Changing market demands and new housing options are shifting the playing field for employee mobility
By Harvey Chipkin
Disruption has come to the relocation landscape – from forces both inside and outside the lodging market. Most immediately, the tax reform bill, effective Jan. 1, 2019, that just passed through Congress eliminates the deductibility of moving expenses, throwing a monkey wrench into corporate programs.
Add to the mix political issues like the complications around visas and immigration, plus industry shifts like the explosion of alternative lodging and demands by employees for a more positive transfer experience, and it adds up to a good time to rethink relocation.
The tax bill will most likely impact new hires and lower seniority transferees who are more likely to receive a lump sum in lieu of managed benefits, according to Paula Holloway, director of relocation accounts for BridgeStreet Global Hospitality. Changes to the tax law may result in more companies managing moves directly with suppliers or reimbursing employees.
On the other hand, there are counter forces that may drive more employee mobility. “The continuing trend of merger and acquisitions activity will support more relocations,” says Neil Hammond, a partner with Goldspring Consulting. “And, ironically, the new tax laws – despite the moving deductibility and other issues – may increase the number of employees who want to relocate because of the elimination of deductibility of state and property taxes.”
But even before tax reform, an evolution had been accelerating in relocation reflecting the broader job market. Tom Buoy, executive vice president of revenue management at Extended Stay America, says the emergence of the “gig traveler” who is working short and mid-term assignments instead of more permanent positions means that rather than relocating one employee for 5 to 10 years, companies are looking at rotating a number of employees in and out of a position for shorter periods.
One reason for that shift may be the changing face of the workforce. Peggy Smith, president and CEO of Worldwide ERC, a not-for-profit organization for the mobility industry, says that by 2027, it is expected that more than half the US workforce will be freelancers, and companies are learning to leverage all types of talent to fulfill business objectives.
Another trend seen by one travel manager is an increase in the number of homeowners versus renters being relocated. Cheryl Benjamin, travel services manager at Dart Container Corporation, says this might be a result of higher rents across the country and a stagnant number of available rental units, while interest rates for home mortgage rates have remained low.
With immigration in the news and international travel to the US down, travel managers and relocation specialists must deal more frequently with visas and other documentation. “Immigration continues to be fluid,” says Craig Partin, chief sales officer for Furnished Quarters, “and people have to stay fluid with it.”
Rajeev Goswami, CEO of global corporate accommodation provider WWStay, says he anticipates obstacles due to immigration policies that may impact relocations from countries like India and China and regions like the Middle East. However, Goswami adds, “In general, the businesses doing the relocations will overcome this.”
And although some countries are positioning themselves with more restrictive immigration policies, Smith says countries like Canada (with its Global Skills Strategy) or France (offering a new tech visa) or Brazil (just enacted a new migration law) are making it easier for talent to come to them.
Blurring Lines & Other Trends Relocation specialists are having to keep up with the dizzying pace of change in the lodging industry driven by technology and demographic shifts. The very idea of relocation seems to be in flux with many companies opting for “temporary relocation” – stays of a year or two with the employees returning home after that – or “rotating relocations” with employees taking turns in a housing unit.
Many “relocations” are long-term but temporary, agrees Jon Wohlfert, CEO of RESIDE Worldwide, a new company that is acquiring local corporate housing companies like Aboda in Seattle (now Aboda by RESIDE). Still, he says, they are handled like a permanent move.
Meanwhile, generationally driven transitions continue. One is the movement toward a preference for urban locations. Partin says that urban markets remain strong with Boston “off the charts,” and growth as well in San Francisco and Chicago as more people seek downtown living situations.
The hospitality/corporate housing “blur” may be solidified as the industry continues to consolidate. Goswami says there will be more mergers as hotel chains look to add extended stay properties to their portfolio as was the case with Choice buying WoodSpring Suites. He says there will also be more investment in corporate housing and apartment-style hotels as investors see that sector as a growth area.
