Apartments speeding up Europe growth
Extended-stay hotels are old hat in Australia and the US but not so much in Europe.
Until now. According to Buying Business Travel, extended-stay hotels are expected to grow at a much faster rate in Europe than other types of hotels over the next few years.
This was the talk at the Serviced Apartment Summit in London. The inaugural one-day event attracted more than 150 delegates including serviced apartment operators, hotel chains and investors.
“It’s very early days for extended stay in Europe,” said Josh Wyatt, a partner at private equity firm Patron Capital Partners. “The US model is significantly bigger and more sophisticated with a larger amount of apartments.”
Mr Wyatt added that the sector had been slow to get off the ground in recent years due to the financial crisis and ensuing recession, as well as a lack of funding. But he said this was now changing with more finance becoming available for developments. “Other areas of the hotel industry are becoming saturated — there are too many five-star hotels — but that’s not the case with the extended-stay market,” said Nr Wyatt.
Vangelis Porikis, Adagio’s director for central and northern Europe, added that Europe was at “the beginning of the revolution” when it came to extended-stay accommodation. “It’s not a mature market, it’s emerging,” he said. “There is plenty of demand for extended stay throughout Europe and it is coming from both domestic and overseas markets. There is still space to grow in cities such as Paris and London.”
Serviced apartments are emerging as another growth sector across Europe, according to a new report from HVS London. The report’s co-author Arlett Oehmichen, director of HVS London, said that investors are likely to be attracted to the serviced-apartment sector as they can generate higher profit margins than the average hotel.
According to the report, Here to Stay: An overview of the European Serviced Apartment Sector, serviced apartments initially benefited from the economic crisis as business travellers moved from hotels to more affordable, extended-stay products. However, operators and owners realised they needed to adapt to smaller travel budgets and offer more competitive prices. “Many new extended stay properties now offer slightly smaller rooms, allowing pricing to come down, which has been positively accepted by guests,” said Mr Oehmichen.
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