A Resilient and Thriving Sector in the Hospitality Industry

Paul Rands, Managing Director of the Future of Hospitality Institute, provides an in-depth analysis of the evolution of serviced apartments. From being a relatively unknown solution for corporate travelers, they have become an increasingly recognized and preferred accommodation option for a wider audience, thanks to technological advancements and changes in travel demands.

Serviced apartments, often described as a “home away from home,” have seen significant growth and transformation over the past several years. Self-contained accommodation units offer hotel-like services such as regular housekeeping and flexible lease terms. The sector, which started gaining traction about 12 years ago, has become an increasingly attractive option for consumers and investors.

Originally, serviced apartments catered primarily to corporate travelers seeking medium to long-stay relocation or project work options. However, with the sector’s rapid development and international expansion over the last decade, serviced apartments have become more popular among a wider audience, including leisure travelers. This growth has been facilitated by innovative technology and the creation of hospitality brands by professional operating companies and new entrepreneurial businesses.

The resilience of serviced apartments during the global pandemic, where they could stay open while many hotels couldn’t, has further highlighted their benefits, such as providing more space and independence than a hotel. This resilience, coupled with the strong business fundamentals of the sector, has attracted increased interest from investors.

The rise of platforms like Airbnb has also contributed to the growing popularity of serviced apartments, making them more accessible to the wider public. While not all Airbnb listings are serviced apartments traditionally, the platform has allowed new operators to develop and establish their product offerings to a wider, predominantly leisure-driven demand base.

Technology has significantly influenced the sector’s transformation. The emergence of technology-led operators in Europe, who can open new markets quickly and with limited in-country staffing, has allowed for a rapid expansion in the sector. Moreover, real-time booking options, made possible through third-party platforms like Airbnb and Booking.com or direct booking on the operator’s website, have made the booking process more accessible for consumers.

Regulation remains a potential challenge for the sector, specifically regarding building licensing/planning consents. However, ‘short stay rental’ licenses are starting to emerge, indicating potential for continued organic growth.

The sector is expected to consolidate further, with larger operators and hotel groups looking to strengthen their extended stay offerings. With evolving travel demands, including corporate business travel requiring fewer trips but longer stays, and the rise of independent business travel, serviced apartments are well-positioned to continue growing. The accessibility of booking and the potential for longer stays make serviced apartments a compelling alternative to traditional hotels.

In summary, the serviced apartments sector has evolved from a niche market to a mainstream accommodation option, thanks to technological advancements, changing travel demands, and the sector’s resilience during challenging times. The future indeed looks promising for serviced apartments.

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