Marina spoke about branded residences to Daniel von Barloewen from Accor in the last episode. To get another perspective on the segment and further understand the growing interest in branded residences, Marina invited Hakan Kodal, Chairman of Ando Living, for the eleventh episode of the IDEEA podcast. Ando Living is a relatively new brand in the residential space aiming to revolutionise it by bringing a neighbourhood lifestyle to its properties. Ando living is currently operating five houses in Lisbon and is expanding into other cities in Portugal, Spain, Greece, Turkey, and Dubai.

Hakan shared why branded residences are gaining traction, especially now post-pandemic. Serviced apartments exploded with the rise of Airbnb, but there were no set standards. Some were purely excellent, and some were just dismal. At the onset of the pandemic, services apartments started gaining more traction than hotels, with higher occupancy rates and branded service apartments had higher ADRs than unbranded ones. Hakan believes that residences provide the modern traveller with more space and the flexibility to switch between business and leisure. With branded residences, the traveller is guaranteed a certain level of quality, whereas an unbranded apartment is akin to the anxiety one might have about a blind date.

With Ando living, Hakan aims to make the traveller feel genuinely at home with the concept of neighbourhood living. With mobility being the future of work, if not already, there will be a growing segment of digital and progressive nomads looking for a home away from home, for which Ando Living might be the solution.

So, block out the next 20 minutes because if you are just slightly curious about branded residences, you need to listen to this conversation.

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TRANSCRIPT

Intro: Welcome to the IDEEA Podcast, a channel for the IDEEA Hospitality Investment Forum, which is an annual gathering for the Hospitality Investment Community in Eastern Europe. Tune in to insightful conversations between the IDEEA team and hospitality investment leaders and innovators across Europe. And now let's dive right into today's episode.

Marina Franolic: Hello, everyone, and welcome to our edition of IDEEA podcast. We're today here with Mr. Hakan Kodal, chairman of unbelieving. Actually, we have unbelieving for the first time at IDEEA, so it's very big pleasure to have you Hakan with us. Welcome! Can you share an introduction about yourself, please?

Hakan Kodal: Well, I'm the chairman of Optylon Krea and Ando Living. Both companies are headquartered in Lisbon. It's a Turkish and French partnership based in Lisbon. We have started our operations with Ando Living with a different brand name four years ago, and now this year is the big big launch of a redesigned brand around Europe. So we are very, very proud to be in this event. And hopefully, we'll meet a lot of people. We are very passionate to announce our new brand.

Marina Franolic: So Ando Living is a service department brand. And I was just reading yesterday, research done by HBS in March 2022, saying that service departments are not new in the hospitality industry but so strong raised during the pandemic. It seems that 7% of participants that were researched by HBS stated that top-line performance across the portfolio improvement in 2021 compared to the year before so 2020,11 with the majority of them mentioning annual improvement of about 25%. And then similarly 75% of respondents reported better bottom-line resorts. And it seems that the service department sector actually outperformed hotels. Do you know why is that? Was it only because of the health reasons or there were other reasons that you noticed as well?

Hakan Kodal: Well, very good start. I have also read this report, very useful. In reality, when we say service department, you know that this has started, especially exploded with the arrival of Airbnb in this industry. But it was basically scattered apartments, individual apartments with no standards. There also were a lot of surprises, nice and of course, sometimes bad surprises. But now it's really becoming for the last couple of years, especially for the last five years more organized than before, with booking.com and other platforms coming into this industry. So in reality, we have our brand Ando Living in Portugal and we are testing this market for the last four years now. And during the pandemic as the report mentioned, our occupancy rates were around 78% versus 30% in hotels. So really higher occupancy rates. Our ADRs are much higher in branded service departments then standard service departments. So there's also the brand value, which in reality gives more comfort and assurance to client expectations. Which this bed is part of the service department's business which is surprises; in reality people are looking more standards, quality, offer reliability in the product. So that's where in reality this gap is opening between hotels and branded residences. The pandemic helped this industry in reality for multiple reasons, prefer service departments and as the question addressed, why? Because there's a flexibility of use. There's more space, you can switch between business and leisure, you can have more space to meet people. You can order foods, so you don't have to be proposed very well-defined offers. It's up to you to decide so you can spend more time, it's more private, you can do remote working, and you have the comfort of your home. So people prefer, of course, more space, more comfort and flexibility of use with the time. So that's one of the major reasons is this. But especially when you have this branded serviced department, which is more organized in this industry. So like us, the branded apartments, the service departments, in reality, we have 20 - 30 higher ADRs than normal service departments. So we are even performing better. In reality in Portugal, we have Ando Living, and we have also another company called Love Stay which is managing 750 non-brand departments. So quality wise, same apartments, but branded perform much better because people are looking for this standardization, and quality assurance. That's where the brand comes into the picture.

