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Serviced Apartments are an increasingly attractive cost option for Corporate Travel and Relocation...

Guest post by: Bard Vos

Article Overview: Serviced Apartments are becoming more and more attractive for corporate clients and Relocation Companies, because they offer great value for money and are cost saving and efficient at the same time.

Serviced Apartments are an increasingly attractive cost option for Corporate Travel and Relocation...

In the summer of 2008, The Apartment Service, the largest European booking agent for serviced apartments worldwide, commissioned a global survey amongst 20,000 serviced apartment operators, (corporate) bookers and clients, which has resulted in the first ever Global Serviced Apartment Industry Report, which was published in September.

Significant savings can be made against traditional hotel accommodation - usually around 30% for stays of 3 or 4 days or more, but first readers need to know....

What is a serviced apartment?

The term "serviced apartment" is used when referring to an alternative for hotel accommodation for short and long stay leisure and business travellers. There are however distinctions to be made between types of serviced apartment:

First there is the extended stay hotel and aparthotel. This type of apartment offers generally a 24 hour reception, is located in city centres and gives the guest a home away from home feeling, within a hotel like environment. They range from budget to deluxe and room types range from studio apartments (one room which can be used as living area and sleeping area, a little kitchenette and a separate bathroom), to two or three bedroom apartments which offer a separate living area, a kitchen, one or more bathrooms and separate bedroom(s). Because of the availability of kitchen facilities in the apartments, extended stay properties and apart-hotels do not tend to offer any extra services such as restaurants and bars. There are of course exceptions to this rule, because there are a number of extended stay properties which have been built as an annexe to existing 4 or five star hotels and the guests who stay in the apartments can make use of the hotel facilities free of charge.

Secondly we can distinguish corporate housing. These are residential properties which have been upgraded for shorter term rentals and packaged together with services such as cleaning, utility charges, local taxes, telephone and television, for stays of 30 days or more. They can be located in city centres, but more often than not they are located on the outskirts of the centre of town, with easy access to the main business areas.

Both of the serviced apartment types above have in common that the units are all fully furnished and equipped and the guests will enter a home away from home, with cooking facilities and all modern conveniences such as television, DVD, internet access etc. Having a kitchen means that the client can opt for eating in instead of out, hence making an instant saving. Other benefits of a serviced apartment include, added space to both work and play, more privacy and more comfort.

The serviced apartment concept was created in the USA and the influence of America on the global serviced apartment market remains huge. 86% of the world´s stock of serviced apartments is still located there. Many, from origin hotel operators, which offer extended stay product, such as Marriott (Residence Inn, Execustay), Hilton (Homewood Suites) and InterContinental (Staybridge) have introduced their products worldwide. Next to that there are the companies, which only offer serviced apartments, such as The Ascott Group and Frasers Hospitality, which have been rapidly expanding their offerings across the globe. In the UK one of the first companies to offer corporate housing was The Apartment Service with their Roomspace Serviced Apartments and Executive Roomspace brands.

Serviced apartments have long been regarded as a specialist market with different payment options, rate structures and booking procedures than hotels, which meant that they were largely left untouched by Travel Management Companies, Corporate Bookers and other travel buyers.

Apart from that a historical problem in the booking of serviced apartments has always been their visibility: Traditionally travel agents and travel management companies have been using the GDS to book their accommodation, offering instant availability and confirmation and only 1/3 of the total serviced apartments worldwide are listed on the GDS. But change is afoot with more and more serviced apartments leaping on the GDS band wagon and specialised agencies such as The Apartment Service have integrated GDS connectivity introduced on their website.

The 90´s saw a dramatic rise in the number of agencies specialising in booking serviced apartments, resulting in an increased level of competition between booking agents for serviced apartments and the high occupancy in hotels began to drive people towards the serviced apartment. At the same time, it became more common place to work away from home for longer periods of time, and hotels are not equipped to cater for this type of accommodation. A third factor in this shift to serviced apartments is cost: It is regarded that a stay in a serviced apartment of one week or more, will save a client up to 30% on a stay in a hotel of comparable standard. And, the longer you can commit, the more economical it becomes to use a serviced apartment.

Relocation and Expatriate Housing have become common place terminology in the global work place and anno 2008 there are more people working away from their home (country) than ever before. Most popular countries to work in are United States, United Kingdom, China, Canada and Australia.

But, priorities and general outlook is changing: Whereas 20 years ago a company would send their employees away to work for sometimes years on end and no one batted an eyelid, nowadays, this practice is used with much more careful consideration, because of employee welfare and the work/life balance which is created. A happy employee is worth a lot in terms of the credibility and prosperity of the company. Most assignments away from home last no longer these days than 9 months at the most. This is another reason for the meteoric rise of the number and popularity of serviced apartment accommodation worldwide.

The remainder of 2008 and 2009 will see some interesting challenges for the short term accommodation sector. The Global Economic Crisis is mentioned as a serious concern which will have an effect on the sector as a whole. However there is a cautious optimism that serviced apartments will weather the storm due to demand outstripping supply and the cost saving benefits apartments are able to offer over hotels. But serious threats which will affect the development of the sector, such as more stringent planning and zoning permissions which will restrict operations and increasingly aggressive pricing by hotels will have to be taken into account and solutions will have to be found to counteract these.

What will the future have in store for the serviced apartment sector?

The sector will continue to grow, especially where it concerns short to mid term accommodation. Employers who are sending their workers abroad, have to take into account the well being of their employees, who do not want to spend extended periods away from home. Serviced apartments with their flexible stay options and favourable pricing are the answer.

The sector will also become more accountable following the introduction of grading systems for serviced apartments, for example the Quality in Tourism initiative by Visit Britain, which were only a few years ago unheard of. Clients have always been able to make distinctions between hotels by their star grading system, which would give them basic information about what to expect. Now this will also be possible for serviced apartments. Another initiative to organise the sector, is the development of Associations. In Britain there is since 2005 the ASAP (Association for Serviced Apartment Providers) and another notable one is for example the CHPA (Corporate Housing Providers Association) with roots in the USA.

Thirdly serviced apartments cannot escape the "green lobby". Nowadays when new apartments are being built the environment has to be taken into account and new design features are introduced to make a serviced apartment as environmentally economical as possible. Existing apartments are being upgraded and refurbished to cater for this drive as well.

But the future is rosy for serviced apartments especially where it concerns stays of one week or more. This is where they offer much better value for money over traditional hotel accommodation. By developing their product and by making it more visible and accessible for the corporate agents and travel management companies for example on the GDS, they will continue to increase their market share and will become increasingly fixed in the mindset of those who stay in them.

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Article Tags: apartmentservice, corporate housing, extended stay, serviced apartments



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