The rise of serviced apartments: August 2021
11th August 2021
Covid-19 affected businesses all over the world. Quite literally overnight, business owners found themselves having to either close their doors or find new ways to adapt to the pandemic sweeping the world.
The hospitality sector was one of the worst hit (ONS 2020) with bars, restaurants, nightclubs, cafes and hotels all having to close. However, it seems there were fewer serviced apartments closing compared to hotels which can be largely attributed to its slightly different customer type and differences in accommodation.
What made serviced apartments more resilient?
With social distancing adopted as the new norm, serviced apartments could easily accommodate due to their self contained nature. With travellers giving a new importance to hygiene and safety over anything else (Pluxa 2021), serviced apartments restrict contact with other people through contactless check in, no reception areas and fully private accommodation; comparable to hotels whose premise is largely based around the guests’s check-in experience and interaction with hotel staff. Guests can comfortably stay in serviced apartments without crossing paths with anyone else, with potential housekeepers being the only staff members to come into contact with.
They also offer a much wider range of amenities within the confined spaces of the apartment. Fully fitted kitchens, wifi, laundry services, desk space and living areas all come as standard. It’s this aspect that has made them much more desirable; particularly for those needing to self isolate.
Tighter budget restrictions due to financial restraints and the furlough scheme also resulted in travellers begrudging to pay extra for things such as laundry services and wifi. It’s here you see the clear difference that serviced apartments can bring, offering much more for the price and space given (Pluxa 2021).
Whilst serviced apartments do cater for short stays, it’s core target market lies within the long term corporates. It’s these predominantly longer corporate stays that provided the sector with higher than average occupancy levels during lockdown, with those in urban spaces spearheading this increase due to their close proximity to business (Pluxa 2021).
What’s the long term outlook?
It does seem that serviced apartments could go from strength to strength. Savills sentiment survey in June 2021 showed 87% of respondents are ‘slightly or significantly more optimistic’ about their business overlook in the next 12 months with this being the highest optimism seen in the last 6 months (Savills 2021).
75% of respondents expect that their occupancy levels will return to those of 2019 before the end of 2022 which would result in a 6-18 month recovery period (Savills 2021).
However, with increasing popularity from the consumer there sees staffing increases which potentially poses risks for businesses, with providers recording staff availability and staff costs as a ‘slight’ or ‘significant’ challenge to the business over the next 3 years (Savills 2021).
By better adapting to people’ needs, greater concerns about cleanliness and social distancing preferences from guests, serviced apartments have been well and truly put on people’s radars and will continue to go from strength to strength.
This married with an increased confidence in travel again, for both leisure and corporate, will see a continued rise for the serviced apartment sector in the coming years.