To say the Philippines has experienced some political instability seems a bit of an understatement—especially considering that there have been nine attempts at regime change in the Philippines during the last 40 years.
Some attempts were non-violent, such as the EDSA or People Power Revolution, in which four days of peaceful demonstrations by millions of Filipinos in response to national election fraud led to the ouster of infamous authoritarian President Ferdinand Marcos. Others have resulted in violence, such as the two coups led by Gregorio “Gringo” Honasan in the late 1980s—interestingly enough, Honasan was pardoned in 1992 and later elected to the senate, only to be arrested again in 2006 under suspicion of involvement in another coup attempt.
However, one of these attempts at overthrowing a Filipino regime is widely referred to as the “Oakwood Mutiny,” because the site of the attempted coup was the Oakwood Premier Ayala Center in the Makati district of Manila.
On July 27, 2003, 321 armed soldiers who referred to themselves as “Magdalo” stormed the Ayala Center and placed explosives throughout the complex. The purpose of the siege was to expose the corruption of President Gloria Macapagal-Arroyo and her administration and force numerous officials to resign. The administration responded to these demands by threatening to reduce the apartment building to rubble.
Instead of panicking, the Oakwood staff managed to negotiate with the soldiers for the release of the hotel guests, including an ambassador from Australia. Subsequently, they were able to secure the release of the staff, as well. After 18 hours, the mutineers had failed to gain the public’s auspices or the support of the rest of the military and they surrendered peacefully.
The Oakwood Mutiny represents the most extreme of difficulties corporate housing providers confront in venturing into the expanding global market. Providing ample security for patrons is a major concern to all temporary living providers that set up shop in locations with reputations for political unrest, terrorism, or riots. The first and most important step in providing a secure corporate housing situation is choosing the location of the apartment. Corporate housing providers investigate the neighborhoods in which they hope to locate their services, measuring the level of security for guests.
“Nobody can guarantee full personal safety of a traveler,” said Gavan James, senior vice president and general manager of Oakwood Corporate Housing, Los Angeles, California. “Things can happen at any hotel or to any corporate provider in a country, but you can certainly diminish the odds of anything occurring by how and where you select the buildings.”
To provide a high level of security in its Asia-Pacific (APAC) locations, Oakwood has thoroughly examined the areas where its high-rises have been built and put a great deal of concern into the actual construction of the structures in terms of entryways and access points. In addition, the properties are patrolled by Oakwood’s own security.
When third-party corporate housing providers look for apartments in any region, they start by searching for buildings of similar quality and good structures with the kind of amenities a business traveler would expect to find in a fine hotel.
Doreen Compton, CRP, global account director for BridgeStreet Worldwide, Herndon, Virginia, said a goal of providers is to try to make a seamless transition for travelers moving from corporate housing in one country to another—offering an air of familiarity sets guests at ease, particularly in potentially unstable regions.
“We do a great deal of front-end research to make sure that [the apartment complexes]... have the proper infrastructure in that they exhibit stellar management teams, rapid maintenance response, and appropriate security,” Compton said. “It’s a very detailed, data-driven, and vigorous process how we choose where our inventory is placed.”
As the corporate housing industry continues to grow, its future is aligned with the enlarging scope of global business. Overseas development represents a promising field for providers to sow their seeds; those that have already encountered the many challenges have seen encouraging harvests ahead.
Global Emergence
The current demand for international assignments is unprecedented, according to the 2007 “Global Relocation Trends Survey,” produced by GMAC Global Relocation Services, Warren, New Jersey. Sixty-nine percent of the 180 companies surveyed reported increased use of international assignments in 2006, and 65 percent predicted even more growth in 2007.
Few companies seek permanent housing for an expatriate on assignment; many countries have restrictions on who may buy property in a domicile. With the various tax and immigration issues that can arise with these assignments, it would seem that the stress of finding temporary lodging for an assignee could be easily accomplished through corporate housing. In lieu of an arduous search for proper accommodations in international markets, which sometimes have little infrastructure, corporate housing offers suitable living quarters in typically strategic locations.
Corporate housing providers are expanding their inventories to cover the many regions where their clients are expressing interest. Partnerships with local housing providers have become highly valuable when assisting corporate clients entering emerging markets. BridgeStreet has been building a global network of temporary living providers for several years. The company has set a goal of being a one-stop shop for global corporate housing—of course that is a goal not without obstacles.
