Demand for serviced apartments is growing faster than new supply is coming on-stream, as an increasingly-mobile global workforce drives business travel and relocation activity.
UNITED KINGDOM – Demand for serviced apartments is growing faster than new supply is coming on-stream, as an increasingly-mobile global workforce drives business travel and relocation activity.
But whilst global apartment brands are expanding into new and emerging economies and new sub-brands are launched, the industry is no nearer the levels of standardisation in product and distribution required by corporates.
These are just two of the findings in the fourth edition of the Global Serviced Apartments Industry Report, published by Travel Intelligence Network for The Apartment Service, which includes the findings of a new survey conducted amongst corporates, TMCs and apartment operators, as well as an overview of global supply and demand trends and individual regional reports.
Charles McCrow, MD of The Apartment Service says buyers and suppliers agree that greater standardisation is the key to realising the full potential of the sector, yet little progress has been made since The Apartment Service’s last report was published in 2010.
“Standardisation should be the clarification of minimum service levels and quality thresholds that can be expected from different categories of product” says McCrow.” The emergence of strong brands will go a long way to enable this but with so many independent providers, universal clarity is required.”
“86% of corporates and 72% of agents agree there should be a global Code of Conduct for serviced apartment operators. Operators agree, but only 48% believe that a Code of Conduct is feasible.”
Barriers to growth
The report also found that there are three principal barriers to sector growth; a shortage of supply in required locations, the sector’s limited online booking capability and a lack of understanding about the serviced apartment product itself.
Despite these challenges, property professionals, hospitality providers and entrepreneurs are realising that the extended stay market can provide good returns on investment. This will fuel the pipeline for both existing and new providers.
Other key findings from the new report were as follows.
Supply
- There are 655,911 serviced apartment units in 8,802 locations worldwide, an increase in supply of 9.4% over 2011.
- The sector growth rate has slowed from 17.5% year-on-year, reflecting the difficulties in raising capital for new developments.
- The inventory of the 15 top global suppliers, whose supply has grown by just 1.7%, suggesting that the bulk of new supply has come from independent operators.
- Supply of corporate housing in the primary US and Canadian markets has declined by 2.2% is due to corporate housing operators’ ability to withdraw inventory during tough times.
Demand
- 94% of operators report that demand in their regions is increasing, compared to 77% in 2011
- Demand for serviced apartments is outstripping supply in many territories, due to
– Greater adoption of serviced apartments in corporate travel policies
– More apartment operators taking short-stay business away from traditional hotels.
– Growth in project and assignment work - 77% of business travellers stay in serviced apartments 5 times a year for up to 7 nights
- Corporates choose serviced apartments due to cost per night, length of stay and location
- Of those who have stayed in a serviced apartment, 79% prefer them to hotels
- Average achieved rental rates reflect a 10- 20% discount
Distribution
- 80% of corporate bookings are made online, of which 27% are via a self booking tool.
- 75% of operators claim to be bookable online with live inventory
- 62% of operators are not represented on any GDS platform.
Vicky is the co-founder of TravelDailyNews Media Network where she is the Editor-in Chief. She is also responsible for the daily operation and the financial policy. She holds a Bachelor's degree in Tourism Business Administration from the Technical University of Athens and a Master in Business Administration (MBA) from the University of Wales.
She has many years of both academic and industrial experience within the travel industry. She has written/edited numerous articles in various tourism magazines.
