Serviced apartments are a relatively recent phenomenon. They are fully furnished apartments that have similar amenities for hotel rooms and can be used for both short and long term stays, offering more opportunities for a home holiday. Some of the main advantages of staying in serviced apartments, rather than in a hotel room, are that they offer an average of 30% more space, more privacy and are more economical in terms of no additional hidden costs and fully equipped kitchens reduce the cost of meals . According to the Apartment Service, serviced apartments are about 15-30% cheaper than hotel rooms, which adds to their attractiveness for business and a demanding tourist.
In recent years, serviced apartment - a representative of the hospitality industry - has grown more than any other class of temporary accommodation in Europe. This is partly due to globalization and the need for workers to travel more often to offices located outside the city and companies that are looking for cheaper ways to place them. In addition, families may prefer to stay together and need a different setting from what hotels offer, in terms of supporting a close relative in the elderly, having office space to catch up with work tasks, or giving more children a more secluded life.
Evidence of their popularity is the occupancy rate. Serviced apartments in the UK averaged 81% in 2016 and exceeded hotel rooms by 77.2%. Among enterprises, their use is also increasing. According to a recent survey conducted by the Business Business Show in November 2016, four out of ten corporate buyers reported that they would use serviced apartments more than at the end of 2016 than in 2015.
As we mentioned above, serviced apartments are superior to hotel rooms in terms of occupancy. Because of their cost-effective nature, they are becoming popular among companies sending employees on business trips and those traveling for holidays who require more flexibility in their accommodation than what the hotel can offer.
Serviced apartment companies enjoy their success and are expanding temporarily at a rapid pace. SACO is currently one of the largest operators of serviced apartments and has made several acquisitions over the past few years. Since the beginning of the year, SACO has provided additional development in London, Cambridge and Dublin, and the fourth in Manchester. This demonstrates confidence in the market, and indeed, the Savills report from 2016/17 predicted that 2017 will be a “record” year in terms of new developments in the UK.
The difference between serviced apartments and Airbnb.
Governments have reduced the cost of renting Airbnb, which partly makes it possible to achieve success in the market for serviced apartments. Berlin sponsored tourists from renting entire apartments from Airbnb to protect affordable housing, and Airbnb is withdrawn from listing short-term rentals in New York. Serviced apartments are different in that they are not apartments owned by persons who want to earn additional income, but they belong to the company for the sole purpose of renting them out on a short-term or long-term basis to people who need to stay somewhere. Unlike Airbnb, apartments are not permanent housing.
Suppressing an Airbnb lease in some places allows you to serve apartments to accommodate those who used Airbnb, which further increased the demand for units.
Serviced apartments as an investment
Investors who want to invest in the serviced apartment sector will be lured by their fundamentals. In terms of specific investments, people will look for buildings with high-quality facilities in good central locations. Remembering that the people who will use the apartments will be either business travelers or vacationers (or their combination), they will require easy access to transport links and attractions and amenities of the area. Due to the length of the stay in general (studies have shown that 91% of the rest is 14 nights +), residents will be assured of a more stable income since their apartment will be occupied for more than a certain period of time. A longer stay in combination with lower operating costs means that serviced apartments usually provide higher net operating incomes than regular hotels. This helps get rid of the anxiety of people considering investing in hotel rooms, but is concerned about the possibility of gaps in the filling.
Sir Thomas House is a great example of an attractive investment in Liverpool. It is located in the city center, close to the bars and restaurants of Liverpool, attractions and transport links. Liverpool itself can boast not only a vibrant tourism industry, but also a growing economy - home to the largest share of fast-growing new businesses in the country. In the hotel industry report in 2017, PwC also identified Liverpool as a place that will experience growth in terms of revenue per number, which indicates increased demand and a willingness to spend more in the city. These factors guarantee a constant need for apartments from tourists and business travelers.
