SAN editor Eloise Hanson outlines four key trends expected to shape the extended stay sector in 2025 and beyond.
New demand drivers shifts KPIs
Serviced apartments have steadily climbed the rankings of investor appetite. The sector’s resilience helped to strengthen confidence and as an asset class, it often generates higher profit margins compared to hotels. Growing customer awareness of the sector, in part helped by Airbnb, is also reflected in the growing appeal of serviced apartments to leisure travellers. With legislative clamp downs on short-term rentals across Europe, I expect much of this historical Airbnb demand will continue to migrate across to professional extended stay products. As the customer base broadens, operators are adapting to meet new demands.
For instance, Sabah Mehta, solutions architect at Mews, reports that due to demand for flexible stays and the blurring between short and long trips, guests are looking for “all-inclusive experiences”. The decision making process is now informed by the amenities available, such as communal lounges, day care for children, and more. As a result, Mehta says that operators should be tracking total guest spend to personalise the experience, which will support guest retention in the future.
While amenities help to incentivise longer trips, booking trends suggest a shortening in the average length of stay. The latest SilverDoor Q4 2024 report reveals that enquiries for stays for less than seven nights have increased by 64 per cent year-on-year worldwide for 2023-24. Enquiries for stays less than a month have also increased by 17 per cent for the same period. The shift in demand is due to corporate managers looking for cost-efficiencies, coupled with the growth in the global serviced apartment supply chain.
Corporate travel management is increasingly influenced by sustainability. Due to CSR travel policies and regulatory compliance, serviced apartment operators are compelled to make necessary upgrades, which too is shaping operational metrics.
Al Butler, senior client programme manager at SilverDoor, says: “We fully expect to see a marked shift towards sustainability having a significantly more influential role in determining accommodation and travel planning, policy and programmes in 2025. This will include the structure and management of RFPs which will place greater emphasis on sustainability alongside cost, service levels and DE&I provisions. Much of the demand for more sustainable-based options, practices and behaviours will be guided by higher level legislative directives, including CSRD, as well as the rising influence of Gen Z and the next generation of corporates and travel managers who are increasingly demanding greener choices.
“As the focus on sustainability sharpens, so too will the demand for sustainability data and reporting on the carbon emissions of individual stays alongside overall programmes. Many would accept the number of accreditations and standards for demonstrating sustainable practice can make this a challenge. Therefore, we also expect greater collaboration between suppliers and buyers, to work towards a more unified approach to such reporting as one of the defining trends for travel and sustainability in the year ahead,” he adds.
Space optimisation
Adaptive reuse has been one of the defining real estate trends of late. The challenges faced by rising debt and construction costs is leading to the creation of new brand models within the extended stay sector, largely focussed on the conversion of office and retail. Local planners may be resistant to losing ground-floor retail to hotel projects, whereby the potential for serviced apartments to exist above have made this a viable route to market for many operators.
As the price of real estate increases in most markets, and due to serviced apartments attracting leisure guests for shorter lengths of stay, some brands have turned to smaller units. As a result, Paul Wells, partner at Studio Moren, says that kitchens are becoming smaller and that front of house areas are getting bigger to offset the difference. Location will typically dictate the size of communal spaces such as the introduction of coworking, whereby it’s crucial for operators to strike a balance between optimising space for shorter stays and providing adequate amenities for longer-term corporate guests.
Carrie Hartman, president at 3Sixty, says: “Business travellers are increasingly looking for accommodations that let them work, unwind, and feel at home. To meet this demand, serviced apartments are placing greater emphasis on space optimisation. Many are already designing units and incorporating amenities that seamlessly transition between work and relaxation, creating versatile spaces that elevate the guest experience while maximising returns for operators.”
The lack of standardised rooms within adaptive reuse projects, however, presents a challenge for some operators in that it may not meet brand standards. Wells argues that such projects can lead to more flexible products. “The blurring of the urban living models is critical to how we’re emerging post-covid, in particular with flexible working,” he says. “The lines are definitely blurring between coliving and serviced apartments. Both schemes are very similar — there’s slightly more front of house in coliving, and it’s a longer-stay model so a different planning journey — but in terms of room layout, they’re really not that far apart. You don’t have to go a huge step further to reach a PBSA scheme. Our clients are much more open to the conversation of whether serviced apartments are the right option.”
