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News Detail
Expanding Companies Turn To Corporate Housing
Date: June 2 2010
Source: Travel Management
Website: http://www.management.travel/news.php?cid=corporate-housing.Jun-10.02
June 02, 2010 • Chicago - Sapient and Blue Coat Systems travel managers Michelle De Costa and Rick Wakida designed corporate housing programs on top of existing hotel programs and found that alternative long-term-stay options saved their companies double-digit percentages while providing travelers with the comforts of a temporary home.
Corporate housing represents a small and fragmented portion of the lodging industry. About 800 providers in the United States offer about 62,000 units, according to corporate housing management company BridgeStreet Worldwide.
Speaking here last month at an Association of Corporate Travel Executives conference, De Costa, global travel manager at Sapient, said that having a firmer grasp on corporate housing became a must as her company grew quickly and had to accommodate expatriate employees working on temporary projects. "We are bringing people over for sometimes up to a year at a time," she said. "A big portion of our movement is from India to the United Kingdom or the United States. They are also bringing their families with them."
De Costa found that having corporate apartments was "generally a better solution for that type of situation than an extended-stay hotel" because Sapient could hold a lease for a year and BridgeStreet would manage the check-in and check-out process for employees, helping with client bill-back and tracking usage. She added that BridgeStreet provides a "dedicated account team" and "customized extranet" to help Sapient employees through the process. De Costa said her travel management company, Carlson Wagonlit Travel, links from its portal directly to BridgeStreet "so people know to go book there."
In addition to its $11 million hotel spending tab (including extended-stay bills), Sapient last year spent nearly $12 million with BridgeStreet and another $3 million to $4 million on other corporate housing.
Through BridgeStreet, Sapient uses "serviced apartments" and "managed apartments," De Costa explained. "Serviced apartments are for one-time need and [BridgeStreet] finds the apartment, they take out the lease, [the employee] lives in there for a year and they leave."
Typically used for a 30-day minimum--or as few as 14 days in the United Kingdom--according to De Costa, managed apartments incur costs "whether someone is in there or not. The risk is on us, but they manage it to help us." If Sapient employees are booking hotel stays for more than 14 days within the online tool, a pop-up box reminds them to consider corporate housing, she added.
Last year, Sapient's U.S. average daily corporate apartment rate was $91 compared with $189 for hotels. The company saw a similar difference in Canada, while there was a $156 differential in the United Kingdom ($93 for apartments compared with $249 for hotels). Overall, De Costa said, corporate apartments on average were 15 percent to 20 percent cheaper than what hotel costs would have been for those stays. She added that Sapient's corporate housing program has greater than 80 percent compliance, with apartment occupancy typically near 90 percent.
Blue Coat Benefits
At Blue Coat Systems, global travel manager Rick Wakida manages about $100,000 in corporate housing spend and expects that to increase as the travel management program matures. "We have seen significant savings on our two-bedroom units of up to about 40 percent [compared with] staying in a hotel," he said. "A large part of that is because you can double people up and that provides you with that flexibility and you can leverage your numbers," as well as reduce the number of rental cars necessary.
Beyond the importance of cost savings, "there are other elements that go beyond cost: "providing a home life that is a fully furnished accommodation option for people that are staying two weeks, three months, six months, a year or relocating with their families," said Wakida.
Wakida acknowledged the challenges in gaining employee support. To overcome such difficulties, he works with the human resources department and project supervisors to direct employees to corporate housing options. Project supervisors benefit by reducing lodging costs, which oftentimes are billed to clients, and Blue Coat benefits by achieving higher corporate apartment occupancy rates.
But Wakida also said it is important for employees to treat corporate housing like a rental rather than a hotel room, and both he and De Costa said their companies have cleaning services as part of contracts. "We had a lot of damages as a result of people taking out leases without cleaning services and, at the end, the place is a complete disaster," said De Costa.
De Costa described other challenges, including the request that travelers book corporate apartments manually after being trained to arrange travel through self-booking tools and the fact that many extended-stay properties provide loyalty program points associated with big hotel chains. Sapient therefore had "to think of other ways to incentivize them," she said, and allow employees to "opt out" of the program "when it made sense."
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