2023-06-23 11:09:41
Xavier Desaulles, PDG d’Adagio.
The past few months have seen the launch of a host of new extended stay brands in the United States, whether by Marriott, Hilton or Hyatt. Do you see the same opportunity for the development of this segment on this side of the Atlantic?
Xavier Desaulles – The potential is there. The market opportunity in Europe is strong if we look at what is happening in the United States where the apartment hotel industry continues to develop. The model was born there, is culturally anchored as moving from one state to another for business reasons and using relocation solutions is common. Americans see it an intelligent, flexible formula with larger rooms equipped with kitchens, without having to go to the restaurant every day. A non-negligible anti-inflation element today. In the end, aparthotels now represent between 8% and 10% of the accommodation inventory across the Atlantic, compared to only 3% to 4% in Europe. which leaves a real capacity for growth by democratizing this form of accommodation.
Hilton: a new long-stay brand in the United States
Where is Adagio’s offer today?
Xavier Desaulles – In 15 years of existence, we have gone from 16 sites in 2007 to 126 establishments at the end of last December. That is regarding 14,500 apartments in 16 countries. A good growth therefore, which focused mainly on France with 80 destinations, including 40 establishments in Île-de-France and 40 others in the regions. In addition to this, we also have 40 aparthotels internationally, including around ten sites in both Germany and the United Kingdom, but also in Switzerland and Italy. None of our competitors have such a network in major European cities. Very present in Asia, Ascott only has regarding forty Citadines in Europe. Appart’City and Résid’home have largely developed in France, but little elsewhere. This allows us to be the leader in aparthotels in Europe today.
Adagio Original Paris Buttes Chaumont
What are your medium-term growth objectives?
Xavier Desaulles – In this still fragmented and growing sector, we are determined to play our role as leader and develop the network. Our five-year goal is to take the brand towards the 200 site mark, and therefore to add 80 destinations by 2027. And this around two areas of growth, starting with consolidating our position in France, particularly in the regions. Indeed, we are already very well established in Paris with 19 intramural sites and 21 others on the outskirts of the capital. It is therefore on the regions that we are going to focus our development. We opened a second Adagio in Lyon in January, another in Montpellier in February, we will soon inaugurate a fourth establishment in Toulouse this summer. These strategic deployments will densify the Adagio network in French cities where we are already established – I might also mention Annecy, Lille, Nantes, Rennes, Rouen or Strasbourg – while going to cities where we are not yet present. I am thinking of Brest and La Rochelle for example.
Will your development also continue in Europe?
Xavier Desaulles – Internationally, our primary ambition is to consolidate our networks in Germany and the United Kingdom, already strong with regarding ten sites. For example, next year we will open a third Adagio in London. In Germany, we opened one in Hamburg last January and we are expecting another soon in Heidelberg. But we also inaugurated an Adagio in Ghent, in the Benelux. Our international development is organized around already established positions, mainly in Northern Europe.
Accor, which is your joint shareholder with Pierre & Vacances, is developing Living versions of Novotel or Mercure Living in Asia or Africa. Won’t Adagio’s development therefore be confined essentially to Europe?
Xavier Desaulles – One thing is certain, Adagio is the priority long-stay brand of Accor’s premium, medical and economy division. We have a right of first look on development opportunities affecting the extended stay segment. My feeling is that, for Novotel or Mercure, this Living variation is not central to the development of these brands. Their know-how in terms of long-stay products or revenue management linked to this model is not at the heart of their expertise. Alongside our own development team, we also rely heavily on those of Accor to source projects, find partners, in particular on combo projects. For example, the project we recently opened in Ghent mixes an Ibis Budget and an Adagio Access, brought together by a common reception.
Adagio Glasgow Central
Adagio Londres Sutton Point
Xavier Desaulles – The future of Adagio is also the rise of its network in consistency. For the next five years, we have a renovation plan covering some thirty establishments. Our desire is to “premiumize” them, to revitalize these assets with new designs, to upgrade their experience. This was recently the case with the Adagio Original, which completed four months of work. Another important subject is that of Notoriety. We must work to become the preferred brand for travelers for medium and long stays. One thing that struck me when I took over as head of Adagio 18 months ago was the lack of perception of this brand. There are few things associated with it, neither positive nor negative. Our ambition is to make it resonate with much more communication to enhance our offer. This is also why we have redesigned our brand territory, with a new signature, a new logo.
Adagio: new identity, new developments
At the same time, you have also redesigned the segmentation of your portfolio.
Xavier Desaulles – Indeed, we have restored order in our offer with, on the one hand, the Adagio Access range, which includes 50 of our sites. With Access, we offer a “premium” economic offer. If the surfaces are a little smaller – 18 or 19 m² -, there is a real choice in terms of design, an ingenious layout of the apartments. For example, a third of them have cupboard beds, which offers travelers on mission with controlled budgets a real place to live with a kitchen, an office to work. Beside we have the high end range Adagio Original, the heart of our offer with 75 sites. Then we added the Premium version, around five-star establishments that we had in Dubai and Casablanca. It’s another profession, the five-star aparthotel business. It is focused on long stay reasons, requires more services. This Adagio Premium range can open up opportunities for us in the very top of the range in certain distant destinations, but, for the moment, our priority is really to develop the two Access and Original ranges in Europe.
Alongside this, the offer of your establishments is also evolving, with the appearance of co-living solutions. For which customers?
Xavier Desaulles – Our definition of coliving targets people who already know each other, whether employees of the same company or family tribes – parents, grandchildren, grandparents. For all of these, we have created coliving apartments made up of four independent studios for two people, all with bathrooms, all grouped around a shared lounge and dining area. It works well with a request from both corporate and leisure groups. Our test site, the Adagio Orginal Paris Bercy, which is close to the Accor Arena also receives many groups of friends who come together for a concert. The idea now is to develop this offer. For example, we will be offering coliving apartments in London next January, on the Whitechapel site.
Co-living apartments at the Adagio Original Paris Bercy.
What does the corporate segment represent for Adagio?
Xavier Desaulles – About half of the turnover with more than 11,000 companies with whom we have agreements. Last year, the corporate segment accounted for approximately 120 000 clients out of the 500,000 that we welcomed in 2022. If we record an average length of stay of 4 nights overall, for the corporate, this duration exceeds six nights. A quarter of our customers even stay with us for more than a month. Hence the importance of hospitality, of the human dimension of our establishments. Contrary to a traditional hotel where the traveler who stays only one night is a bit anonymous, our teams bring an extra soul by knowing the name of the customers, their habits. Another important aspect with respect to this clientele is this idea of tariff degressivity depending on the duration. For a short stay, from one to three nights, we are in line with the traditional hotel industry. But following 3-4 nights, we are 5% to 10% cheaper, and 30% cheaper for those who stay a month.
With regard to business customers, is the change in post-pandemic habits favorable to your type of accommodation?
Xavier Desaulles – Absolutely. The current trend towards “work from anywhere” demonstrates the strength of the aparthotel offer in general, and of Adagio in particular. A traveler can work in his apartment or quietly in the common areas, on large tables, with very good connections. We see more and more business travelers arriving during the week and being joined on Friday by their spouse, their family, to discover the city at the weekend. Before the Covid, Saturday was a generally uncrowded day. Today, attendance is much higher, as well as in August, which was traditionally low due to the lack of corporate clientele. Today, people take their holidays in a different, more fragmented way, and the month of August has become a very strong month for us with a mix of leisure and corporate clients. Borders are blurring. And this hybridization suits us very well.
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