How did Adagio get through the period of confinement?
Karim Malak - Just over 70% of our aparthotels closed during this period. On a positive note, this also means that 30 % of the residences continued to operate. In towns where we have several establishments, we couldn't afford to keep all of them open. So we grouped our customers together temporarilyt. In Paris, for example, the long-stay residents of the Adagio Paris Tour Eiffel have been moved to the Porte de Versailles. Thanks to the presence of a medical clientele and a certain number of business customers, these establishments recorded occupancy levels of around 30% - 40%. Keeping part of our network active at a time when most hotels were closed enabled us to gaining trust new customers who were previously unfamiliar with the residential package.
Some customers therefore spent the whole of the confinement period in your home.
K. M. - That's right. Our long-term customers included employees of Chinese companies and Indian engineers. They stayed in their flats, where they could work and prepare their meals. We have a grocery shop in most of our establishments, they didn't even have to go outside to do some shopping. The aparthotel is designed to be independent. That's its great strength.
Now that business has resumed, how far have you got with the reopening phase?
K. M. - Today, 70 % of our aparthotels welcome customers and almost all our establishments will be reopened. around 15 July. Demand in the provinces is starting to return, not massively yet, but in an interesting way. This is not yet the case in Paris. An earlier wind-down in the provinces, a recovery in business travel, a rise in the number of leisure customers: all these factors mean that the Côte d'Azur, Annecy and Grenoble are starting to do well.
The aparthotel is designed to be self-contained. That's its great strength.
What health measures are in place to support this recovery?
K. M. - Our services have obviously been rethought from a health point of view. However, it has to be said that our internal protocols already complied with the WHO recommendations. We simply had to review them to make sure that everything was in line with the new measures, and intensify certain points such as cleaning door handles and common areas. Breakfast buffets have also been replaced by 'grab & go' formulas. We are currently looking into the possibility of introducing another type of breakfast from September, in line with current standards. But in the meantime, grab & go is working well. As far as sanitary measures are concerned, we are also in the process of introducing the All Safe labeldeveloped by Accor, the main aim of which is to reassure our customers globally. But, I repeat, we have nothing to be ashamed of in terms of the housekeeping we used to do.
Given the current constraints, has your Le Cercle concept for the communal areas and entertainment in your residences had to evolve?
K. M. - We obviously have to do things differently when it comes to events with fewer people The guests were invited to aperitifs, to outdoor games or to walks through the city accompanied by someone from the aparthotel. On the other hand, while respecting social distance, the layout of common areas remains the same. We've made gel available everywhere and the cleaning teams spend more time behind the customers. But, to be honest, customers aren't making much use of the shared kitchen at the moment, whereas it used to be very popular for its practicality.
Let's move on to the consequences of the crisis. How do you see the months ahead, starting with the summer season?
K. M. - While we generally get a lot of foreign customers during the summer, both long-haul and European, I think we'll be able to replace them with domestic and even local customers. A clientele that is often more price-sensitive and that will find in the home product a cost-effective solution. Business travellers are well aware of this. When you stay ten nights in an aparthotel, you save money on accommodation because the rate is degressive, unlike in a traditional hotel. And you also save on food and drink, thanks to the fully equipped kitchens in the flats.
Is the price argument, often essential for leisure customers, also essential for corporate customers in the current economic crisis?
K. M. - Aparthotels really make sense in this context, because if you look at the total cost of a trip, we're much cheaper than traditional hotels. At a time when some companies are putting a freeze on travel, when city caps downgradedIn Europe, where travel is generally more controlled, the aparthotel solution makes economic sense. In this context, companies that are bound to be very careful about their travel budgets are going to take a closer look at our offer.
Especially as the product is also very suitable for work. And for teleworking too...
K. M. - This is another of its key points, which means that aparthotels are currently being selected. In the same way that there is a real "kitchen" function in flats, there are also a genuine "work" function. Having more square metres in the rooms means we can offer real offices, not just corner tables. In the communal areas, we always have large tables where people can work. Customers really like this, especially as they can also go back up to their flats if they need more privacy.
Which business customers visit your residences most regularly?
K. M. - Adagio is unique in that it reaches a broad spectrum of customers, from leisure to corporate, short, medium and long stay, with customers who stay for one night and others who stay for a year. For years now, our residences have been used as workplaces, whether by consultants, businesswomen who want discretion or training groups who can work together on their projects in the communal areas as well as in the flats. For these groups, we are currently developing an Adagio-style coliving offer, i.e. six to eight rooms grouped around a central lounge to facilitate group work. Everything has been delayed a little because of the crisis, but work is starting and we should have a witness, I hope by the end of the year, at the Adagio Paris Bercy.
Recently, you decided to make workspaces available free of charge to local businesses. Why did you take this initiative?
K. M. - It's a way of saying that we see ourselves as players in the local economy and that we want to support the revival of small businesses in our own way, i.e. by giving them free use of our flats during the day. The aim is to help companies that have difficulty keeping up with social distance and are looking for additional office space, or those that have employees who work partly from home and can't go home during the day. For us, it's also a way of introducing people to Adagio aparthotels. There are still quite a few business customers, particularly SMEs, who are not aware of the advantages of this formula.
What impact do you think this crisis will have on business travel, particularly in view of the growth in teleworking?
K. M. - The digital 100 % is a stopgap rather than a perfect solution. When you're negotiating a contract, when you have to get managerial messages across or when you're giving training courses, it's not quite the same thing whether you're behind your screen or in front of the person. Having said that, the number of internal trips that I would call 'pleasure' trips - those that you make during the day or over two days - should decrease. All the more so if health conditions do not improve and companies review their travel budgets downwards. In my opinion, short stays are therefore likely to be more affected. But projects and face-to-face training will always exist in one form or another. From this point of view, I'm less worried about medium and long stays.
We continued to sign projects, even during the lockdown.
If the long-stay product seems more resilient in the medium term, what do you expect in the short term?
K. M. - The crisis will undoubtedly have an impact, particularly if training budgets are cut, even though we receive a lot of consultants, trainers and trainees. Another area of concern is everything to do with events and major trade shows. Exhibitors, fitters and catering staff who work shifted hours really like the aparthotel solution. But 2020 and 2021 are likely to be two bad years for this clientele. We usually emerge from a period of crisis after 18 to 24 months, but this one seems to be deeper. We'll see how long it lasts, but in the medium term I'm confident. What's more, we've continued to sign projects, even during the period of confinement.
So the growth of your offering should not be affected?
K. M. - Although some of the openings planned for this year will be postponed until the very beginning of 2021, development has not stopped. In France, we already have a strong presence in the major cities, and we're now looking to conquer the smaller towns. We've just opened an aparthotel near Mulhouse. Another is due to open in Vannes in July. This will bring our total number of establishments to 115. And there are more residences to come in France - notably near Arles in 2021 - but also outside France, with a project near Turin, in Italy, and a franchise agreed in Belgium, in Ghent. But it is above all in Germany and the United Kingdom, two countries with several major cities to conquer, that things are progressing most rapidly. Six projects have been signed in Germany and five in the UK, with a second Adagio planned for London in early 2021. We're also looking at Manchester. We're continuing to make progress and investors are on our side. Because the aparthotel product is a priori more resilient and is becoming increasingly popular with both business and leisure customers.
