Serviced apartments are emerging as another growth sector across Europe, and one whose survival and expansion will depend on the concept appealing to an ever more cost-conscious consumer, according to a new report from HVS London. Straddling the traditional hotel stay and residential letting, serviced apartments are still a relatively new concept in Europe, despite the presence of international operators in the sector such as Accor and Marriott.
At this week’s inaugural Serviced Apartment Summit [8-9 July], being held at London’s Andaz hotel, report co-author Arlett Oehmichen, director of HVS London, says that investors are likely to be attracted to the serviced apartment sector as they can generate higher profit margins than the average hotel.
According to the report, Here to Stay: An overview of the European Serviced Apartment Sector, serviced apartments initially benefited from the economic crisis as business travellers moved from hotels to more affordable, extended stay products. However, operators and owners realised they needed to adapt to smaller travel budgets and offer more competitive prices.
“Many new extended stay properties now offer slightly smaller rooms, allowing pricing to come down, which has been positively accepted by guests. We have already seen a trend for aparthotels to increase the number of studios,” says Oehmichen.
The report says this urge to downsize is just beginning and can be taken further with the move towards micro apartments, which can provide eco- and budget-friendly living in about 20 m². Despite their small size, designers have managed to create an illusion of spaciousness by creating triple functionality space, whereby one room can function as a dining room, living room and bedroom. This has been achieved with higher ceilings, retractable beds and foldaway tables.
“While planning restrictions and minimum length-of-stay regulations remain issues in this sector, lenders and investors are showing more interest in serviced apartments on account of the lower operational cost structure and potentially larger profit margin,” says co-author Veronica Waldthausen, an analyst at HVS London.
“The market has shown continual, albeit small, growth which reflects the growing demand for the product. Additionally, as mobility improves, people will continue to travel more, making serviced apartments a highly attractive consideration for business people, relocating employees and leisure travellers,” Waldthausen concludes.