Marina Franolic: That's almost the same as with the branded hotels. We've been saying for years that the brand does give assurance to the client. So it seems that it's the same thing that spread across different category. But Harkin, who are the guests in your service department. And maybe you can also compare to the others to the unbranded ones that you're managing.

Hakan Kodal: In reality, it started mainly with families. Of course, when you have kids and more people in the family, you save a lot of money by going into a two-bedroom or one-bedroom apartment than getting two or three rooms in a hotel. So that was the start of this business. But in reality, for the last couple of five years, including our brand in Lisbon, we are seeing more and more people, which in reality prefer service departments, because they would like to connect to the city. In reality, they don't want to be considered as tourists. When you go to a hotel, you are proposed classical offers, which are more commercial than really friendly, in reality going to a restaurant proposed by a concierge service, which in reality gets probably a commission to send you to this restaurant. Or anything you consume, it's expensive. People prefer to be in service departments to be able to get into the city connected to the neighborhood. And in reality, we are seeing more and more progressive nomads, business travelers, digital nomads. In reality, people who like to meet local, and being part of this local community. That's also what I am in reality. I'm Turkish, French and Turkish, studied in France and US. I am now doing business internationally. I have a company in Portugal, so I can work anywhere but what I want is when I go to a place is really to be close to the people I like.

Marina Franolic: So how do you provide the service? Because when you say when you go in a hotel, to consumers will send you to a certain restaurant, but when you go to the service department, how are you going to find out about the local restaurant, and the people that you will be meeting in the property are not still local. Maybe they're there for a long time, but they're not local? So how do you implement this localization and this service where people will actually feel like they're part of the community?

Hakan Kodal: That's exactly why. The Ando Living brand is structured. But in reality, it's much easier today than 10 years ago. So you can go to blogs, everything you can find on the internet. So you can search best restaurants to go, you can your own search. But of course, to have a local friend, introducing to the local community, introducing to the best restaurants to go, to introduce you to people and people like you, that's the key elements, which is the missing part of this service department industry. And that's where I will maybe explain later on where the Ando brand will fill the gap.

Marina Franolic: I've been thinking now for the past couple of years how interesting would be to just change location of living for every couple of months or every year. Do you think that this mobility that has now happened even during COVID definitely increased highly? Do you think it's here to stay? Do you think that young people in the future will tend to live in different places during their life or travel for work longer. And even though I believe that's the case, how do you I have to say, just because you've been running this, I have to ask, how do you think that this will work with families, because children even if you want to move, even if you want to work somewhere, when children start going to school, you actually have to be in one place? Will this be only organized for work, where you will actually stay a little bit longer and for younger, or you think that also panelists will be able to accommodate this type?

Hakan Kodal: Well, I mean, mobility is not here to stay. It's the future. It's here already and we will only grow. There are multiple reasons for that is first of all, of course, internet. You can remote working, even Airbnb now. And also you can work anywhere, and lots of companies will do that. Because of quality of life, good cost of living people will prefer to work where they want. In reality, they may go into a city, move with the family, and give their kids into a local school and continue working in their home country just travel sometimes. But in reality, it's remote working digital, nomads is the future. So in reality, that's the future of our life. And more and more, some countries will win in this exchange, and some cities will become really very popular, Lisbon, for example. In reality, we are seeing a lot of nomads, coming into Lisbon, especially Mediterranean will benefit a lot because it's cheaper, the weather is great. So that's the future of our life.

Marina Franolic: This is where I see maybe even Croatia coming up. Are you thinking to developing anything here around the region?

Hakan Kodal: Well, this is one of our countries and on our list. Of course, we have grown in Portugal, now we have multiple locations. But we are now entering the Turkish market, Istanbul, Athens, we are about to enter in Spain, Dubai, and of course, Croatia. And then we will also go to large cities, metropolitan cities like Berlin, Paris and London. But we have to be in the southern Europe where we believe this digital and progressive no mass future will be.

Marina Franolic: And how do you see now the evolution of the service department sector? How do you see them progressing in the future?

Hakan Kodal: Well in reality, we can talk about this classical standardization, space, technology, flexibility, etc. But you know, it's all about blah, blah. This business is in reality, the fusion of co-living and co-working. Of course, co-working it has become very popular. And in reality, people prefer not offices but cool working spaces where they can meet people. People wants to meet people like them, socializing. Co-living is the same people want to spend time with people. So in reality, business and leisure are more connected. And during the same day, people switch between business and leisure multiple times. So it becomes a way of living. So in reality, the future is cool living and working. It's all about lifestyle and community. So in reality, that's why Ando Living's future is really creating a community, which in reality is the future of our business, and I will come to that later on.

