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Flexibility And Innovation Building Resilience In Tourism/hospitality And Property Sectors

Leading aparthotel operator offers flexi-rental accommodation at 4/5-star luxury properties

Totalstay’s no-lease agreement mirrors growing flexible leasing in local commercial property market

Totalstay, a Cape Town-based aparthotel operator that operates a private collection of fully managed, hotel-grade vacation rentals including hotels, villas and serviced apartments, is offering flexible monthly rentals free of lease agreements, at prices starting at just R8 500 per month.

This is ahead of what looks set to become a rebound in the USA, with the US aparthotel markets showing the strongest recovery in states that ended lockdown the earliest, including Texas, Georgia and Arizona. “The aparthotel market is one of the first to rebound right now in the US and Europe,” says Rael Phillips, co-owner and director of Totalstay. “According to data from Airbnb, occupancies went up by 17% just over a week and a half ago, a gain of 7% on the week before, and a gain of 4% on the week prior.” 

Totalstay’s collection includes one-, two- and three-bedroom offerings, such as Latitude Aparthotel in Sea Point (32 apartments), Strand Beach in Sea Point (21 apartments), The Verge Aparthotel in Sea Point (22 apartments) and Urban Artisan Aparthotel in Woodstock (20 apartments). All properties offer 24-hour concierge, full kitchens, free wifi and hotel-grade amenities. 

With South Africa still under lockdown, Totalstay has adapted to local conditions, says Phillips, meeting the needs of people under financial pressure and wanting hassle-free rentals. “This also builds an element of resilience into our business, to see us through to the level when domestic travel will start again and local tourism starts picking up,” he adds. 

In general, however, he notes that “aparthotels have been able to respond to the pandemic far more quickly and withstand more of the commercial impact it’s presented because of the sheer nature of an apartment/villa versus a conventional hotel room – it offers more space and facilities, and is more flexible and agile. As people are allowed to travel again, they’re drawn to staying in serviced apartments because they’re much more self-isolated and individualistic, which upholds the social-distancing need. The risk of contaminated food is less because you’re able to cook for yourself, and you have greater control over what you yourself can wash and clean.”

While obviously nowhere near to pre-Covid levels of reservations, in the USA, Beyond Pricing, a Californian-based revenue management tool for the global vacation rentals market, has noticed an uptick in reservations, as restrictions in certain shelter-in-place locations are lifted. There’s also been a major shift in the length of stay, particularly in urban centres, more than doubling in April, pushing the average daily rate (ADR) downwards as price is negotiated over a longer period.

This flexible, agile nature is something that worked well in the commercial property-leasing market, even before the Covid-19 pandemic hit South African shores. Inospace, a Cape Town-based operator of serviced business parks that provides a wide range of industrial, office and storage space, offers terms with flexibility at its core. Rael Levitt, CEO of Inospace, says, “South Africa’s weakening macro-economic climate and all the uncertainty it presented was fuelling demand for short-term, flexible leases, but the recent disruption to the economy has turbo-boosted that demand.” The company is now offering monthly on-demand rentals on a pay-as-you-go basis, although for tenants who want a greater level of certainty, two- to three-year leases are offered, with a two-month lease break granted in the tenant’s favour.

“Dynamic or fluctuating rental pricing, much like hotel room pricing, is something that we see coming into all commercial property,” notes Levitt. “We believe that large businesses and corporates will also start utilising this on-demand offer, especially in the warehousing and industrial space zones, to place stock that traditionally moves through more expensive retail channels.” 

Flexibility, agility and quick responsiveness have been saving graces for companies like Totalstay and Inospace, which are independent, privately owned and entrepreneurially led. 

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