“Companies are looking for global solutions for temporary housing,” said Jon Wohlfert, managing director of the Americas for BridgeStreet. “And as those companies look for global solutions, they’re looking for companies that can not only do it in the U.S., in the U.K., but all across the world. That creates its own unique set of challenges—not only do you have time zone issues, you have cultural issues, business operations issues. You have a whole new paradigm.”
Wohlfert said that BridgeStreet is spending a great deal of time and effort expanding its network.
“As corporations become more global, they expect the same level of service abroad as in the U.S.,” Wohlfert said. “That requires us to be out in front—we have a fairly large development team that’s out in areas like Europe, India, and China researching the top providers in those markets... and trying to figure out who we want to include in our network.”
According to James, the international market is where the business is.
“The international market is going to have the largest percentage of growth for Oakwood in the next 10 years as we continue to add new buildings,” James said. “We anticipate within five years the number of associates we have working overseas will outnumber the people working in the United States.”
In particular, James said there is a dearth of quality Western-style housing in India. “Until we entered India with the first of our 10 new properties, it was a little like the Wild West out there,” he said.
Most of Oakwood’s properties in APAC are high-rises measuring 20 to 50 stories that are managed and completely staffed by Oakwood. James said consistency is maintained in service and feel, but each building maintains the cultural aura of the country it is located in.
“Our style of operation in the United States is not really feasible in Asia-Pacific,” James said. “There’s a lack of furniture rental companies, and there’s a lack of available apartments that you would be confident in—whereas you would take a block of apartments in the United States.”
The competition in APAC has gotten steep, according to T.J. Spencer, SCRP, GMS, vice president, vertical markets, sales, for Oakwood. More regional companies have entered the field, offering furnished apartments in their localities.
The business potential of temporary living accommodations has intrigued property owners and developers. Some property owners actually have sought out Oakwood to run corporate housing operations in their buildings, Spencer said.
“One of the keys for us is that in many cases we were able to be partners before the buildings were designed,” she said. “We came in and offered our advice and influence on what makes a successful service apartment building.”
Currently, Oakwood has 30 properties in the pipeline to be constructed in China, including two towers in Beijing and several projects in Shanghai. Another nine buildings are currently under construction in India, one in Bangladesh, and several others scattered over the region.
BridgeStreet also has seen the advantages of being involved in a building’s construction.
“We do a lot of leasing before a building is up and running,” Compton said. “Because if we see a quality project in the makings and we know that is the type of quality our business clients want… we may go in before that project is even open. Many of the new buildings being developed now are 100 percent hard-wired with the best technology out there, with a lot of enhanced amenities, and those are the kinds of buildings in the larger metropolitan areas where our clients want to be.”
Some issues corporate housing providers have encountered international markets are common to many industries: language barriers make negotiations difficult, and currency conversion issues are becoming prevalent. Currency risk will play a bigger role in the future of corporate housing, Wohlfert said.
Corporate housing businesses also are susceptible to legislative hassles in terms of setting up work permits and offices. Particularly in the process of interviewing suppliers, the interference of government regulations is noticeable.
“You have to become an expert in all of these different countries and their employment and business laws,” Wohlfert said. “You want to know these laws as well to better understand the constraints of your providers in their countries.”
Maintaining a consistent level of service across these global markets is no easy task. Housing providers cannot provide the exact same amenities across the globe, Wohlfert said, but they certainly can make sure the core features do not deviate.
Technology has provided another resource in maintaining consistency over a vast network of apartments. Enhanced communication methods have played a large role in providing homogeneity over long distances. During the last two years, BridgeStreet has developed tools to communicate and measure service levels even in far-removed markets, and designed computer programs that educate corporations about these processes and procedures. In the company’s global network, all partners are held to certain standards through metrics. These standards are measured on a monthly basis and shared with the clients and suppliers. In addition, the company has a web-based tool to distribute requests for housing across the U.S. network—currently, it is being expanded to cover the global network.
“We are continually educating our network and measuring our network in a perpetual improvement loop,” Wohlfert said.
International corporate housing providers also are seeking ways to offer their services to companies installing operations in second-tier cities and emerging markets.