Marina Franolic: So how are you different than the market? You said a little bit before, but can you tell us a little bit more, how do you differentiate yourself from other brands?

Hakan Kodal: Well for the last two years, we have spent a lot of time and effort for this strategy. And I think this strategy is unique, it's revolutionary, I should say. Because it's not about branded service apartments classical, it's all about a creating a community. So we're not talking about an apartment to stay or live, which you can find hundreds or thousands of alternatives in this world. You can have a more luxurious one, coolest one, cheapest one, high tech one etc. This is not what we are aiming for. In reality, we are willing to create a community of travelers and locals alike, a concept built around business and leisure. And in reality, the unique approach is the neighborhood approach. In reality, we are trying to create your neighborhoods anywhere you go. In reality, which means we are building clubhouses clubs, which include a lot of you know facilities which will be restaurants, bar concepts, sports store, cool working spaces, gym, anything you need during a day for working, having leisure, meeting people. So it's really socializing club in the major neighborhoods of every major city. And then we are building houses and flats. In reality, there are multiple versions of apartments you can live. To start with, you and expat, for example, you go into a city. What you are missing is not a space to stay or live. In reality you want to meet people to be well integrated into the neighborhood and the city. So that's where we walk into the picture. And then if you want to bring your family three months later with your kids, you will move into your own house or a flat, which is much larger but always connected to the same club. So in reality, Ando is your friend, proud of his neighborhood, introducing you to the local people like you, and making your life easier, helping you to do your business and leisure without going to the office, a lot of business opportunities for you, and all have fun. In reality, it's not about short-term, extended stay or living, this is all together. So in reality, wherever you go Ando Living is in reality, helping your life make your life effortless, seamless and pleasurable. That's why I think it's unique.

Marina Franolic: Well, it sounds really interesting. I hope I will go to Lisbon soon to see your Ando Living there and then across the globe, wherever you will open. But Hakan, you said something, we will then build apartments. Do you build yourself? Do you rent existing? Do you refurbish? What do you do? How do you develop your brand?

Hakan Kodal: Well, we are kind of investment management. So we have investment management business, we have done developments, so we have a development business. And we have also service department management business. So we have the three businesses together. So we understand how the real estate umbrella is important. But for Ando Living expansion, we are really very open. So in reality, wherever we go we will be looking for local partners to develop the brand. We will be cooperating and partnering with building owners. In reality, what we have learned is that we know how to do this business, the hospitality side of this business, but we understand from the real estate side. So we can talk the same language, if necessary, we can invest, we can finance the FFNE or we can even put a loan to help local partners to develop the project. So we can rent, we can give long-term guarantees. We are very flexible, because we believe we have to expand and we have a lot of things to do. And we can't be everywhere to do our own.

Marina Franolic: Hakan, I would say that you did your homework, in terms of you really found what the market needs and you went through the entire process of investments. so you know how it works. You can definitely be a valuable partner, I guess wherever you come. But at this stage, I will now finish the conversation because I think that we suggest enough for people to come and listen to you at IDEEA in Athens, it's going to be on September 27th. Because I think that we'll definitely hear more about Ando Living in the future, a lot more. But I'm very glad to say that we also have an announcement to make at IDEEA, we won't share anything now. So I hope that all the delegates will be very surprised and very happy about the announcement. So Hakan, thank you so much. It was a pleasure talking to you and I'm even more looking forward to meeting you in person in Athens in just a little bit more than two weeks.

Hakan Kodal: Yes, that will be a pleasure Mona and sorry for the late start. But it's always a pleasure and I hope to see you in person too. We have a lot of things to share and I'm glad to meet you.

Marina Franolic: Perfect. Thank you so much Hakan.

Hakan Kodal: Thank you. Thank you. Bye bye.

Marina Franolic: Bye bye.

Outro: Thank you for listening to the IDEEA Podcast, the channel for the IDEEA Hospitality Investment Forum. You can find a full transcript of this conversation in the Content Library on ideaa-forum.com. With other reports and insights. We look forward to welcoming you and your colleagues in person at IDEEA in Athens, Greece on the 26th through 27th of September 2022. If you haven't registered yet, please go to ideaa-forum.com To purchase your pass today and save before ticket prices increase. Please feel free to email us with any questions at Hello@thebench.com.

Until the next episode, stay safe and keep well. Bye-bye for now.