As modern travellers and digital nomads increasingly favour hospitality providers that offer flexible accommodation, companies like Bob W have emerged to fulfil this brief.
Bob W is operational in 10 countries with a focus on Europe, opening accommodations that integrate bespoke technology, local design, and environmentally friendly practices.
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With a portfolio split of 35% hotels and 75% serviced apartments, Bob W (which stands for Best of Both Worlds) has a close eye on the challenges and opportunities in both hospitality segments.
Chief development officer Philip Grace tells Hotel Management Network how serviced apartments are giving traditional hotels a run for their money.
Strategic location choices
Grace’s role at Bob W is to define the company’s location strategy, find and deliver the opportunity to establish a property in a chosen location, and oversee the opening.
The company is currently under contract in three new countries to open accommodations with developers who have either acquired a site to refurbish for Bob W or are building a new site.
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By GlobalDataGrace explains: “There’s a lot to be done in Europe and there are certain core markets that perform better than others. So right now, for example, Milan, Madrid, and Munich are three very good real estate markets.”
Like any major players in the hospitality industry, Bob W looks for locations that provide the opportunity to grow beyond one building.
“When we look strategically at the location, we’re very much focused on what it can provide for our customer base to tick various boxes, including for guests that are tourists or travelling for business,” says Grace.
In April, Bob W strengthened its presence in Estonia with its sixth property, followed by an expansion in London, UK with three new accommodations, bringing its total portfolio in the UK capital city to 13.
The competition between serviced apartments and hotels
Grace asserts that “serviced apartments are absolutely disrupting the traditional hospitality market. An apartment gives greater flexibility than a standard hotel box that provides no glamour. Many guests want to live as a local when they visit a destination.”
He explains that with its business guest segment who are travelling more and staying for longer periods, Bob W is able to is occupy its buildings in lower seasons with longer bookings to optimise revenue. In peak tourism seasons, this can be adjusted for shorter term stays.
“Where we have a hotel room product, we try to provide shared spaces for guests such as co-working areas, kitchens, or other facilities, so that they have flexibility and will stay longer,” states Grace.
Bob W has also honed in on contactless technology at its properties, which includes digital front desks, self-service check-in and 24-hour remote customer service.
According to Grace, consistent investments in this tech-led guest experience across its apartments and hotel rooms has allowed Bob W to “reach a gross operating profit (GOP) of around the mid-60s.
“If you compare that to a traditional hotel, they have roughly 35-40% GOP because they have a massive burden of staff that they need to employ at each one of their buildings. We are showing hotels a different way of providing guest experiences.”
The future of rentals and hotels
Short-term rental provider Airbnb has driven the biggest disruption to the hotel industry in recent years.
Grace proffers that Bob W exists to balance “that hotel experience in terms of regularity, but without the bureaucracy that goes with it.”
Bob W’s offering comes at a time when local authorities around the world are clamping down on Airbnb properties.
Grace acknowledges that compliancy is a key issue in the serviced apartment sector.
“Our USP is that we are a fully compliant operator, whereas if we look across the market in the UK, in London particularly, around 90% of operators do not comply with legislation.”
Legislation for serviced apartments in the UK states that if a guest is in a residential building, they have to stay in that apartment for more than 90 nights for residential occupancy. If a guest stays for fewer than 90 nights, it becomes a hotel classification.
Despite such demarcations, Grace believes that “there will always be a market for the quality hotels of the world.”
Bob W is continuing to grow in its medial position between the hotel and apartment industries, recently launching a £120m equity raise to acquire and repurpose hotel and office assets into short-term serviced apartments in partnership with Osborne+Co Investment Management.
Hotel industry players would do well to consider opportunities to enhance guest provisions and operations to match the stiff competition presented by serviced apartment providers.
