This article is taken from Relocate Serviced Apartments Ultra 2018 - all the latest in Serviced Apartments news and Global Mobility trends. Access your digital copy here

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With cost management and personalisation high on the agenda in the global mobility space, the latest benchmarking study for the serviced apartments sector – the Global Serviced Apartment Industry Report (GSAIR) 2018/19 – is welcome news.The GSAIR study shows a 23.7% increase in total global inventory over the past two years. The sector has a dizzying array of terminology, concepts and descriptors for the range of accommodation options on offer.Global mobility managers, who have long seen the virtues of serviced apartments for short-term and project-based assignments, but lamented the relative lack of supply compared to demand, will surely welcome this growth.Offering a safe, fully trackable and comfortable base for global mobile assignees and relocating employees in a variety of locations, serviced apartments fill a gap in the market that offers the flexibility to respond to the growing range of assignment types.The aparthotel, often co-branded to give that all-important hallmark of security and guarantee of positive guest experience, is becoming more commonplace for these reasons, especially as global mobility and business travel arrangements are starting to overlap.But is this increased inventory enough to reverse the plateaued growth from the relocation sector highlighted in the most recent GSAIR analysis?

Where is the potential for growth?

The latest figures from GSAIR estimates there are now in excess of 1,022,984 serviced apartments worldwide (with a further 73,563 corporate housing units) in more than 13,164 locations.This compares with 826,759 apartments (with 70,300 corporate housing units) in 10,777 locations two years ago. These represent a significant increase in available inventory; 23.7% growth compared with 10.5% growth as published in the 6th edition.This 7th edition of the report, compiled from both primary and secondary global sources, has comment and debate from more than 40 industry buyers, suppliers and consultants. It also features a series of case studies detailing how corporates have successfully adopted serviced apartments for business travel, assignment working and relocation requirements.

Assessment of the results of the latest GSAIR survey of 6,000 corporates, 2,000 serviced apartment operators and more than 1,800 agents show the following:

• More than half of corporates are using serviced apartments for business travel, with 40% of corporates allocating up to 20% of accommodation budget to extended stay solutions
• Serviced apartments have found their niche as a ‘stand-alone’ category and are featuring less in the standardised annual hotel RFP’s
• 37% of corporate companies are now mandating the use of a specialist agency channel (similar to TAS Global), alongside an RMC or TMC for their apartment bookings
• 47% of corporates allow their travellers to independently select/book their own long-stay accommodation
• Corporates are continuing to leverage long-stay savings of between 17% and 29% versus their hotel programme spend

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Visit our Serviced Apartments pages for all the latest news

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To explore the challenges in this maturing sector, speaking at the Serviced Apartment Summit (SAS), the annual European conference, which took place in London, in July, Thomas Emanuel, director of business development for STR, a hospitality benchmarking company, analysed the data and confirmed that “from a demand perspective... it is great news”.He confirmed that demand for this accommodation type grew 2.2% in Europe, according to STR’s analysis, against a supply increase of 0.9%. This trend is repeated across Africa (5.3%), Asia (4.3%), Australia and Oceania (3.3%), South America (7.6%) and North America (2.7%). The only exception is Central America.In addition, occupancy rates remain well above 75% in the UK, UAE, China and Australia, reflecting this high demand. With relocation managers often citing a lack of supply as a challenge to accommodating assignees in second and third cities, for the UK at least, where serviced apartment supply is outpacing hotel growth, the medium-term looks more promising than the short-term.

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Related reading from the latest issue of Relocate Ultra:

• A market on a great journey
• Sharing in the success of the serviced apartment sector
• Why the gig economy may not be the workforce of the future

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STR expects “triple-digit growth” in Glasgow, Manchester and Liverpool, while York, Leeds, Edinburgh, Birmingham and Reading all have significant supply in the pipeline to complement serviced apartment providers’ existing inventory, too, according to STR’s data. Overall, “there are lots of reasons to be confident”, added Mr Emanuel.But with more supply coming on stream and in more widespread locations, will this maturing serviced accommodation sector connect with the needs of relocation and global mobility managers? Is it able to face down the concerns noted in the GSAIR reports around quality, availability, security, location, legitimacy and consistent standards.

Building trust and getting the basics right

AIG global accommodation manger Jan Jacobsen, speaking at SAS, said transparency, trust and speed are going to be key for the sector as it moves forward.“Client expectations are broadening, so broadening distribution and the speed is the key. That is where we are going. Some are stuck in the Stone Age when it comes to distributing their inventory. Our challenge is to bring suppliers together into one platform and multiple channels and make it really easy to do business.”“GDPR has highlighted the importance generally of trust,” Mr Jacobsen added, “We’ve always known trust is a fundamental for all aspects of success, but trust in the product and privacy of data, getting these basics right first and foremost is really, really important. So is the speed of both response and booking vital. We have to reduce the turnaround time from days, to hours to seconds,” he asserted.

Drive for improvement

Another panel of experts and investors focused on the importance of guest experience – including their own experiences booking accommodation. It concluded that while the sector has been organising itself in the UK to provide consistent quality standards and ratings – so guests knew what product they were getting with transparency and consistency – there were still some operators not meeting standards.Check-in and booking also still has a long way to go to meet guests’ expectations. Similarly, real-time pricing and booking still lags behind that available in the hotel sector, making cost-projection, estimating and budget allocation a more painful process than necessary, especially when conducted over international time zones.While there is growing availability to meet the demands of the changing workforce, global accommodation buyers need to be aware of the potential shortcomings of some providers and look for accredited suppliers and reputable brands.The full results of the report can be found at www.apartmentservice.com/GSAIR

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