In some cases, serviced apartment operators are broadening into the living sector with BTR/multifamily offerings. The potential to divide inventory and portfolios between different lengths of stay is a savvy use of space due to the consolidation of amenities while servicing a captive audience. Economies of scale can lead to increased efficiencies and profitability in this respect, and success in converting temporary leisure and corporate guests to longer-stay residents will rely on effective marketing.
Michael McCartan, VP EMEA at IDeaS, says: “As the younger generation start to travel more, their preferences will continue to reshape the hospitality landscape. This socially-driven demographic seek places to stay that offer more than just an apartment — they crave dynamic spaces that foster connection through in-house events, group activities, and curated experiences. To appeal to this market, operators will need to rethink their marketing and communication strategies, tailoring them to align with this generation’s values. With purchasing decisions heavily influenced by social media trends and platforms like TikTok, it’s crucial for serviced apartments to maintain a strong presence where these audiences interact.”
Corporate direct and instant bookings
As the customer base for serviced apartments widen, it’s important for operators to remain relevant. The modern corporate traveller – characterised as tech-savvy and efficiency-driven with a strong emphasis on work-life balance – remains the dominant user of serviced apartments, with the latest GSAIR highlighting relocation as the biggest source market for growth. In the same report, while the use of specialist serviced apartment agents had dropped 12.5 per cent, agents were making 72.73 per cent of bookings manually, direct with the property. There’s clearly demand to book direct, though the ability to instantly reserve longer-term accommodation (especially where contracts are involved) has been difficult due to the range of pricing strategies required.
Property management systems are flexing product suites to better cater to blended stays, and as tech stacks advance, so do digital tools. Live availability and instant book features are gradually being introduced, enabling greater convenience and flexibility for the end user.
It took nine months for WaterWalk by Wyndham to launch its instant book capabilities. CEO Mimi Oliver says that conversions have improved as a result, with the demographic of bookers being twofold. “We’re seeing relocation or project work – typically aged between 20 and 50 – use the instant book feature. These are individuals working for big companies, and we’re working on expanding the feature to companies. Occasionally, we’re also seeing local residents, perhaps for insurance reasons, instantly book.”
Where minimum lengths of stay are required, one challenge lies with restructuring websites to clearly show the different options and availability of offering. When the aim is to streamline and simplify the sales funnel, the front-end user experience must be seamless and easy to navigate.
Should more operators adopt similar online tools, corporate reliance on specialist serviced apartment agents may continue to decline. The vast supplier network accessible to agents is invaluable and their sourcing power second to none. Brands are however establishing greater reputation and market presence; herein lies the opportunity for operators to build direct relationships, enhance guest retention and loyalty. Autonomous business travellers will likely appreciate the convenience of direct and instant bookings, presenting a new challenge for travel managers to control and maintain compliance with company policies.
New wave of hotel serviced apartments
All the major hotel chains now offer a dedicated extended stay brand. Supply across the United States has grown substantially as a result of modular prototypes in development across the country, leading to a record number of signings for some brands. To accelerate growth of its Suburban Studios and Mainstay Suites brands, for instance, Choice Hotels this year introduced a prefabricated Lobby in a Box concept to increase the volume and speed of hotel conversions.
Elsewhere, the Middle East has been identified as a major growth market. In Saudi Arabia, giga-projects such as Diriyah, Neom, and Red Sea include branded hotel residences as part of the accommodation offering. While the majority of these projects sit within the luxury segment, Elie Milky, VP development at Radisson Hotel Group, believes branded residences will become steadily incorporated in the lifestyle segment too.
Branded residences are becoming one of the fastest-growing sectors of hospitality. Savills anticipates the sector will more than double by 2031 (by number of completed projects), with the Middle East and Africa showing the strongest growth at 270 per cent over the next seven years. “As well as an increasing number of projects, the geographies have also expanded with operators and brands looking to new destinations”, says Rico Picenoni, head of Savills global residential development consultancy. “Over the next five years, we forecast that 60 new brands will enter the space and the industry will reach five new geographies including Romania and Tanzania.”
Should hotels gain greater market share within the residence and apartment sector, stronger resources could see innovative hospitality products such as private clubs or celebrity-led restaurants be introduced. In terms of geographical expansion, Milky highlights Greece as an untapped market due to less than one per cent of branded hotel supply in the country, and no serviced apartment brands. He adds that independent operators can thrive in areas where there’s little brand penetration, while also presenting an opportunity for further collaboration with hotel chains to add collective value at a local level.
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