For those booking a branded residence for a short stay, a huge part of the allure is renting a snazzy multimillion-dollar home with the service of a five-star hotel. It’s all well and good to promise that. However, delivering that promise for a branded residence under a rental program can turn out to be very complicated indeed, with particular attention needing to be paid to the many cogs that ensure the efficiency of what can be a really complex machine.
But for the luxury travel advisor booking it for their client with very exacting standards, none of that complexity should matter.
Getting it booked
“It should be as seamless as any other booking with that brand,” says Brian McGregor, head of brand advisory at Global Branded Residences and a former Four Seasons executive who spent 19 of his 25 years with the hotel company working with branded residences.
However, Vanessa McGovern, SVP partner product, marketing & events at Global Travel Collection, the luxury travel division of Internova Travel Group, says booking one can sometimes be anything but straightforward.
First, the residence has to form part of the hotel's available rental inventory. But because residences are often treated as special inventory, they may not appear in the global distribution system at all, requiring advisors to book directly with the hotel or resort.
Problems are more likely to rear their ugly head, McGovern says, when residential inventory is managed separately from the hotel or the two operate under different policies.
“The biggest challenges are usually around communication and ownership of the villa: is it managed by the hotel, or by a separate company. Advisors need to have that clear before confirming the accommodation,” McGovern stresses.
Third-party distribution can also add complexity. McGovern notes instances where a booking was assigned to a third party that did not have a detailed understanding of the resort's facilities or what was included in the rental.
“The hardest part is finding someone who knows the residence intimately. Clients who book these properties ask very specific questions: what temperature is the pool, is there construction going on next door? And the advisor needs answers to all of them to avoid a disappointed client,” she adds.
Additionally, she notes that the same unit may also appear on several different third-party sites, stressing that “maintaining rate parity across all channels is vital.”
A third-party property management company also adds complexity because they may have their own rules and restrictions for a given home as well as how to handle maintenance issues.
Commission can become more complicated too. When residences sit within the hotel's rental pool, Global Travel Collection says they should generally be treated as hotel inventory, with commissions handled similarly to rooms and suites.
“Those questions really only come up when a villa is booked through a third party,” NcGovern says. “A third party can complicate commissions, both the percentage offered and how quickly it's paid. Contracts also tend to be more restrictive when a third party is involved.”
The big operational question
Operating branded residences can be a convoluted endeavour because in addition to dealing with traditional hotel considerations such as design, operations, employee training and guest experience, the operator also has to deal with things like condominium ownership, individual homeowners, developers, homeowner associations and in this case, also rental programs.
But McGregor says a common mistake is treating those complications as something that can be solved once the residences are built.
“If it's going to have a rental program from the very beginning, the same level of detail and control and obsessiveness that that brand would have with their hotel is what they need to have with the branded residence,” he says.
That thinking extends down to even the smallest details such as where an owner's belongings will stored while paying guests occupy the residence or how housekeepers will transport/store their equipment.
Failure to answer those questions early in the design stage could result in a simple guest request becoming an operational headache.
“You call for housekeeping, spending $20,000 a night, and it takes them 45 minutes to get there and they forgot the vacuum,” McGregor says as an example.
Operators themselves acknowledge how much of the eventual guest experience is determined before opening.
Paul Rosenberg, regional vice president – development – luxury at Accor told Hospitality Investor that operators must consider “having enough areas to provide housekeeping services, the concierge, the restaurant. If you do room service as well, how do you deliver that? And how do you connect those spaces to deliver an elevated experience?”
Four Seasons shares the same viewpoint, with James Price, senior vice president – residential stressing that the company's work at the beginning of a project extends “from the governance structures and homeowner associations through to the layouts and back-of-house flows” and is undertaken with a 10-, 20- or 30-year horizon.
In other words, what appears to the advisor as a booking problem may actually be a development problem several years in the making.
Consistency in service
Another issue can be consistency – or lack thereof – in branded residences contained in the same building.
“Because many are individually owned, décor, furnishings and even some amenities differ from one unit to the next,” McGovern says.
The more freedom an owner is given to alter interiors, the more difficult it becomes to guarantee that what an advisor sells is exactly what their client expects.
“What appeals to an owner may not appeal to the guest renting the home. The more consistent the design, the easier the property is to promote and sell. Otherwise the advisor has to send the client photos and hope they like the décor.” McGovern adds.
To address this, McGregor says operators need to decide how much control they require before selling the residences. He notes that there are projects where extensive owner customization makes perfect sense but those residences may simply be unsuitable for a rental program, stressing that this is where strong legal agreements are needed
“If you're in that situation where somebody is in their house and you do an inspection, and you see that they've made changes… if you don't have a strong contractual agreement with that person, you're dead,” he says.
At the upper end of the market, he notes that sophisticated operators establish those boundaries from the outset instead of attempting to regain control later.
Scale is another huge consideration. Imagine, McGregor says, a residence being booked at $25,000 per night for 10 nights. However, the booking is for five people. Multiply that across multiple residences and combine them with a full hotel and there’s a massive operational problem with issues such as if everyone can fit into the breakfast restaurant, if there enough loungers around the pool, whether the spa has sufficient treatment rooms, whether the staff facilities were designed to support the larger workforce required to serve all those additional guests. The list could go on and on.
McGregor explains: “You have homeowners that can't get a pool chair and you have somebody paying $250,000 for the week who can’t find space to eat their breakfast,” stressing that these capacity probabilities need to be properly considered early in the planning stages.
If it’s not, then both the transient guest and the branded residence owner see a service failure. And by the time the travel advisor is dealing with an unhappy client, it is far too late to make significant physical changes.
Overall, experts stress that for the booking element of branded residences under a rental program to work, residences have to be treated as a genuine extension of the hotel to ensure both the homeowner and transient guests are happy.
Minor Hotels' chief assets and development officer Laia Lahoz sums up the balancing act to Hospitality Investor: “We cannot treat either the branded residence owner or the hotel guest as second-tier.”
Singling out Four Seasons and One&Only as examples of brands that treat branded residences as a true extension of the hotel, Global Travel Collection says the best programs combine clear commissions with a guest journey that feels consistent from the initial booking through to departure, adding that hotel benefits also need to translate neatly to residences. For example, if If a hotel program offers a $100 food-and-beverage credit on a standard room, it argues, an advisor booking a four-bedroom villa for valuable clients may reasonably expect an equivalent benefit commensurate with the larger booking.
“The guest should feel they're receiving the same top-quality service they'd get in the hotel,” McGovern says.
McGregor goes further. If everything has been structured properly from the start, the advisor shouldn't need to think of a branded residence as a fundamentally different booking at all.