There is a growing trend among serviced apartment providers to move away from a reliance on the long-stay corporate market and focus on the short-stay business traveller, according to a report from property advisors Savills.
The main driver of this is fewer travel buyers are relying on TMCs, with many choosing to arrange their own travel due to the “greater choice” and “flexibility” it provides, Savills said.
The report found in order to achieve this apartment operators are developing more branded standalone products, closely aligned to Aparthotels. This is in contrast to its previous expansion in Europe, which was dominated by local operators taking on single units in traditional residential blocks.
Savills director of research, Marie Hickey, said: “Some of the larger operators are moving away from a reliance on the traditional long stay corporate market and are tapping into shorter stay guests, particularly as business reliance on travel management companies wanes.
“As a result, developing a branded product that appeals to a variety of guest segments and which raises consumer awareness has become all the more important to operators,” she said.
The study also found the number of internationally branded serviced-apartments across Europe is set to double over the next two years.
This growth is expected to be spurred by the “constrained supply” currently seen across key destinations, including London, Paris, Amsterdam and Belgium.
Savills said Singapore operators Ascott and Frasers are both planning to open sites in Frankfurt this year, and StayCity is pursuing a 30 per cent growth in inventory with its plans to expand to 5,000 apartments across Europe by 2019, including new apartments in Venice, Lyon and London.
The report showed the lack of supply in Europe is different compared with Asia and the US, where the serviced apartment concept and its brands are more familiar to consumers.
James Bradley, associate director of Savills hotels, added: “This expansion of branded purpose built stock should strengthen the appeal of the sector to institutional investors and we anticipate a significant increase in capital in the next few years.
“However, over the short term, private equity and owner operators will continue to be the primary driver of expansion.”
Bridgestreet Apartments has this week announced it has signed a new 10-year lease for one and three bedroom apartments at Liverpool One.
Liverpool One includes more than 170 retailers and restaurants as well as Hilton and Novotel hotels.
The news coincides with a 23% increase in visitor numbers to Liverpool in 2013, ahead of the UK average of 2.6%. Bridgestreet claims the city is also the fastest growing location for business tourism in the country.