The serviced apartment sector is expanding fast in the UK and across Europe, with awareness of it increasing rapidly, and the options it offers – both business and leisure – becoming better known.
For most serviced apartment operators, it is corporate travellers that provide the major revenue source: for Staycity, the reverse applies – over two thirds of revenue comes from leisure travellers.
And Staycity is expanding fast and confidently – witness its recently announced TV advertising campaign, a first for the sector and testimony to a company that’s intent on building awareness both of the sector and of its brand within it.
H&C News was therefore pleased to seize a recent opportunity to meet Tom Walsh, CEO of Staycity (pictured above), and find out more about the operation and its plans.
Ten years old
Recognising that standard hotel rooms did not meet the needs of growing numbers of travellers in Europe, Staycity was founded in Dublin in 2004 to provide leisure travellers, families and corporate travellers with a mid-market, cost effective and user-friendly alternative to hotel accommodation in popular European cities.
The company is growing fast, now operating over 1000 serviced apartments in Dublin, Birmingham, Edinburgh, Liverpool, London, Manchester, Paris and Amsterdam, offering quality short-term apartment lettings in city centre locations.
Staycity is a profitable, debt free privately held company with headquarters in Dublin. The majority shareholding (52%) is held by the founders, while 48% is held by Irelandia, the investment vehicle of the Ryan family, one of Ireland’s wealthiest families.
Its business model is based on long term, full repairing and insuring leases with building specifications that give customers what they want, while stripping out extraneous features for which the travelling public does not necessarily want to pay.
European ambitions and standards
The global serviced apartments sector makes up 7% of the short stay market, compared with 12% in US cities. In Europe the figure is smaller, at just 1%, but growing quickly.
Staycity achieves a turnover of €25 million (£21m) with EBITDA for 2013 at around €2 million (£1.67m). Staycity is anticipating growth at a compound rate of 30% per annum for the next five years and is aiming to grow to 3,500 apartments by 2018.
By 2020 Staycity aims to be Europe’s largest independent serviced apartment operator with over 4,500 apartments, revenue of €100m (£84m) and EBITDA of €15m (£12.5m)
“The sector will expand, driven by the needs of the travelling public,” comments Tom Walsh. “We expect independent players, such as Staycity, to continue to gain market share while the larger hotel corporations remain bound by their unwillingness to lease and by cumbersome brand standards.
And: “…we expect that standards across the sector will rise and serviced apartments will become one of the choices travellers automatically consider as they plan their next trip. This will be helped considerably by the recent announcement by the Association of Serviced Apartment Providers (ASAP) that it is to launch a quality assurance programme for serviced apartments. This will provide a much-needed benchmark for operators.”
Delivering growth
Given the scale of ambition, Staycity has been working hard on its pipeline in both the UK and major European cities: it has two senior employees working full-time in Rome and Paris looking for 100 to 200 unit properties and developments.
It is now close to a Central London deal, as well as further deals in Europe, and where appropriate will now also consider management agreements. Further Staycity sites in the pipeline include Lyon, Nice, Milan, and York, with Greenwich London opening in May 2014. Birmingham, Paris, Edinburgh and further London sites are also planned.
To deliver its ambitions, it needs and expects to sign 1000 units in 2014 and the following years, and Tom Walsh is confident of achieving this, pointing to increasing awareness in financial circles of both the serviced apartment sector and of Staycity itself and its scale and reputation. Not only do property agents now know them and bring properties to their attention, so too do the financial institutions know them – and they are now operating in an improved financial climate and seeking investment opportunities.
Customers
Staycity apartments achieve an average occupancy of 80%, with a RevPAR of €75 (£63). The properties have a longer average stay than city centre hotels and a shorter average stay than other serviced apartment operators, occupying a niche that appeals particularly to families and small groups travelling together.
Some 70% of Staycity’s revenue comes from leisure groups, with 30% being mid week corporate customers. Around 60% of customers are aged 18-44.
The revenue management model offers lower rates for early – not late – booking: Staycity is aware of the growing awareness and customer dissatisfaction with ‘deals’ that disadvantage early and/or loyal customers.
Bookings and promotion
From the start, Staycity distributed through its own website direct, not through corporate sales and deals. A core strength remains that 60% of bookings are still made directly through the Staycity website, though Tom confirms that intermediaries – including OTAs – have grown as the sector and Staycity has become more visible and offered more properties.
Considerable resource is now being invested in building and utilising Staycity’s own customer database: there is recognition that acquiring and holding data is not the same as utilising that data effectively, which will be a significant challenge – and opportunity.
At the same time, Staycity is seeking to grow its presence and visibility organically, and developing its social media activities to support this requirement: expect to see more of this in the coming months.
The apartments
Staycity serviced apartments accommodate four to six people with four-star quality standard facilities. The apartments are bigger than the majority of hotel rooms and have a fully equipped kitchen with dining room/lounge and bathroom.
Properties also feature secure car parking on-site or nearby; complimentary Wi-Fi access; flatscreen TV; complimentary sports channels; spacious living and dining rooms; weekly housekeeping; air conditioning and heating; rollaway sofa beds in all apartments; iron and ironing board; cot & high chair (on request); hairdryer; and a lift to all floors.
As the advertising campaign is designed to demonstrate, these apartments stand up well against the blandness of many hotel chains, whilst offering a positive guest experience, including 24 hour reception, and the free Wi-Fi that is so essential a part of modern business and leisure life.