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When pandemic-related restrictions highlighted the benefits of serviced apartments’ space and comfort in relation to hotel rooms last year, the serviced apartment sector made 13% more profits than the UK regional hotel market.
This year, we expect the serviced apartment sector to increase the profitability gap by being pragmatic in the face of economic constraints. By diversifying its offer to include multi-stay lengths and harnessing new technology, the serviced apartment sector will improve customer experience. These are the 10 serviced apartment trends to watch in 2023.
- Economic constraints
With parts of Europe and North America facing a recession, it’s expected that a knock-on effect will impact business travel in these regions (meanwhile, Asia-Pacific will fare better). As such, business travellers may shorten their stays or stop travelling for work altogether in favour of moving their overseas work online. For serviced apartment operators that specialise in business travel, 2023 is the year to be pragmatic and cater for other customer segments too (i.e. the leisure market). Specialised tech is necessary to switch offers accordingly (i.e. advertising units on different sales channels).
- Multi-stay lengths
In tough economic conditions, serviced apartments need to be flexible. Diversifying units across multiple stays lengths enable serviced apartment operators to take advantage of booking gaps and seasonal demand, while also catering for various customer segments. More serviced apartments operators need to embrace the tech for multiple stay lengths, meaning every unit could be a hotel for ten-day holidays or a home for ten-month work placements. Staying flexible increases profitability.
- Extended stay offerings
2023 looks positive for extended stays. Not only do extended stays avoid the stringent regulations affecting short-term lets in many countries, but extended stay operators are likely to benefit from business customers that travel less, but for longer periods (such as those who bookend their stay with a holiday). In addition, the private rental market is becoming increasingly expensive, and more people may turn to extended stay apartments as alternatives to renting - especially if they are waiting to make a more permanent move (i.e. to see if house prices fall).
- Tech-led amenities
In 2023, customers expect serviced apartments to offer pet and family friendly facilities, state-of-the-art gyms and wellbeing options as a minimum. The best serviced apartment operators stand out by offering these amenities alongside the seamless use of technology. For example, digitally registering a child for daycare, reserving a spa session via an app or using an in-apartment tablet to book a gym class. Tech also makes it easier to upsell amenities (i.e. book a massage) to target customers (i.e. those who use the spa often) and boost subsidiary revenue streams.
- Customer experience
Credibility is so important in the hospitality industry. In fact, 93% of customers read reviews before making a purchase decision. To boost occupancy levels, operators need to provide a level of customer experience that encourages guests to leave 5 star reviews. This means allowing guests control of their own housekeeping rota and reporting maintenance concerns via a digital app. It requires a frictionless experience from check-in to check-out with the use of virtual inventories, personalised communications and flexible payment terms. Customer experience has always been important, but even more so in 2023.
- Loyalty programmes
In the face of tougher times, we expect more serviced apartment operators to prioritise repeat custom over attracting new ones. For an operator who is managing lots of locations, offering innovative membership models will attract corporate clients with employees who travel multiple times per year. For location-dependent operators, it’s all about using a customer relationships management system (CRM) to save guest preferences and send automated emails with bespoke discounts and perks. For example Ascott Star Rewards offers benefits like priority birthday discounts and signature gifts.
- Environment
2022 shone a brighter spotlight on the use of energy, but what does that mean for serviced apartments? On a macro level, corporate travellers will likely want to offset carbon emissions to hit their ESG goals. On a micro level, guests will be more likely to book places with smart meters in order to ‘do their bit’. Serviced apartments that offer digital heating/cooling control, innovative designed buildings and sustainability initiatives (i.e. discounts for energy-saving) will stand out.
- Regional stock expansion
In 2023, European mega cities like London are still serviced apartment hubs, but destinations such as Istanbul, Manchester and Glasgow are also emerging out of the pack. According to Marie Hickey, Director, Commercial Research, Savills, this “reflects a combination of rising developer and investor awareness of the sector alongside increased operator appetite to expand into new, relatively underserved markets”. To successfully manage multiple units across different countries, operators will need to have the technology that converts prices to local currency, advertises units on foreign sales channels and automatically translates languages.
- Blurring with BTR
Build-to-Rent (BTR) is having a moment, so expect traditional serviced apartments to jump on the bandwagon either directly - by incorporating BTR into their offer - or indirectly - by setting up BTR arms. For example, leading serviced apartment operator Flying Butler recently launched its BTR brand Mura Living with a new split development in Hemel Hempstead (80% BTR, 20% serviced apartment).
Dominic Sherry, CEO, Flying Butler and Mura Living, said: “Expectations of today’s renters are high and with our 25 years’ experience in residential services, we are well-positioned to deliver a cohesive, quality rental service for both BTR and serviced apartment guests. Thanks to res:harmonics PMS and valued tech integrations such as HubSpot, Canopy, HIVE and DocuSign, we’ve been able to support the CRM, bookings and operational demands required for this mixed use business model.”
- Serviced apartment PMS developments
2023 will see a growing divide between traditional ‘pen and paper’ operators and modern tech-fuelled serviced apartment operators. New technology developments for the serviced apartment sector are accommodating multiple length stays, scalable pricing and multi-channel advertising. In 2023, only serviced apartment operators that embrace technology will truly take advantage of the opportunities.
Serviced apartment success
Despite potential hurdles, serviced apartments have much to look forward to in 2023.
Download the Ultimate Guide to Serviced Apartment Property Management Software 2023 to learn how property management software supports serviced apartment operators.
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