Breaking new ground for corporate travellers

dubai - Start-up leases furnished apartments in Dubai for mid to long durations to business executives

While he was a management consultant with McKinsey & Company, Alexandros Chatzieleftheriou travelled extensively across Europe and the Middle East on work and had to stay for long durations ranging from one month to 10 months in hotels.

"It was tiring to spend so much time in hotels where there was never enough space. For the company, it involved high costs. It was tough to book an apartment since landlords are not willing to lease for shorter durations," recalls Chatzieleftheriou.

This helped him to identify a market gap for serviced apartments targeted at corporate travellers for the mid to long-term. Chatzieleftheriou founded Blueground in 2013 and introduced it to the Dubai corporate hospitality industry in August this year. The start-up also operates in Greece and Turkey.

Blueground leases existing unfurnished apartments in high-end residential towers close to business centres in Dubai. The service provider then upgrades and furnishes the apartments and offers them on lease to business executives, diplomats, NGOs and sports teams for periods ranging from one month and longer.

While Blueground operates 400 units in its total portfolio across the three cities it operates in, it has 55 units in Dubai and aims to have 250 units under management by the year end. The units are in Downtown Dubai, DIFC, Dubai Marina and Jumeirah Beach Residence while Blueground also has Jumeirah Lakes Towers on its radar.

Blueground's clients are major multinationals such as Coca Cola, H&M, Oracle, Samsung, Panasonic, Ikea, Novo Nordisk and Siemens.

The price range for a studio operated by Blueground is Dh9,000 per month whereas for a high-end two-bedroom unit, it can cost Dh20,000. The price also depends on the duration.

All the maintenance and facilities support are provided, but does not offer F&B as in a hotel or serviced apartment.

The hospitality start-up insists it is different from hotels, serviced apartments and Airbnb. "Airbnb is a listing marketplace which mostly caters to leisure travellers. They have a different business model where they don't have control over the guest experience. Serviced apartment operators have a similar product, but our focus is on the longer duration," says Chatzieleftheriou.

"A business traveller will choose a hotel for a stay of three to five days, a serviced apartment for a stay of one to two months. If they are around for one to two years in a city, they prefer an individual apartment. This is where we position ourselves and our average stay is about six to eight months," adds the CEO and co-founder.

It's also a win-win scenario for developers in Dubai since it ensures there are takers for their apartments. "We are long-term tenants who invest in the property, stay for four to five years, leaving no vacant periods for the owners. We do the property management for free for the owners. We also offer flexibility. If the owners wishes to sell the unit, we are willing to vacate in two months," he points out.

Blueground also claims its in-house technology, which automates all aspects of the business, including online bookings, 24/7 guest support through an app, differentiates it from the small-scale furnished apartment operators.

"We invest heavily in technology. For example, guests can use the app to communicate with our on-the-ground Dubai team," says the CEO.

With Dubai being the financial hub of the Middle East, the city attracts a high proportion of regional and international business travellers. As per a HotStats survey, over 20 per cent of guests within four and five star hotels are corporate travellers.

"Corporate travellers stay on average three to four days and prefer the facilities and service of hotels. However, long-stay corporate travellers often prefer the convenience of self-catering hotel rooms and apartments," says Julien Laloye, consultant, TRI Consulting.

Although Airbnb is increasing in popularity, it will only have a marginal impact on hotels as units listed on the platform offer more of an independent, convenient and cost-saving alternative to traditional full service hospitality offerings.

"Economy hotels and serviced apartment properties are more vulnerable to this new sharing-economy system. Traditional serviced apartments will continue to attract high levels of demand from GCC families and medium to long-stay corporate travellers," adds Laloye.

Industry experts believe Airbnb will attract new market segments of leisure and corporate travellers looking for increased independence and willing to forego the traditional services and facilities offered by hotels and serviced apartments.

According to Dubai Tourism and Commerce Marketing, there are approximately 2,000 holiday homes in the Dubai market. However, Airbnb provides owners and tenants with an option to not only rent their apartment or villa but also spare or individual rooms.

- deepthi@khaleejtimes.com