Stuart Winstone, CEO, SilverDoor
Habicus Group, the parent company of serviced apartment agent SilverDoor, has acquired long-standing competitor The Apartment Service. SilverDoor CEO Stuart Winstone talks to BTN Europe editor Andy Hoskins about the deal.
BTN Europe: Tell us about the scale and significance of this acquisition?
Stuart Winstone: We can’t disclose the sums but I can tell you that, pre-covid in 2019, SilverDoor had just shy of £100 million turnover and The Apartment Service was nearly £30 million. Once we bring it all together we’re looking at a £130 million-plus group and growing thereafter. If we were in the TMC space we’d be in the top 20 largest in the UK.
It’s a significant deal in our sector. It will by far create the largest independent agent in the world. There are hybrid agent-operators and pure independent agents in our sector. There aren’t actually that many independent agents because many of the bigger players are hybrids – we’re creating an enormous independent agent. There’s no one near the size and scope and global capabilities that we have.
The Apartment Service was a hybrid but it was one of our closest rivals. There was the agency and there was the Roomspace operating brand for their 400 or so apartments which are now de-merged. We’ve only taken the agency business.
BTNE: What were the key drivers of the acquisition?
SW:
The main thing is increased customers and increased networks. There’s a
huge amount of [network] crossover but of course The Apartment Service
has relationships we don’t and vice versa so both will benefit from the
enhanced supply chain available to both of them. We have around 1,700
suppliers so The apartment Service might take us over 2,000 suppliers
around the world.
Another key driver is The Apartment Service’s
experience in Iberia and Latin America. That was somewhere we recognised
our existing group wanted to increase its presence and the The
Apartment Service brings us an office in Madrid and someone in Lisbon.
That’s an important part of the acquisition. It also increases our
status in APAC. Both businesses have offices in Singapore and bringing
them together by far makes us the largest agency group in the APAC
region.
BTNE: How did the deal come about?
SW: We’re always looking for opportunities and talking to competitors about the opportunity to acquire them. It’s not unusual to be having those conversations. This is not a Covid-related deal, it’s just the nature of our group. It was funded by our reserves. We acquired Citybase in 2016 and we’ve been looking at others since.
Things had slowed down a bit so we brought in a specialist acquisition partner to help us move forward with our goals. We have a deal that’s fair for us and fair for the old owners and lets us all progress in what has been a very difficult time.
BTNE: How will the two businesses operate?
SW: They’re definitely going to be run separately for a little while. We’ll take our time to analyse the processes of both businesses and find out what works best. They’re separate businesses under the Habicus Group, however it would be silly to have duplicate functions so in the background we want to share services and make it as efficient as possible for the group. We’re intending to retain the two brands for now. Whether that will go on indefinitely I don’t know yet. With fewer agencies in the market with what’s happened over the last year there’s still space for the two brands. If we were to retire it [The Apartment Service brand]… that’s a big decision. For now I don’t see any reason to.
BTNE: Do you anticipate making any redundancies as a result of the deal?
SW: No. We have 16 new starters at SilverDoor and 15 vacancies across the group. And there are three vacancies at The Apartment Service. So hopefully not but never say never. We want to run the group efficiently so if we have to make those decisions we will do so but it’s not the intention. We’re buying this business to grow it. When we acquired Citybase in 2016 we had 45 staff and we made one redundancy. We try to avoid them. We had to make a few during Covid but it’s not how we like to do things.
BTNE: What’s the message to clients following the deal?
SW: It’s 100 per cent business as usual. I don’t want customers to see any differences except for improvements over time. SilverDoor is very tech driven and we’ll be able to share some of that with The Apartment Service. And I’m sure there will be things we can learn from The Apartment Service that we can bring into SilverDoor as well. It’s all about taking the best of the best.
BTNE: Why was the Roomspace operating brand not included in the deal?
SW: I’m sceptical about the hybrid agent-operator model. I think you need to focus on one and do it well. Being a hybrid, you can’t be the best of the best for both sides of the business. I really believe in the independent agency model and we don’t want to go into operating apartments. The benefit for our customers is we’re giving completely impartial, agnostic advice every single time. We’ve not got our own stock that we prioritise first.
Hybrids are looking old fashioned. Look back 30-40 years and hotel groups had agency models attached to them and that long since went. I think we’ll see the end of it eventually. This [deal] is an example of that split – we’re seeing the operator being able to go off and thrive and the agency go off and thrive.
BTNE: Can we expect further acquisitions from Habicus and SilverDoor?
SW: We’re always looking, always having conversations. We’ve acquired two UK-based businesses so I think our next one will be elsewhere in the world. We want to increase our strength in the US, we want to increase our strength in central Europe and in the Middle East – that’s a priority for the group now ahead of any more UK acquisitions.
BTNE: What about the future of the service apartment sector?
SW: The sector has come into its own during the pandemic with social distancing and self-sufficiency built in – it’s been a popular choice over hotels. A lot of hotels were closed early on and so a lot of people experienced apartments for the first time and once they’ve done that they’re hooked.
Unfortunately there have been some big business failures in our sector which has been sad. We’ve seen customers come across to us so we’re confident going forward that we’re going to come out [of the pandemic] even stronger.
There’s been some uncertainty about our sector with some big names disappearing very quickly so we’re certainly being asked more questions by customers wanting that assurance, but we’re in a good place to be able to demonstrate the status of our business. An acquisition sends the right message.
BTNE: Have you seen a shift in corporate attitudes to your sector?
SW: What I’ve really seen is how we have gone up the travel manager’s list of priorities. We used to be one of 20 or so things they managed and we were on the second half of that list. Now we’re very much in the top half. A lot of travel managers are finding they can’t expect the TMC to do it [manage apartment needs] anymore and that they’re needing to bring in specialists to work alongside their TMC as long as all that data is captured so the whole programme can be managed effectively. Corporates are also seeing the opportunity to cost save. Enquiry levels are higher than they were before Covid and we’re also seeing the benefit of the exit of competitors. We’re busy – it’s very much a positive situation and if we could recruit today we would.
Do you expect the service apartment sector to consolidate?
SW: In terms of suppliers there’s a lot of competition so you have to expect some consolidation. In the hotel world it’s the big players that really dominate but it’s different in our space at the moment. And in terms of the agency piece, a large part of the market needs big global player like us who can invest in our teams and invest in our technology. But there’s the other part where bespoke agencies work for customers with those needs – the medium and large agents will be looking to acquire them.