While the global hotel and resort industry was heavily impacted by the Covid-19 pandemic, serviced apartments and aparthotels, many of which managed to stay open when everything else shut down, surged ahead. In this interview with Biznews, Rael Phillips, the CEO of Totalstay, the company that brought the concept of aparthotels to South Africa, said traditional or ‘old school’ hotels were stagnant and plateauing as guest preferences have changed. He emphasised that Totalstay aparthotels are now competing head-on with any other hotel in Cape Town, offering guests various options in terms of prices, facilities, and amenities, with some even featuring podcast studios. Phillips said that digital nomads testing out various cities worldwide find Totalstay aparthotels and serviced apartments in Cape Town ideal for work as they offer free uncapped internet, jacked-up security, and a consistent power supply. Phillips highlighted the exponential growth in Cape Town’s tourism, with visitors increasing by 16% and airport arrivals up by 104% and expressed optimism about the growth potential of the aparthotel and serviced apartment sector in South Africa. – Linda van Tilburg
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Edited Excerpts from the Interview
The difference between ‘old school’ hotels and aparthotels
The typical definition of an aparthotel is a residential complex that offers hotel services. For us, this could mean a block of flats with 20 or 50 units. We integrate hotel services that every guest worldwide would expect, such as a 24-hour reception and daily housekeeping. We also ensure excellent internet crisp hotel-grade linen, and those are the touches that we add. That’s what defines an aparthotel.
Typical ‘old school’ hotels are designed to be just that – hotels. The rooms are small, with larger common areas. You may have slightly larger rooms as suites or presidential suites, but generally, hotel rooms are much smaller, with big foyers, massive boardrooms, and large food and beverage dining areas.
In contrast, a typical aparthotel lacks those spaces and sometimes won’t have any on-site food and beverage options. That’s typically the most significant difference between a generic hotel and an aparthotel.
The Aparthotel concept started in 2014 thrived in Covid lockdowns
It’s been a trend and a sector that’s been around for a while, called different things in the United States and Europe. When we started the business at the end of 2014, we began as a hospitality brand. In 2015, we looked at a building with three empty floors in Seapoint, Cape Town. We had already run luxury villas, service departments, and penthouse units.
We proposed the aparthotel concept to the developer who had these empty floors. They asked, ‘What’s an Aparthotel?’ We explained that we wanted to run it like a hotel, not just as 21 service apartments with no brand. We had travelled extensively and saw an opportunity in Cape Town for something fresh. We identified that building as our first landmark, and the developer agreed. That was the first Aparthotel we opened here in Seapoint.
Traditional hoteliers and big hotel brands are losing market share and stagnating
Typical hoteliers and big hotel brands are concerned that it’s eating up their stock. They’re losing market share in terms of where guests are booking. Also, guests’ preferences have changed, especially with COVID. So their main concern is that they are worried that the quality and the regulations they have to go through for hotels don’t exist on the Aparthotel side. Our main focus is to follow a global standard in terms of how we offer our guests an experience and ensure the quality and fittings in the Aparthotels themselves. Following that standard allows us to be at the same level as our counterparts in Europe, the US, and across the globe. We feel the sector is only growing, whereas the traditional hotel line is stagnant and plateauing.
Aparthotels can compete head-on with any other hotel in Cape Town
There are different levels of aparthotels. There are budget-friendly options, the middle tier, and then, of course, there’s the luxury tier. We have that within our own portfolio. Our guests can choose from a wide variety of options, ranging from price to the facilities and amenities available on-site.
For example, our first Aparthotel had nothing but a 24-hour front desk and 21 apartments, and it was hugely successful. It ran at 85% occupancy in its first year. On the flip side, our more recent addition, the Latitude Apartments at Aldon Sea Point, offers many facilities, including a rooftop restaurant, a boardroom, and co-working facilities, and they’ve recently added a podcast studio.
It has become a great value addition, especially for individuals who travel for work and manage their podcasts. It’s also beneficial for businesses in Cape Town or Joburg. Including a podcast studio has been a valuable addition, attracting new guests. I fully support anything that enhances the value for our guests and our overall product. If it makes sense, we’ll test it out.
It even features two pools on the rooftop. Now, this property competes head-on with any other hotel in Cape Town. Guests have the flexibility to choose what suits them best. Suppose they prefer more privacy and fewer common area spaces. In that case, they might opt for properties that don’t have those, similar to our Casa products, which offer hotel services in a residential complex.
We’ll always attract different guests with varying preferences. The great thing is that each property is unique as we scale and introduce new products. For instance, we are launching a new Aparthotel in De Waterkant in February next year, and it offers a wide variety of large communal spaces, multiple restaurants, an indoor pool, a gym, etc. So, we’ll have that in our portfolio for those seeking such amenities. On the other hand, those who typically prefer the conventional hotel experience will stay there. I guess we’ll even test out an apartment for them one day.
