Serviced apartments are a relatively recent phenomenon. They are fully furnished apartments that have amenities similar to hotel rooms and can be used for short or long stays, offering a more home-like 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 fully equipped kitchens . reduce food expenses. According to The Apartment Service, serviced apartments are 15-30% cheaper than hotel rooms, increasing their appeal to both corporate and discerning tourists.

In recent years, the serviced apartment, a sub-sector of the hotel industry, has grown more than any other type of temporary accommodation in Europe. This can be attributed in part to globalization and the need for workers to travel more frequently to offices located outside of the city, and companies are looking for less expensive ways to accommodate them. Additionally, families may prefer to stay together and require a different setup than what hotels offer, in terms of wanting to keep an elderly relative close by, having office space to catch up on work tasks, or allowing older children to stay together. have more privacy. .

The evidence of its popularity lies in the occupancy rates. Serviced apartments in the UK averaged an occupancy rate of 81% in 2016, surpassing 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 reported that they would have used more serviced apartments by the end of 2016 than in 2015.

As we have mentioned above, serviced apartments are surpassing hotel rooms in terms of occupancy rates. Due to their cost-effective nature, they are becoming popular with companies sending employees on business trips and those traveling for leisure who require more flexibility in their accommodations 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 operators of serviced apartments and has made several acquisitions in recent years. Since the start of the year, SACO has secured additional developments in London, Cambridge and Dublin, with a fourth in the pipeline in Manchester. This shows confidence in the market and indeed a 2016/17 report by 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 been cracking down on Airbnb rentals, partly enabling success in the serviced apartment market. Berlin has banned tourists from renting entire floors from 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 an extra income, but are owned by a company for the sole purpose of short or long-term rental to people who need a place to stay. Unlike Airbnb, apartments are not someone else’s permanent residence.

The crackdown on Airbnb rentals in some places is allowing serviced apartments the opportunity to accommodate those who would have used Airbnb, further increasing demand for the units.
Serviced apartments as investment

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

Sir Thomas House is an excellent example of an attractive investment in Liverpool. It occupies a city center 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 highest proportion of fast-growing start-ups in the country. A 2017 hotel industry report from PwC also identified Liverpool as a location set to experience growth in terms of revenue earned per room, indicating increased demand and a willingness to spend more in the city. These factors ensure that there will be sustained demand for apartments by tourists and business travelers alike.

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