Expert panel discussions hosted by media outlets are great. They pull together bright minds from semi-competitive businesses to illuminate complex industry-related topics and trends. This usually results in an expansive, surprisingly collaborative, and interesting discussion.
To this end, the recent Serviced Apartment News (SAN) webinar titled, The Connectors: Serviced Apartment and Corporate Housing Agents, did not disappoint.
For the purposes of this post, we want to zero in on the last question of the webinar, which centered around the hybrid business model of service delivery and whether or not the exit of premier operators, Oakwood and BridgeStreet, is a symptom of a faulty model or a by-product of unrelated business decisions.
Panelists Stephen Hanton, Synergy’s president, International, and Jo Layton, director, CAP Worldwide, offered insightful answers to this question, both commenting on Oakwood and BridgeStreet’s prominence and stewardship within the sector while noting both departures were less about the model and more about separate business decisions and extraneous events. But the two industry thoughts leaders held a slight deviation when discussing the overall value of a hybrid service delivery model.
While Stephen noted the model’s advantages of providing client options, choice, and flexibility, Jo noted its potential shortcomings as it presents challenges in managing vacancy, and at the same time, the implementation of a client’s global program.
To illuminate the value of the hybrid service delivery model, we thought it’d be beneficial to properly define it, discuss its benefits, and outline how Synergy manages service delivery through the model.
What is a Hybrid Service Delivery Model?
First, let’s define the basic two components within a hybrid model: An agent and an operator.
An agent typically builds a network of vetted supply chain partners and works within the network to fulfill client needs. Conversely, an operator either holds and manages long-term inventory through strategic lease agreements or owns the inventory outright.
Quite simply, a hybrid model combines the services of an agent with the products and services of an operator. Most serviced accommodation providers do one or the other, but few do both.
The Benefits of a Hybrid Service Delivery Model
Stephen said it best, “…if you are an operator, then you are pushing people into your inventory, not necessarily where [the client] wants to be or where is best for them.”
However, if you operate solely as an agent, you lose touchpoints within the guest experience and the potential cost savings of strategic lease and inventory management.
A hybrid model intends to maximize the advantages of the agency model—adaptability, flexibility, and customization—with the cost-saving potential and control of the operator model.
From an overall philosophy standpoint, the hybrid model fosters the necessary client/supplier partnership dynamics for a truly consultative client approach to take root. As “consultants,” Synergy actively guides and counsels our clients based on their current and future needs set against the backdrop of what we see in the marketplace in terms of inventory, amenities, and price. The goal is to help our clients define and create value within their business travel and mobility departments/divisions. Without the ability to offer the benefits beholden in both the agency and operator models, serviced accommodation providers limit their ability to use all the available tools necessary to bring value back to their client’s housing programs.
Furthermore, a hybrid model is best suited to limit liability during disruption. As more and more businesses go global and the complexities of travel markets increase, global housing program providers need financial strength, solid owner/operator relationships, and contractual agility if they are to survive the negative effects of changing market dynamics and government regulations—let alone a pandemic or unprecedented supply conditions. A hybrid service delivery model is best suited to maximize client optionality and cost savings while limiting risk.
All in all, with a hybrid model, you get the best of both worlds. The agility of the agency model and the cost savings of an operator model all the while reducing exposure to the downsides of operating solely as an operator or agent.
That said, the model isn’t successful in and of itself. Success really depends on the experience, knowledge, and specific expertise of the organization running the model.
Synergy’s Four Pillars of Service Delivery
Synergy’s hybrid model is composed of four pillars:
- Real Estate
- Core Inventory
- Supply Chain (i.e., an agency platform enabled by technology)
- Alternative accommodations via sharing economy platforms or project specific solutions
Real Estate. Our real estate portfolio is comprised of aparthotels via our parent company, The Ascott Limited. Together, we offer over 122,000 units under the umbrella of eleven distinct brand segments that offer a range of amenities and price points.
Core Inventory. We offer core inventory (i.e., Synergy-managed long-term leases) in most major markets across the globe. This approach takes into mind risk mitigation and best business practices while matching client demand.
Supply Chain. Synergy’s partnership model of strictly vetted providers is tiered based on various factors, most based on performance and merit. It promotes trust and mutually beneficial transparent pricing as opposed to a commodity-driven rate negotiation.
Alternative Accommodations. From fully vetted shared economy options to unfurnished apartments to single-family residences to hotels, Synergy offers a robust set of alternative accommodations to meet the unique needs of our clients.
The four pillars of Synergy’s hybrid model are underpinned by a cloud-based tech stack, which integrates our global reservation systems and proprietary souring platform with a suite of tools and services from Oracle’s NetSuite—all backed with custom reporting and analytics.
Finally, our global team of local hospitality experts brings it all together with experienced, localized, and personal service.
It is natural to question the efficacy of any service delivery model, especially if recent examples point towards vulnerabilities. Above all, we recommend each of our clients and prospects in the market for extend-stay housing products and services exercise due diligence when vetting your providers. We put together a list of questions buyers should ask their extended-stay providers that can be found here.
At the end of the day, we believe in working with, not just for our clients. To honor this subtle yet significant distinction, we team up with our clients in the spirit of partnership and build adaptive, versatile housing programs. The best mechanism to honor our partnerships, and as Stephen said, ensure we are serving our client’s best interests, we believe, is via a hybrid service delivery model.
Are you interested in how Synergy can help define and bring more value to your mobility and business travel housing programs? Reach out to us today via email@example.com.