30 properties in its stable, most in Cape Town
We’ve got quite a wide variety. We currently manage over 30 properties, including 12 aparthotels. Our aparthotels in Cape Town, as I mentioned, vary in range. We expanded to Johannesburg last year with a location in Sunninghill and, more recently, in Pretoria in Lynnwood with the Circa Aparthotel.
We also have The Archer Aparthotel in Sunning Hill, our Casa products, which consist of three buildings in Seapoint and Bantry Bay. We opened the highly successful Newlands Peak Aparthotel at the beginning of this year. We also recently took over the old Bantry All Suites, which had an extremely long-winded name, and we’ve since changed that. It used to be an existing hotel that’s been around for almost 30 years, and we’ve converted it into an Aparthotel. Next year, it will undergo a complete revamp.
We also manage the Carrington and the Tokyo in the CBD, and there are more properties on the horizon, including one in De Waterkant, with several others in the pipeline.
The aparthotel model has been proven to be successful overseas
I don’t think it’s slowing down. However, I believe the opportunity for us, especially as a hospitality brand, to focus on this sector specifically and become a leader is quite important. As I mentioned, competitors overseas with much larger portfolios have proven this model’s success.
I don’t see it going anywhere. I anticipate there might be a lot of consolidation with the larger hotel groups, as has already happened, acquiring businesses that effectively add value to their portfolios. So yeah, I’m extremely bullish on the sector as it stands.
Digital nomads are testing different world cities, including Cape Town
Places like Latitude offer dedicated co-working spaces, and our property in Sunninghill features an extensive co-working section. This has become a significant aspect for a sub-sector of travellers. We provide private desks in the rooms for guests to work comfortably. Additionally, we offer excellent fibre internet, ensuring seamless connectivity throughout, and it’s complimentary.
We do not charge for internet usage; it’s uncapped, allowing you to use it as you wish. This is crucial because many travellers, particularly digital nomads, explore different cities without committing to one. Cape Town stands out as a fantastic hub where you can work, enjoy the picturesque Winelands, experience shark cage diving, and visit some of the world’s best beaches and sightseeing spots. I don’t see that slowing down. As far as the digital nomads are concerned, I foresee that thousands more will come and test Cape Town out for three weeks, three months or years. It is not going to slow down.
How Totalstay is dealing with security and power supply problems
Everyone must know that safety is a concern in any major city worldwide. The larger the city, the more significant the issue. South Africa is no exception, but Cape Town exists in a somewhat smaller bubble where the Western Cape is actively working on initiatives to improve itself. While we can’t eliminate crime entirely, people must realise that they can’t casually stroll the streets with cameras around their necks and laptop bags sticking out. However, at our properties, we prioritise security with 24-hour personnel, CCTV, and a robust security system at every managed property.
Concerning loadshedding, most new buildings have full diesel generators, and apartments are equipped with inverters. For those without, we’ve arranged backup UPSs to ensure continuous power for the internet and lights.
While I hope for positive changes, I don’t foresee them happening soon. The private sector needs to take action sooner rather than later, as the situation is unsustainable. The media exacerbates the issue, making it a deterrent for potential travellers. Like the water crisis, addressing these concerns is essential to maintaining travel appeal. Implementing measures ensures that travellers won’t feel the impact. For instance, our aparthotels often have 24/7 generators ready to kick in, providing a seamless experience even during power outages. We remain hopeful for improvements in the future.
Covid lockdowns were a turning point for aparthotels
COVID was undoubtedly a significant turning point for our business. While many traditional hotels physically closed their doors, we maintained an impressive 90 to 100% occupancy. The unique challenge for aparthotels lies in their nature as apartments. Ultimately, guests can stay for a single night or extend their stay for up to a year.
Extended stays have become a massive trend. Previously, our focus was on stays ranging from one to 21 nights. However, our current average stay is four to five nights, which is fantastic to witness. Our flexibility is incredible, allowing guests to stay for months due to the fully equipped kitchen, bedrooms, and lounge available in the apartments.
This setup provides a sense of home, distinguishing aparthotels from traditional hotels, making them feel very homely.
Cape Town tourism has gone through the roof
Cape Town’s tourism has gone through the roof. Last year, I perceived it as a bit of an anomaly. I believe that post-COVID, there was a massive bubble waiting to burst, fuelled by people’s enthusiasm for travel, especially considering Cape Town’s status as a prime tourist destination. Consequently, last year’s tourism numbers were staggering. This year, the Western Cape has also witnessed incredible growth.
One notable figure indicates a 16% increase in visitors in the Western Cape alone, which is truly fantastic. Airport arrivals have soared by an impressive 104%. These numbers reflect a healthy and robust tourist market, encompassing international and local visitors.
