HERNDON, Virginia—Serviced-apartment giant BridgeStreet’s foray into the hotel space isn’t a huge departure from its core business. The company has been using yield management and hotel-pricing theories for years.
Sean Worker, BridgeStreet’s CEO, said the company’s decision to launch its ApartHotels by BridgeStreet brand takes the company in a natural direction from its current business model, which specializes in furnished residences, serviced apartments and suites.
“Our core business is fundamentally derived from the same source as the rest of the hospitality world,” Worker said, citing travel managers and purchasing directors of corporations as primary sources of business. “We’re dealing with the same person, the same (requests for proposals), the same process as hotels.”
Worker said those decision-makers are looking for city-center accommodations that provide a high-value proposition close to their offices—a perfect fit for ApartHotels.
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Sean Worker BridgeStreet |
“We have purpose-built our brands to cascade with the level of experience and service our clients expect from mainstream hotel environments,” Worker said.
Worker, formerly with Wyndham Worldwide, has several other members of his executive team with hotel backgrounds, which will help as BridgeStreet plans to have 20 to 30 properties open or in the active development pipeline within three years. The company plans to be operating in the U.S. within 18 months.
First up for ApartHotels by BridgeStreet is a Birmingham, United Kingdom, property scheduled to open in 2014. Worker said other high-priority cities include Paris; London; Zurich; Edinburgh, Scotland; Frankfurt, Germany; Munich; Geneva; Brussels; Amsterdam; and Barcelona, Spain. Worker said U.S. targets include gateway cities, such as New York, San Francisco, Boston, Washington D.C., Miami, Chicago and Los Angeles, among others.
The inaugural 80-unit ApartHotels property in Birmingham is a good gauge for the future of the brand, Worker said. It’s a city-center hotel with a wine bar/coffee shop, a full fitness facility and a small meeting room.
“Its full customer service that has all the right amenities,” Worker said. “It has (electrical outlets) in the right places, (universal serial bus) ports, a sound system and the ability to cook if you desire.”
Worker said 70 to 90 units per property is a good size for the ApartHotels offering. The company will use new builds and conversions to fill its roster.
“It has a very configurable base that appeals to investors, which we’re highly conscious of,” Worker said.
A variety of growth vehicles
Growth of the ApartHotels portfolio will be through a mix of franchised, managed and leased operating structures. While BridgeStreet would prefer to not own the properties, Worker said it is putting its balance sheet to work to ensure the brand is well represented in at least 15 anchor cities in Europe and the U.S.
“The biggest opportunity for us is we have the ability to ignite deals, particularly in this environment where (loan-to-value ratios) are spanning quite a width,” Worker said. “Lenders are demanding equity to be put in. With our history in committing to projects in Europe and America on a lease basis as well as other investment vehicles, that gives us an advantage.”
Worker said one key target to ensure growth is municipalities that are searching for more inventory.
“They realize they are not only competing in their own country but the competition is lying far beyond their own borders,” Worker said. “City planners are taking on a very different view in terms of what mix of hospitality they want in their municipality. It’s very telling about their desire to ignite that pipeline because of that demand.”
BridgeStreet is no stranger to a hotel mentality. With more than 50,000 units around the globe, it often provides nightly rate options in addition to extended-stay packages. The serviced-apartment sector has some limitations set by local and national governments that require minimum length of stays by guests. Worker said BridgeStreet embraces that concept whenever it does business in such a location, but it also likes the idea of no minimum-stay requirement where it is legal.
“Where we can do it legally, 50% of our business is leisure travel less than seven days,” Worker said. “So we’re already doing a hotel-type of environment with BridgeStreet.”
Worker said the ApartHotels brand will have an average daily rate comparable to yield-managed 4-star hotel rates. The company’s press release said the concept will be akin to midscale hotel offerings.
“Fundamentally, you are getting an apartment that generally is twice the size of a hotel room,” Worker said. “Depending on the city, in Europe that could mean €350 ($460.07) to €400 ($525.80) or as low as €250 ($328.63).”
It is what it says it is
Serviced apartments and extended-stay hotels are the same concept, according to the BridgeStreet CEO.
Worker said the name perfectly describes the product: The value of an apartment with the amenities of a hotel room.
The company has been working on the concept for about two years.
“As we continued to grow our customer base, we tested it with our customers and asked their views,” Worker said. “It became very clear it would be very well received.”
Worker said a key feature of the brand will be indigenous design elements so guests will know where they are staying.
“We call it standardization with familiarization,” Worker said. “You’re going to know you’re in Paris, Amsterdam, Istanbul or New York. The art will reflect that, the scheme will reflect that and all the amenities that you expect are going to be there.”
Worker said thinking globally while catering to localized offerings is essential in the hospitality industry. For ApartHotels, the architecture is from Germany, the creative design is in London and the marketing is done in Washington, D.C., which gives the brand a global view.