The chance to ‘live like a local’ or find an affordable room in a city center location has tempted many a visitor away from hotels and into the arms of peer-to-peer apartment rental sites.
However, as the likes of Airbnb, HomeAway and Roomarama experience a crackdown in cities across the world, the number of properties listed on such sites could face pressure as regulations and legislature are addressed.
But that doesn’t necessarily mean a return to the hotels of old for travelers who prefer the home touches that come with renting a room or someone’s whole place. Instead, serviced apartment operators could benefit.
“Today’s travel culture is about exploring,” says Max Thorne, Managing Director at JLL Hotels and Hospitality Group. And thanks to the power of the internet, travellers are clued up on the culture and geography of where they’re going before they ever leave their front door. As a result, accommodation doesn’t need to be limited to the few hotel brands they may have heard of – usually global chains that provide dependable experiences.
“There has been an extraordinary global growth in consumers looking to discover new experiences, including choosing to rent apartments as their travel accommodation,” Thorne says. “Given the much greater variety in private apartments, this experience can be inconsistent, which in part is the attraction.
“It can, however, also be unregulated with the potential for misinterpretation in listing information, yet travelers continue to explore apartment rentals. This demonstrates how much consumers want a new hospitality experiences, it would also strongly suggest that apartments are a significant alternative for them.
From a neighbor’s apartment to a serviced apartment
Unfortunately for apartment-favoring travelers, short-term rental sites are facing increasing legal opposition across the world, as cities grapple with the impact of the Airbnb boom on local housing and hospitality operators.
In Berlin, recent legislation made it illegal for people to rent out more than 50 percent of their property, leading the number of entire-flat Airbnb listings to drop from 11,000 in February to its current count of around 300.
Many major European and U.S. cities have also introduced legislation limiting the ability of ad-hoc landlords to lease their properties on such short-term rental sites.
Such measures have been well received by the U.S. hotel industry which has been grappling with the challenges posed by Airbnb. For serviced apartments, however, it’s a different story – in fact, Thorne notes that the market is benefiting from the greater exposure to apartment accommodation that peer-to-peer rental sites have offered consumers.
“There is a clear opportunity for operators to step up and create product to fulfill the continuing demand for short-term apartment rentals,” he says.
Mixing business and leisure
While it’s yet to be seen whether cities with stricter short-term rental laws will experience a correlated growth in serviced apartments, the global market is booming with 750,000 serviced apartments – an increase of 80 percent since 2008.
A major factor behind the growth is the rise of business trips that travelers extend with a couple extra days of leisure. “If someone is having a longer stay, they’d naturally prefer a larger space like an apartment to a single room,” Thorne says.
In the UK, more than 3,500 serviced apartments are in the pipeline over the next three years – triple the number of three-star hotels. The majority will be in London, Manchester and Edinburgh where there has been the greatest demand from business travelers, and includes the first serviced apartments from hotel chains Accor and Marriott in the UK.
Demand for extended-stay apartments been similarly increasing in China, where business travel is surging. Serviced residence owner-operator Ascott recently partnered with local peer-to-peer rental site Tujia to launch serviced apartments aimed at the country’s growing sector of middle-class travellers.
Room with a (unique) view
There is an untapped opportunity for brands who can respond to next-generation travelers’ desire for the unique and individual over the familiar and expected; for a personalized home-away-from-home over a room that is identical in Shanghai and in Portland.
“Hotels are already being customized to fit the area they’re in, and advances in manufacturing are making it more manageable for properties to feature different variants of rooms,” Thorne says. “The next part of the evolution is a tiering for serviced apartments, where operators produce lower-cost residences alongside existing luxury and mid-tier properties.”
That process has begun already, with affordable hotel chain Yotel launching serviced apartments in business travel hubs Singapore and Dubai.
Down the line, peer-to-peer rentals could complement serviced apartment and hotel offerings for both travelers and hospitality brands. Accor recently supplemented its serviced apartment and hotel portfolio with an investment in Oasis Collections, a short-term rental platform that connects travelers with landlords in Latin America, U.S. and Europe, allowing the hospitality group to expand the kind of traveler it can appeal to.
“Travelers are driving this alternate hospitality environment, because of the growing expectation of choice,” Thorne says.
Where choice was once paramount to deciding between a standard room or a deluxe room, today, it means choosing boutique hotel or micro-hotel, extended-stay suite or serviced apartment, hilltop villa or inner city flat. Decisions, decisions.
This article was originally published on JLL Real Views, JLL’s news site exploring the big trends shaping the real estate industry’, with ‘Real Views’. www.jllrealviews.com. Reprinted with permission.