at domestic stays).   The growth in leisure nights domestically is coming purely from short breaks, which we define as a 1-4 night stay. These now make up 90% of demand, so defining the reasons for choosing a serviced apartment are vital.

Selection says more about the occasion than the guest

With the rise of the short break, we’ve seen that the path-to-purchase and the type of accommodation selected is becoming increasingly occasion driven. It is evident that travellers no longer see themselves as a budget-brand user or a luxury-hotel stayer. Instead, there is increasing promiscuity from one tier to another and one type of accommodation to another, depending on the occasion.

Serviced Apartments are in a perfect position to take advantage of these opportunities if they can develop clarity on both their target audiences and their offering.  In this fluid market, though, they will continually need insight into the mind of the large potential market, and not just keep addressing their established audience.

All of the data in this blog comes from our Hotel Guest Survey. This is an annual study conducted quarterly in 30 markets and is nationally representative of travellers within each market. The study tracks elements like brand awareness, brand usage, but also the hierarchy of guest needs and trends in the sector.

We help our customers with everything from brand equity tracking, to market sizing and segmentation, to new product development. If you are interested in finding out more, please do get in touch with me.

You can also learn more about BVA BDRC's hotels and hospitality insights at our annual Hotel Insights Forum.