The year of the serviced apartment
A look back at a turbulent year and the relative resilience of the serviced sector
It’s not breaking news that the hospitality sector was hit hard in 2020. Even some of the industry’s biggest names suffered, as did those in retail.
Yet where Covid has dealt a whacking blow to hotels and the high street, serviced apartments and aparthotels have had relatively better fortune, with a majority of these assets continuing to trade throughout the lockdowns.
That’s not to say 2020 was an easy ride for serviced apartment operators. Between the good-news stories of businesses taking over entire blocks and aparthotels offering accommodation to key workers, operators had to contend with plummeting rates and occupancy levels, and disappointment for those brands that had planned to launch new properties in 2020.
But what the pandemic has shown is that the serviced apartment model is more agile, more adaptable to changing circumstances and has great potential for growth.
Instead of focusing on the many negative ways in which Covid has been disruptive, it’s worth recognising its power to shake up the serviced apartment sector (dare we say) for the better. Established operators are vanishing, making space for younger, savvier brands attuned to the desires and aesthetic ideals of design-conscious, modern travellers. At the same time, these newer operators are leasing prime real estate at more competitive rates.
It’s true that landlords can no longer bank on bidding wars between operators. But what they can rely on are specialist advisors such as Saxbury to provide sound advice on who’s buying, leasing and doing the deals. This is a prime time to diversify estates away from declining sectors – retail, office space – in favour of assets that inspire confidence. We have already seen investors from across Europe keen to shift their exposure to serviced apartments, which are increasingly viewed upon as a defensive asset class.
The leaders of 2020 are those who saw this as an opportune time to capitalise on good market value. Vibrant new brands – room2, Stay & Co, Bob W, Your Apartment, Stay, Capital Residencies, Charles Hope Apartments, Gravity – with fewer liabilities, exceptionally well-designed buildings in city-centre locations and an unshakable belief in the regenerative power of the UK’s hospitality sector. It’s not a question of if it will bounce back, but when.
As we brace ourselves for a post-pandemic world, we anticipate a boom in travel as people shake off the shackles of lockdown. For businesspeople, the novelty of zoom meetings is wearing thin. The future is meeting face-to-face and striking deals.
Where will they want to stay? We suspect it won’t be at traditional hotels with communal buffets and multiple shared services. Travel will not simply be about the live-like-a-local experience, but about experiencing it safely. The fact that serviced apartments with self-contained facilities were able to stay open during the pandemic speaks volumes.
In our new normal, people might be travelling less, but they will be travelling for longer – and they won’t want to stay in a tiny hotel room. What they will want is the freedom to work, eat and live in a quality, self-contained way that only serviced apartments can offer.
At the start of 2020, this type of accommodation was a growth sector. Looking forward, serviced apartments will ride an even greater wave of prosperity. Saxbury can help you get on board.
The fast-moving serviced-apartment sector holds some of the greatest opportunities in real estate. As specialist advisors, we unlock the opportunities for landlords, investors, developers, and operators to build meaningful connections that shape how we live, work and (short) stay.
