Large international brands are realising the sector’s potential and are creating and evolving new brands to penetrate the market.
In the first quarter of this year, Hilton opened 23 extended stay hotels within their dedicated All Suites brands: Homewood Suites, Home 2 and Embassy Suites. Dianna Vaughan, global head and senior vice president of All Suites commented: “The All Suites brands have proven time and again to be a strong investment opportunity that can withstand the cyclical nature of the hospitality industry. This resilience, coupled with our commitment to innovation, has driven the explosive growth of our pipeline, and it’s why we saw a nearly 29 percent increase in approved deals during the first quarter compared to the same time period of 2017.”
The Ascott Limited, the world’s largest provider of extended stay, also announced their target to double their global portfolio from 80,000 to 160,000 units by 2023. Mr Kevin Goh, Ascott’s Chief Executive Officer, said: “With the global economic upswing and international travel arrivals hitting a new high, we are confident of exceeding 80,000 units this year. We see immense potential to scale up to 160,000 units worldwide in the next five years. Besides accelerating our growth through management contracts, which currently make up 60% of our portfolio, we will continue to seek opportunities for strategic investments in strong operating businesses that will widen our customer reach and give us a competitive edge. We will also grow our franchise business, particularly through our Citadines and Quest brands, and form strategic alliances with leading companies that have a pipeline of properties for us to manage.”
IHG also has another 169 extended stay hotels in their Staybridge Suites pipeline. For the first half of 2018 in the Americas region, Staybridge Suites recorded an average occupancy of 77.3 percent, up 1.7 percent year on year; ADR of $120.46, up 2.6 percent; and RevPAR of $93.09 up five percent.
All in all, its clear that these large hoteliers are aware of the competition and profitability of the serviced apartment sector. It remains to be seen how quickly their portfolios will continue to spread as more and more specialised brands enter the market with new technologies and a thorough understanding of 21st Century traveller needs.
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