“In markets where we do not have Oakwood properties, the need for referral services or assisted services, like our accredited provider program in the United States, is growing,” James said. “Many of our relocation customers are moving people to areas that have not been previously served by Western-style temporary housing. We’re working to find our customers solutions that meet Oakwood’s standards and exceed client expectations.”
The benefits of using corporate housing during international assignments are becoming clear to many corporations with global operations. According to Michael Washbourn, CRP, GMS, manager of global relocation services for Pfizer, New York, New York, his company mainly relies on its local human resource contacts in their international locations for housing needs, which has not always proved the best option.
“Depending on the country, it can get quite costly many times to secure proper housing,” Washbourn said. “I hate to say it, but we have had to get involved in contracts that are probably not as favorable toward us as I’d wish.”
As Pfizer has been increasing its use of short-term global assignments, the global expansion of corporate housing providers has caught Washbourn’s eye. He imagines in the near future Pfizer will reconsider its policy and approach global corporate housing for short-term international assignments.
With the continual extension of the realm of global business, corporate housing providers aim to stay a step ahead of their clients; however, they must balance this pioneer attitude with management smarts.
“On the global level, one of the things I think that everybody is looking at as they are expanding is, what are the right choices at the right time?” Compton said. “Where do our clients need to be? And how do we prepare for that appropriately without increasing risk for our company from an inventory standpoint?”
Hotels Chains Entering the Arena
Possibly the largest outside competitor for the corporate housing industry is the studio-style suite-hotel business. With the rise in the use of domestic and international short-term assignments, suite hotels and corporate housing are elbowing each other for that growing business segment. Competition can become quite heated when a large number of suite hotels are built in an area.
“While we do compete for certain segments, our products are very different,” James said. “Corporate apartments are located in residential, home-like areas; hotels are commercial buildings in business zones.”
Some hotel chains are dipping their feet into corporate housing waters. In 1999, hotel magnate Marriott International, Inc., Washington, DC, purchased ExecuStay, a medium-sized corporate housing provider, to add to its line-up of extended-stay residences, which includes Residence Inn and TownePlace Suites. Residence Inn and TownePlace Suites both offer hotel services, along with rooms that include a kitchen and separate areas for working and dining. In addition, Residence Inn, the luxury option that was developed in the early 1980s, provides more high-end hotel services, such as laundry and daily housekeeping; holds guest social events; and offers complimentary breakfast.
Completing Marriott’s portfolio of temporary living options, ExecuStay is a fully furnished corporate housing provider, with multi-bedroom apartments. The apartments are not always Marriott-owned—many are leased, and packages are customized for guests. There is a 30-day minimum stay, similar to the requirements of many corporate housing providers. ExecuStay is aimed at business from consultants and other businesspeople working three-to-six month tours in a region.
A global one-stop shop for various temporary living accommodations such as Marriott represents a challenge for corporate housing providers of all sizes. APAC is Marriott’s fastest growing region, leading the company’s overseas expansion. Many of Marriott’s international extended-stay options are attached to the company’s upscale “J.W. Hotels”—the residences offer all the services of the conjoining hotel.
“That’s really a starting point, not the ultimate vision,” said James Tremmel, director of national sales for ExecuStay. “It gets tricky internationally because of leasing laws compared to hotel laws—that’s a challenge for us. But our goal is to eventually have our own inventory separated.”
Marriott has found that the best way to expand its temporary living operation globally is to ensure consistency in service throughout the various offerings.
“The customer wants an easy way to buy, and they want one person or one form of process they can use globally,” Tremmel said. “In any industry, you want that…. That’s been our M.O. at Marriott—you can go into China and have a Marriott burger, and you can go to London, you can go to Tijuana, Mexico, and the level of consistency is there.”
The entrance of hotel chains such as Marriott and Hyatt International, Chicago, Illinois, into the corporate housing arena has garnered the attention of companies that provide only furnished apartments.
“A lot of hotels are zeroing in on the billions of dollars coming into the extended-stay hotels and the temporary housing industry,” said Jeanne Ann Heiser, CRP, director of national accounts for Korman Communities, Plymouth Meeting, Pennsylvania. “I know there are a lot of hotels that are looking to get into this niche business. It’s definitely going to impact the industry.”
