Skift Take

A wave of agency closures and takeovers means those that are left need to ensure they're lean enough to compete with owner and operators.

This year has been one of two stories for companies in the corporate serviced apartments space.

Legacy agencies and hybrid agencies (owner/operators with their own agency business) that typically book guests into long-term stays in serviced apartments have been hit hard by the pandemic — much like leisure and corporate travel agencies.

The owner/operators of the apartments seem to be faring better, as corporate employees and essential workers steered clear of hotels with their shared spaces deemed less hygienic. The operators have also in many cases either reduced inventory by moving into the residential market or reduced the numbers of units in their portfolio.

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Habicus Group, parent company of SilverDoor, this week bought rival agency The Apartment Service. It’s the latest in a string of deals that have seen agencies and hybrids change hands, or simply disappear, over the past 18 months.

“The Habicus Group of companies has increased its market share during the pandemic and we see a huge opportunity for the company and sector to continue to grow in the post-pandemic world,” said group CEO Stuart Winstone.

Like the travel management sector, consolidation is on the rise, and Habicus Group will now look to buy more agencies across Europe and in the Middle East, according to reports. Currently it has offices in Frankfurt, Madrid, Singapore, Washington, Denver and Hyderabad in India.

Germany’s Serviced Apartments Platform, part of Vision Apartments, bought digital marketplace Acomodeo last month. Acomodeo’s founder and CEO was honest in his appraisal. “It has been a turbulent year,” said Eric-Jan Krausch. “Due to refinancing needs in the middle of the corona crisis, we were dependent on new shareholders.” Serviced Apartments Platform had previously invested in the company.

US brand National Corporate Housing snapped up the European and Asian agency business of BridgeStreet at the end of last year. It filed for bankruptcy on November 25, and is liquidating its remaining assets in the U.S. and Britain.

Singapore’s Oakwood exited its agency business in May last year to focus on growing and managing its hospitality portfolio. The UK’s Select Apartments also closed down in 2020.

A Wake-up Call to Reenginner

As a result, many travel managers who had awarded their global serviced apartment programs to agents before 2020 now find themselves working with different organisations and cultures compared to the agents and hybrids they originally contracted with.

“The costs of running original legacy agencies or hybrid models could prove to be prohibitive in 2021,” said Jo Layton, director of CAP Worldwide Serviced Apartments. “Revenues and demand have been very different in the last 18 months, since the heydays of 2019.”

For those agencies in the UK, a further blow is expected this month as the government’s financial support comes to an end. In June, travel agents and associations protested to demand an extension of the aid packages.

“The majority of agents either made good use of the furlough scheme, made redundancies, or ran on skeleton staff, which if your biggest cost is your people has helped to keep many companies afloat in 2020 and 2021,” Layton said. “With the change in this landscape, through closures or consolidation in a short period — the wake-up call for many agencies is to reengineer their business to be sustainable for 2022,” she added.

While many hospitality brands aim for an asset-light model, it’s proving a riskier approach in the serviced apartments sector.

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Tags: BridgeStreet, corporate housing, corporate travel, serviced apartments, singapore, travel management

Photo credit: Agencies that book guests into long-term stays in serviced apartments have been hit hard by the pandemic. Alexander Pemberton / Unsplash

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