The Rise of Serviced Apartments: A New Era for Business Travel

While bleisure continues to be in the spotlight for most executives travelling around the world, increasingly, guests are choosing to extend their business stay to enjoy attractions in a location after working hours or on the weekend. This renewed enthusiasm is drawing significant investor attention, prompting both long established brands and new operators to expand and adapt, creating exciting growth and transformation opportunities in the industry.

Standing apart from traditional hotels, serviced apartments are gaining stronger popularity as a whole new generation of travelers chooses to explore countries while keeping their 9 to 5 remote working which, for many, has become a normal and important part of work life balance. As developers and investors look to ever changing needs from co-living concepts, social spaces and practical designs, serviced apartments are becoming an appealing solution in serviced apartments by having access to more space, a sense of community and amenities.

A new and dynamic era has begun for the serviced apartment industry with global demand and occupancy consistently showing robust growth since post-pandemic months, some in part due to the return of corporate travel and changing lifestyle preferences.

The Difference Between Serviced Apartments and Hotels

Serviced apartments ideally serve as a 'home away from home' with a living room, fully equipped kitchen, ensuite facilities and parking along with other amenities - while ensuring hotel-like services such as a reception, fitness gym, concierge and housekeeping all of which encourage guests to stay for weeks.

In terms of layout a typical hotel room usually has a place to sleep, a TV, a closet, and an ensuite bathroom. Some rooms may have a chair and desk, a mini fridge, lounge chairs or couch, but usually, the space is limited as it was primarily designed with short stays in mind.

Cost per night is also typically higher for hotels than serviced apartments due to location, though more and more operators are choosing prime locations or converting hotel rooms and older apartments into serviced apartments in a bid to remain competitive.

Serviced apartments may not offer room service, a restaurant, spa and other common hotel luxuries, but they compensate with an outstanding long term comfort level, while hotels continue to center around daily experience and service ratings.

Unlike hotels, serviced apartments lean towards self-service with guests having to buy their own groceries, resulting in more autonomy and flexibility for the guests.

Guests also have more control over their privacy with cleaning done every few days or weekly at a serviced apartment as opposed to the twice a day housekeeping service at hotels. This makes them a popular choice of stay for larger groups and families as well.

Investor Appetite in the Serviced Apartment Sector

The serviced apartment is seen by investors and lenders alike as a resilient asset to diversify a real estate portfolio with, due to its strong return in even the worst times. Other than capital, the challenge lies in adapting and innovating designs and amenities based on changing and foreseeable needs in the market.

At Spire Studio Architects, we find that the newest serviced apartment products tend to combine the best of both worlds with aparthotels that combine the comfort of fully furnished apartments with boutique hotel amenities and targeting leisure demand (which impacts operational efficiencies), focusing more on prime locations and offering facilities like spas, entertainment and restaurants.

Hotel brands are becoming equally flexible and introducing some serviced apartment units and suites within their inventory. The goal remains to find a balanced spot by managing operational costs and therefore reducing the impact of inflation and improve overall profitability.

Most developers will agree that refurbishments and conversion of real estate shortens non-revenue-generating period and remains a more viable model than a new build, opening up a whole market of opportunities for investors and building owners.

Conclusion

As the design, operational efficiency and profitability remain at the core of investor confidence in the two sectors - serviced apartments and traditional hotels remain strong and continue to converge and evolve as an opportunity for most markets globally.

About Spire Studio Architects Ltd

Spire Studio is a full-service design and consulting firm specializing in Architectural Design, Interior Design, Project Management, Design Build and Sustainable Design based in Nairobi, Kenya.

www.spirestudioarchitects.com