In preparation for the competition ahead, Korman has morphed into a hotel/apartment option, Heiser said. Korman buildings offer 24-hour check-in and check-out services, along with concierge services, daily housekeeping services, and room service from local restaurants. In addition, Heiser said the company is working with online food shopping services to provide delivery options. Almost all Korman properties offer spa services. Also, there is no minimum length of stay—a guest even can just pop in for the night.
In the Asia-Pacific region, Oakwood’s properties are known as “serviced apartments,” the international term for corporate apartments. “Oakwood operates these serviced apartments not unlike how Starwood or Ritz-Carlton operate hotels,” James said. “They’re more hotel-like, even though they’re fully furnished apartments. Most buildings have restaurants on-site, car service, bellmen, and 24-7 desks. It’s similar to a hotel operation, but it’s more residential in feel.”
Strategic Partners
The increased role of corporate procurement departments in provider selection is symbolic of a new form of alliance between clients and corporate housing companies.
Spencer has noticed that most request for proposal presentations now are attended by purchasing or procurement representatives, or even the CFO, which is quite different from five years ago when the decision was in HR’s corner or left to a third-party relocation company.
“We have taken a more business approach to our sales, with formal quarterly business reviews, and by bringing trends and strategies to our customers, versus just selling a product or service,” she said. “[It’s] a more strategic partnership with our customers, helping them meet the goals and objectives of their organizations….”
Corporate housing providers are striving to be recognized as something more than just a service. They are reconsidering their operations in order to assume the roles of business partners. “Our corporate clients are looking at their structures and their processes and trying to find additional ways to create efficiencies—corporate housing [professionals] can assist them,” Compton said. “There’s a lot of pre-planning and forward thinking that corporate housing companies are doing today to be strategic and anticipate their clients’ needs.”
One way in which a corporate housing provider partners with a corporate client is by educating transferees about the destination they are relocating to, Compton said. BridgeStreet offers extranet sites available to clients that contain highly localized content for transferees becoming acclimated to a new area. The material ranges from cultural information to permanent housing options. In addition, BridgeStreet provides accurate, real-time metric reporting online so its clients can analyze, from a management perspective, if they are getting substantial return on investment.
“Those are some of the ways we can assist large corporations in advance so that their people are better educated and their expectations are appropriate,” Compton said. “Keeping the line of communications open from guest to corporate housing provider and from provider to corporate client contact is the key to satisfied guests and a healthy partnership with clients.”
Some corporations already consider their corporate housing providers strategic partners.“We very much depend on our corporate housing provider—it’s an extension of our relocation department and of our relocation team,” said Terry Mandle, CRP, senior manager—relocation for Sara Lee Corporation, Downers Grove, IL. “They understand our policy, so when we authorize someone for help, they know… what we have agreed to provide, and they administer that part of the benefit, freeing us up…. And then the only time when we hear back is if there is a question or a request for something that is outside the guidelines. But they pretty much take the baton and run with it.”
Mandle said Sara Lee will suggest its corporate housing provider to vendors staying in the area in an attempt to send business its way.
“To be a long-standing corporate housing supplier, you must be very responsive to a client’s needs, and recognize and respond to the struggles they are having over time, said Dave Caple, president and CEO of ABODA, Redmond, Washington. “If you’re just trying to sell a cookie-cutter stuff service, then it becomes a commodity to the client. It may be easy for them to buy or sell the service, but it’s not really answering their unique needs or differentiating your company from the rest in their entirety.”
Avoiding the label of commodity is possibly the most daunting obstacle on the road to becoming a strategic partner, but corporate housing providers have found ways to resist being pigeonholed.
“You have to quantify your service and you have to bring value in a different way,” Spencer said. “But you don’t want to lose sight that you’re not a commodity, and that has to come across in your sales approach.”
When a client tells Oakwood that the company feels like a partner, James considers it a tremendous compliment. But the partnership works both ways—James noted that many domestic and international locations Oakwood has entered were at the request of clients.
“We feel we’re strategic partners, especially in the relocation industry,” James said. “It is critical that we meet with them on a regular basis, fill their ever-changing needs, and come up with new products and services that meet or exceed those needs.”
Gavin Dunaway is staff writer for MOBILITY.