The rise in popularity of the aparthotel

Serviced apartments are a relatively recent phenomenon. They are fully furnished apartments that have similar amenities to hotel rooms and can be used for short or long term stays, offering a more homelike experience. Some of the main benefits of staying in a serviced apartment compared to a hotel room are that they offer, on average, 30% more space, more privacy, and are more cost-effective in terms of no additional hidden costs and kitchens. fully equipped. reduces food expenses. According to The Apartment Service, serviced apartments are 15-30% cheaper than hotel rooms, making them more attractive to businesses and discerning tourists alike.

In recent years, the serviced apartment, a subsector of the hotel industry, has grown more than any other class of temporary accommodation in Europe. This can be attributed in part to globalization and the needs of workers to travel more frequently to offices located outside the city and companies looking for less expensive ways to accommodate them. In addition, families may have a preference for staying together and require a different setup than hotels offer, in terms of wanting to keep an older relative close, have office space to catch up on work tasks, or allow older children have more privacy. .

The evidence of its popularity lies in the occupancy rates. Serviced apartments in the UK averaged an 81% occupancy rate in 2016 and outperformed hotel rooms, which stood at 77.2%. Among companies, its use is also increasing. According to a recent survey conducted by the Business Travel Show in November 2016, four in ten corporate buyers have reported that they would have used more serviced apartments at the end of 2016 than in 2015.

As we mentioned earlier, serviced apartments outperform hotel rooms in terms of occupancy rates. Due to their profitable nature, they are becoming popular with companies that send employees on business trips and those who travel for pleasure and require more flexibility in their accommodation than a hotel can offer.

Serviced apartment companies are enjoying their success and subsequently expanding at a rapid pace. SACO is currently one of the largest serviced apartment operators and has made several acquisitions in recent years. Since the beginning of the year, SACO has secured additional developments in London, Cambridge and Dublin, with a fourth in the pipeline in Manchester. This shows a confidence in the market and indeed a 2016/17 report from Savills predicted that 2017 would be “record growth” in terms of new developments in the UK.

The distinction between serviced apartments and Airbnb.

Governments have cracked down on Airbnb rentals, partially enabling success in the serviced apartment market. Berlin has banned tourists from renting entire flats on Airbnb to protect affordable housing, and Airbnb is banned from listing short-term rentals in New York. Serviced apartments differ in that they are not flats owned by people looking to earn additional income, but are owned by a company for the sole purpose of renting them short or long term to people in need. somewhere to stay. Unlike Airbnb, apartments are not someone else’s permanent residence.

The crackdown on Airbnb rentals in some locations is giving serviced apartments a chance to accommodate those who would have used Airbnb, further increasing demand for the units.

Apartments with services as an investment

Investors looking to invest in the serviced apartment industry will be excited about its fundamentals. Regarding the specific investment, people will look for buildings with high quality facilities in good central locations. Considering that the people who will use the apartments will be business or leisure travelers (or a combination of both), they will need easy access to transport links and attractions and services in the area. Because stays are generally longer (research has shown that 91% of stays are longer than 14 nights), residents will feel comfortable with a more stable income since their apartment will be occupied for a more defined period . Longer-than-average length of stay, coupled with lower running costs, means serviced apartments generally achieve higher net operating income compared to regular hotels. This helps allay the concerns of people who are considering investing in hotel rooms but are concerned about the possibility of gaps in occupancy.

Sir Thomas House is an excellent example of an attractive investment in Liverpool. It occupies a central city location, close to Liverpool’s bars and restaurants, attractions and transport links. Liverpool itself boasts not only a booming tourism industry, but also a growing economy, home to the largest proportion of fast-growing startups in the country. A 2017 hotel industry report by PwC also identified Liverpool as a place that will see growth in terms of revenue achieved per room, indicating increased demand and willingness to spend more in the city. These factors ensure that there will be a sustained requirement for apartments from tourists and business travelers alike.

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