Our very own Alex Neale (Group Head of Partner Relations at SilverDoor) recently sat down with Serviced Apartment News to discuss trends that are going to shape the sector.
Joining them in this insightful session were Ben Harper (Group Managing Director at Watergate Bay) and Richard Maurin (CEO at Charles Hope Apartments). Read on to discover what’s in store for the industry in 2023.
"Accommodation providers will have to impart evidence of their ESG performance to satisfy travel buyers."
Environmental
Undoubtedly, environmental performance is receiving a lot of attention at the moment.
Many large multinational corporations are already looking to their supply chain to help them meet Carbon Net Zero targets, which some of them have set as early as 2030. SilverDoor has seen a huge increase in the questions on RFPs surrounding environmental efforts. At the moment it’s still at that high level, but inevitably to ensure success; there needs to be more change on the ground.
To give you an idea of some of the environmental criteria that are being included in these RFPs (and what buyers are actually asking…) can be seen in the likes of:
- Do you have carbon emissions reduction commitments and when are you planning to achieve them?
- Could you provide carbon emissions reporting for the last full year?
- Is your company purchasing more or less energy from renewable sources?
Social
The pandemic shifted priorities, especially for traveller well-being and comfortable workspaces. This can also be seen in the rise of pet-friendly options in travel. Ultimately ensuring travellers' mental health is looked after as much as their physical.
Governance
In February 2020, SilverDoor overhauled its health and safety policies, which included vetting accreditation bodies and collecting a significant amount of data and evidence on our partners' Health and Safety compliance. The pandemic highlighted the importance of maintaining up-to-date and robust health and safety information on all accommodations.
Whilst there's always more that can be done, such as getting these accreditations further recognised by clients and developing a global corporate standard for accommodation; the most significant part of evolution has already happened.
- Alex Neale, Group Head of Partner Relations at SilverDoor
"Key decision-making factors such as price and traveller well-being are still priorities at the point of booking but changes are happening."
Currently, there is very little to allow the booker or partners to understand the environmental impact of their choice, especially in any presented data.
It is currently challenging to demonstrate ESG credentials by means of property upgrades, as benchmarks are currently not in place. However, this may change in the coming future as properties begin to gradually make changes.
Current societal and governmental pressures, following the COP26 summit, are galvanising properties to change the way they operate. The wider market does not always welcome rate hikes.
Hence, properties will need to look into upgrades that aren’t costly, or that can even be cost-effective investments in the long term. They currently focus on ‘in your face’ upgrades such as bike doors, or plastic toiletries removal. To achieve reduced costs in the long run, they will need to make changes at the core of their operations. ESG ambitions are becoming increasingly measurable as we are able to calculate carbon emissions and our carbon footprints."
- Alex Neale, Group Head of Partner Relations at SilverDoor
"Service operators Charles Hope is moving into the build-to-rent sector."
After working within the build-to-rent sector as a tenant, Charles Hope has a clear viewpoint on how service levels can differ. Their build-to-rent initiatives came about with their aim to improve standards in the living environment. They also want to improve their asset value, add things such as amenity space, and elevate the standards that you get offered compared to a standard rental.
In this blended approach, Charles Hope aims to increase the standards, therefore increasing the ROI in the investment.
- Richard Maurin, CEO at Charles Hope Apartments
"The upscale extended stay sector was regularly recording higher rates than it was in 2019."
The US extended stay sector outperformed the wider hotel market significantly; through a combination of self-contained units and a client base made up of sectors which carried on throughout; supplying the likes of construction and healthcare workers.
- George Sell, Editor at Serviced Apartment News
"Customer tastes are evolving with all new leisure properties."
Whether that be a new build or conversion across the hospitality sector, it will be expected to include an apartment offering. New hotels won’t be built with solely small rooms, they'll have to have more of a residential feel. With the likes of Beach Street Suite, they have intentions of starting in the same way, moving like in the corporate environment but in the urban environment.
Creating a new category that people really associate with and that becomes more mainstream. More consumers and travellers will ask for it, therefore it will be built.
- Ben Harper, Group Managing Director at Watergate Bay
"Accommodation providers will also have to adapt their physical products to cater to new trends."
The endgame for this is that all providers and accommodations are going to have to gradually make more stringent targets. This will involve upgrading and retrofitting existing inventory to ensure they're eligible for this.
Alternatively, when considering it in terms of costly upgrades, it needs to be balanced with how much people are prepared to pay in rates. However, when a property is going to invest that money, incorporating ESG ambitions is increasingly common and appropriate.
The corporate market is much more likely to encourage buyers to look for efficiencies, which aren't expensive or may even reduce costs.
The big point here is that the industry needs to deliver a way of demonstrating choice by displaying the environmental impact at play, allowing an open market for heavy investment in sustainable changes.
- Alex Neale, Group Head of Partner Relations at SilverDoor
"Tech-driven hybrid hospitality operators will flourish."
There is a fascinating new wave of operators who capitalise on creating a bridge between hospitality and cutting-edge technology. They take the best pictures of the service apartment and short-term rental sectors whilst scaling on autonomous tech, catching the eye of the investment community.
Their properties have local character, enabling them to appeal to both business and leisure travellers. The use of technology to improve current operating systems is nothing new. However, the increased interest that the hospitality industry has generated from investment communities can help forecast the increased use of new cost-intensive tech in the industry.
- George Sell, Editor at Serviced Apartment News
