February 22, 2024

Here to stay

Meeting the new needs of travellers, extended-stay options are securing a place in more travel programmes, says Catherine Chetwynd in our 2024 Serviced Accommodation Guide

The perception of serviced accommodation among business travellers changed during the pandemic and  persuaded more travel managers that extended-stay options remain appropriate.

A continued requirement for wellness, safety and sustainability has led more corporates to give serviced accommodation a more prominent place in their travel programmes, offering apartments as an alternative to hotels.

“Some of the big buyers tell us they will put our offer beside Marriott and Hilton, etc,” says StayCity Commercial Director Paula Mullaney.

“And with hybrid working, when people are in the office two or three days a week, they are working in an apartment rather than in a hotel room or lobby; similarly when they are relocating. It has worked well for us.”

STR’s figures for accommodation in 2023 reflect this trend, with occupancy for serviced apartments up 3.3% to 80.8% against 77.3% for hotels. Rates are up 7.7% nationwide to £158.23 for serviced apartments, against £119.47 for hotels. 

Our 2024 Serviced Accommodation Guide is out now

Senior Director at STR Thomas Emanuel says the premium rates are partly down to brand – the biggest hotel operators in the UK are economy brands “but there is no economy piece in the serviced apartments pie”, he says.

London tops nationwide occupancy at 81% for serviced apartments with an average daily rate of £208.80, up 8.7%, against 79.8% and £195.69 respectively for hotels. In the UK regions, serviced apartments enjoyed 80.6% occupancy compared with 76.4% for hotels while STR found average rates were £109.90 for apartments, versus £91.11 for hotels.

“The industry had a good year in a challenging environment, with rates well up against pre-Covid levels. Occupancy nationwide is back. The UK is ahead of most of Europe,” says Emanuel.

“And there is still room for growth because the Chinese market – and corporate and group business – have not yet returned in strength.”

“Individuals are now away from home for longer periods but travelling less frequently, and we expect that to increase”

Despite challenges such as the economy, geopolitics and a “worrying year of elections”, which could have selective impact on performance, Emanuel is optimistic about hospitality as a whole.

“I’m forecasting growth in 2024. This will not be double digit growth but more standardised increases in Europe, which will come from occupancy, rather than rates,” he said.

According to Managing Director of House of Fisher, Trine Oestergaard Stafford: “We are definitely competing against hotels in accommodation programmes and we believe guests prefer serviced apartments over hotels if they are on a longer stay because they might not have the budget to go out for dinner every night or the company can’t afford it. Using a kitchen and doing a weekly shop will be much cheaper than eating out every evening.”

In demand

Running hotel and serviced apartment programmes alongside each other is made easier by the increasing presence of aparthotel brands such as IHG’s Staybridge Suites and Marriott’s Executive Apartments and Residence Inn.

In fact, aparthotels continue to punch above their weight and Citadines’ figures reflect that. In 2023, 65% of stays were business trips, up from 50% in 2022, and there was an increase in executives extending their stay for leisure time.

“There is still room for growth because the Chinese market – and corporate and group business – have not yet
returned in strength”

STAY apartments is seeing a shift towards longer stays. “Individuals are now away from home for longer periods but travelling less frequently, and we expect that to increase,” says Vice President Operations for STAY Camden Sam Ghosh.

However, STAY is noticing a response to the fluctuating economy, with a drop in corporate demand towards the end of 2023 following the 2022 post-Covid boom.

Frasers Hospitality also sees requirement for extended stay shortening.

“This does not mean that the long-stay segment is declining in 2024 but that the flexibility of serviced apartments is appealing to a wider range of travellers,” says COO EMEA Rebecca Hollants van Loocke. “Frasers Hospitality now receives corporate enquiries that vary from one night up to four months.”

“With hybrid working, when people are in the office two or three days a week, they are working in an apartment rather than in a hotel room”

The serviced accommodation sector is making major in-roads to meet the rising demand for sustainable stays (see page 8) and to improve bookings and other processes through technological innovation (see page 10).

“Thanks to improved distribution among operators, and TMCs investing in content-rich technology platforms, there is a small (5%) increase in agents offering serviced apartments as a core service, or via a partner,” says the latest Global Serviced Apartment Industry Report (GSAIR).

“However, operators say 23.16% of bookings still come direct to their own websites.”

While access and awareness are improving, agents say there is a continued need to explain the advantages of serviced apartments to corporate clients.

2024 Guide to Serviced Accommodation