The rise in serviced apartments
Without question, the popularity of serviced apartments is growing tremendously across the hospitality sector, which is due in large part to changing consumer habits.
Although mostly associated with business travel, more leisure travellers than ever before are choosing this type of accommodation over hotels, resulting in a growing number of new serviced apartment businesses popping up across the UK.
In 2017, serviced apartments achieved 81.7% occupancy nationwide. In October 2018, Investar Property Group’s serviced apartments business, Union Bank in Liverpool, achieved a 96% occupancy. This was our highest rate on record, proving that demand is increasing as travel behaviours shift, especially the rise of longer-stay business travel and the emergence of the “bleisure” trend, which combines business trips with leisure activities.
The rise in serviced apartments
Serviced apartments are progressing at a stronger pace than any other type of accommodation in the hospitality sector for business travel.
Typically, serviced apartments are very ergonomic, offering more space and equipment to work as comfortably as you would in the office.
Business travellers are often away for longer periods and serviced apartments are renowned for being a home away from home. Rooms are usually 30% bigger than hotels and offer additional home comforts such as sofas, dining tables and even coffee machines.
They offer a more cost-effective solution for business owners, offering tailored packages for long-term stays, which allows businesses to save money elsewhere. For example, serviced apartments come with fully fitted kitchens and living spaces that encourages travellers to stay in, saving on additional expenses, such as dining and transport.
The “bleisure” trend
“Bleisure” in an increasingly popular travel trend that’s particularly common among millennials, who endeavour to find a better work-life balance. More people than ever before work flexibly or remotely and “bleisure” allows employees to travel for work, while incorporating leisure activities into their stay. This might be making time for sightseeing, adding additional night stays to your trip or even bringing along loved ones to make the most of your stay.
The rise in serviced apartments can somewhat be attributed to the growth of this trend. For example, business travellers who added a Saturday night stay to a business trip rose globally by 20% in 2017. Millennials make up the largest share of those seeking a “bleisure” balance, globally accounting for 38% of these trips, with Generation X and Baby Boomers responsible for 31% each.
Seeking a healthy work-life balance is very important and Investar Property Group is proud to own a serviced apartment business that encourages this. Vibrant cities, such as Liverpool, are an ideal place to combine the two. Union Bank was created to be that home away from home for travellers, welcoming them into both Liverpool’s business and social communities.
Serviced apartments as property investment
Thanks to their rise in demand, serviced apartments have become a popular choice for property investors, particularly in sought-after city centre locations. Currently, there are a lot of private renting sector (PRS) and buy to let (BTL) offerings across the UK, whereas the serviced apartment remit is less crowded, providing a new opportunity for investors.
This type of accommodation is popular for longer stays and setting a minimum number of nights is often best practice. With this, the risk of low occupancy is much lower than hotels and investors can make substantial profit through excellent yields and occupancy rates.
Despite ongoing concerns about individuals renting out their homes via platforms such as Airbnb, serviced apartments provide a different experience. You can expect to receive a full service, similar to that of a hotel, with the assurance that the accommodation is being managed by a reputable management company. This isn’t always the case with individual home owners, where visitors are expected to clean up after themselves or pay additional security deposits.
The service apartment sector’s continued appeal to both business and leisure travellers has cemented impressive growth and encouraged greater investment levels in 2018. It’s likely that this will continue, causing an upsurge in more serviced apartment offerings in strategic UK cities and beyond as we go into 2019.