Hyatt, which has been looking beyond the traditional hotel space, last year made an investment in Oasis, a sharing economy platform that offers homes and condos in residential neighborhoods, but with hotel-like services. Kevin Kelly, vice president of sales for Hyatt Place and Hyatt House, Americas, says travelers who use home sharing aren’t considering a hotel for that particular trip. They’re seeking more space, a longer stay and a “local-like” experience. To help meet these guest’s individualized needs, says Kelly, The Unbound Collection by Hyatt recently began offering home rentals through Oasis, a collection of upscale homes in more than 20 key markets.
And security – duty of care – continues to increase in importance. A recent report done by Oakwood with the Forum for Expatriate Management, revealed that price is still a high priority among companies (69.1 percent) but that’s followed by physical security of accommodations (64.8 percent). Companies are not only advising their employees on potential risks in certain areas, says Hotze, they are also increasingly expecting their global mobility partners to assist them in the event of an emergency.
Can Relocation Be Fun? Well, maybe not fun, but perhaps a memorable and positive experience. It’s an increasingly important goal for relocation specialists. Andrews says that with access to information like online reviews, “it’s about housing as an experience and it must be an experience people love.”
Younger workers are all about the experience, Smith adds. “They seek adventure, are comparison shoppers, have grown up during the dawn of the sharing economy, are used to extreme transparency, have an ‘IKEA’ perspective toward possessions (cost-friendly, disposable items) and want all of their information to be mobile-accessible.”
Similarly, Hotze says younger travelers are expecting “an overall stellar assignment experience.” They are placing a high demand on amenities, she notes, including workout spaces, technology and high-speed Internet, among other things. They also have preferences around local entertainment – “if given multiple options, they seem to prefer walking distance from an entertainment hub,” she says.
Adrian Kurre, global head of Homewood Suites and Home2 Suites by Hilton, says the brand’s expansion into “surban” – not suburban – locations, has increased relocation volume. He says these areas, just outside of cities, feature traditional urban amenities but are more affordable.
Easy Booking, Consultative Feel Establishing a universal platform continues to be a goal for relocation, but it does not seem to be as crucial as in traditional lodging. Partin says a growing number of third parties or corporate housing companies are establishing platforms and that Furnished Quarters aims to have live booking on its site by the end of 2018. He says the move is driven by “generational tastes,” but that corporate housing remains a consultative business.
At BridgeStreet, according to Holloway, the company recently announced that their OTA platform now has a property base of over 120,000 with another 240,000 in the pipeline. The company maintains that proves how much new technology is needed to support suppliers and the growing number of business travelers who rely on alternative accommodations.
Joyce Grinczel, a relocation specialist with Dart Container Corporation, says she has talked to vendors who offer a one-stop booking platform, but she prefers a personal approach because “a move is stressful enough as it is. The more you take off the employee’s plate, the better.” She adds, “I tap into whatever resources I can, even talking to local realtors about the options in their area.”
Relocation at Dart, says Grinczel, is a hands-on process where she and her team handle each of the roughly 60 annual moves themselves, researching and finding housing. Each situation is different because of individual employee needs. In addition, many of Dart’s plants are in rural areas where there is little corporate housing so rental companies like HomeAway and VRBO come into play.
Dart actually manages its own long-term apartments near its headquarters, says Benjamin, because most of its relocation activity is to the corporate head office in Mason, MI. The task of managing the units is handled by a designated corporate housing associate.
Who’s in Charge? Relocation has never fit easily into a corporate department. Goswami says that most corporate travel managers still do not handle corporate relocation as part of their travel programs. He adds that unpredictability and inconsistency of business volumes make it inherently difficult to negotiate prices and make it manageable through an RFP.
At Dart, according to Benjamin, relocation is one of seven different areas under the travel services umbrella. Grinczel, who heads up that area, says the subject of where to place relocation in the corporate structure is always an issue raised at relocation conferences. It is a crucial decision because at Dart, Benjamin says, Grinczel is often the first person other than the company’s recruiter and hiring manager to make contact with a new or relocating employee, setting the tone for a successful move and experience.
Benjamin explains that relocation being a part of travel services “dovetails nicely” into coordinating all the relocating employees and families’ travel without having to outsource it. She says her department can better control relocation expenses by use of preferred suppliers (air, car, hotel). “We also depend on our travel agents’ expertise to streamline transportation and accommodations for travel,” Benjamin says.