Four bgb attended last week the Serviced Apartment Summit, in London. For its second year, the Summit included a wide range of subject matters with sessions on finance, planning, branding, management and of course distribution and travel buyers.
World trends in the serviced apartment industry are showing growth although not everywhere equally. London is a long way behind Asia and Americas when it comes to development and availability of the product. For example, whilst in Asia, there are 5.3 units for 1,000 business travellers, London has only 1.6 serviced apartments for 1,000 – New York leads the way with a ratio of 5.7 to 1,000. At the same time, this shows that there is huge opportunity for growth in London specifically but also in the rest of Europe. Europe’s serviced apartment is set for 50% growth in the next two years according to agent Savills. Growing demand for the product is slowly but surely encouraging investors to look into the market.
In order to grow, the serviced apartment industry is facing a few challenges. First and foremost, positioning is key, as well as educating the traveller about the difference between hotels and serviced apartments. This might become slightly problematic as the line between the two is starting to blur with serviced apartments adding more and more services whilst there is a growing trend for a certain sector of hotels working to reduce them. Big hotel chains are waking up to the investment opportunity in the serviced apartments sector – for example, the new InterContinental hotel in Greenwich, funded by Queensgate Investment Fund, will also include the 23-storey Peninsula Tower offering 100 serviced apartments.
Investment in the latest technology is set to become a big priority in an industry where mobile account for 20% of all travel sales. Currently, the challenge for hotels and serviced apartments is conversion with mobile users still three times less likely to book a hotel room than those using a PC.
As the serviced apartment sector grows in the UK – according to the Association of Serviced Apartment Providers (ASAP), it will grow by 10% this year with the opening of 1,276 new apartments across the UK in Ireland, 70% of which will be in London – a new trend has emerged, the ‘bleisure’ market. Things have started to change in 2014 with a growing consumer awareness, helped by some of the bigger hotel chains’ incursion in the serviced apartment sector and by more flexible, user-friendly shorter stay serviced apartment offerings. This form of accommodation is becoming more and more appealing to leisure consumers who want to experience cities they visit like locals. In some markets, the tide is already turning – in London, Think Apartments says its customer mix is an even 50/50 split, a dramatic change from a few years back when it was dominated by business travellers.
Cheval Residences, a Four bgb client, has recently opened its seventh unit in London near the Tower of London – with 159 luxury apartments, which was followed last month with the opening of another 50-apartment unit in Harrington Court. The prime location of the apartments is clearly a factor in increasing the appeal for leisure consumers.
One of the key challenges facing the service apartments sector is branding, which is going to become more and more important – the summit surmised that there is a real need for differentiation from the competition, including hotels, to secure a growing loyal customer base for this dynamic and ever changing industry.
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