Martin Brage of Aptel looks at how serviced living has become one of the main growth areas in the hospitality sector and evaluates its potential for more expansion.
In a landscape where Airbnb is a key rival for the hotel industry, businesses up and down the country are re-evaluating their offerings to remain competitive – especially in the tougher post-pandemic world.
Whether this involves updating booking software, improving customer service, or reallocating costs elsewhere, hotels have been forced to change to suit new industry expectations.
One key development is the increased supply and demand for serviced living, a general term for fully furnished, often cheaper, accommodation, featuring everything you would need, including bathroom and kitchen facilities. According to Savills, the London hotel market saw a 26.7 per cent expansion in serviced living in 2022, demonstrating a clear demand in the capital and beyond.
Staycations are now increasingly popular among British holiday goers during the cost-of-living crisis, and the need for cheaper accommodation is set to increase over the next 12 months. So, why is this? And what does this mean for the wider industry?
• Why has serviced living become more popular?
Self-contained accommodation’s newfound popularity could be down to several factors both in and out of the industry. For guests, serviced living streamlines the experience. Including kitchen facilities and equipment alongside standard amenities is an uncomplicated way to reduce costs for the guests, as they no longer need to pay for meals out, or utilise potentially expensive in-hotel services. Particularly when it comes to families, providing as many amenities as possible can help drastically reduce the total price of a trip.
For businesses, hotels that offer in-room kitchen facilities can reduce spending once used on chefs, ingredients, and waiting staff in their onsite facilities. These savings can then be attributed to profits or distributed elsewhere in the business to enhance the guests’ experience.
These are just two examples of cost efficiency that has helped serviced living excel within the industry. Combining this with the less tangible benefits, such as more privacy and increased independence for guests, and the business benefit of offering a wider range of options; serviced living is primed to expand further this year.
• What does the growth of serviced living mean for the wider industry?
Those at the forefront of serviced living have seen the growth first-hand. But how does this impact those watching on from the side-lines, in traditional hotels, Airbnb, and beyond?
For starters, future hotels are having to adjust their plans quickly ahead of opening. On its own, London has 3,000 committed units in the pipeline [according to Savills], which bodes well for the serviced living industry. But this puts recently opened or soon-to-be open hotels lacking these facilities under pressure, as they will need to immediately pivot or look to incorporate serviced apartments into their future developments to ensure they can compete with increased rivals.
There is also potential for a change in approach to impact other hospitality, like bars and restaurants, which may rely on nearby hotels and their passing trade for bookings and sales. Condensing the city break experience to a single room takes options out of the consumer’s hands and puts them into the hands of the hotel. While this is inevitably is good for some, it may leave the wider industry at a disadvantage.
• What can we expect from serviced living in the future?
Serviced living has already established itself as a key player in the industry, both as a rival to traditional hotels and as something to compete with Airbnb.
From a business perspective, there is huge potential for hotels to incorporate certain amenities and drastically reduce their overheads. For instance, by removing bars, restaurants, and cafes in place of larger, fully serviced rooms. Whilst there is a real possibility of many hotels choosing this route, others will maintain their status as a traditional facility to offer a more luxurious experience at an increased price, with a higher standard of on-site services.
Looking forward, improvements to the current cost-of-living crisis could see an injection of funds into the tourism industry, as consumers begin to spend their disposable income more freely and spending more on meals out, local experiences, and better-serviced hotels. This potentially paves the way for traditional hotels to counter-programme the cheaper all-in-one approach of fully serviced apartments. Alternatively, if the purse strings continue to be tightened, we could see serviced living strengthen its hold on the hospitality industry further.
The growing popularity of fully serviced living facilities demonstrates consumers’ demand for more contained, cost-effective, and streamlined experiences. For an industry hit most heavily by the pandemic, a breakthrough in new hotel offerings is a welcome addition to the fray, despite potential concerns from traditional hotels and dependent businesses.
In 2023, the story of serviced living is seemingly an easy one to follow, with more demand and increased supply in the pipeline. However, with many units potentially looking to reduce spending and invest in serviced facilities instead, traditionalists who opt for standard tourism experiences could be at risk of falling behind. For now, only time will tell.
Martin Brage played a pivotal role in the launch of Aptel in east London, in 2021, with a keen focus on incorporating sustainable developments and cutting-edge, guest-centric innovations. With over two decades of post-qualification expertise in the property industry, he brings a wealth of knowledge and experience to the table. In addition to his role at Aptel, Martin is a seasoned entrepreneur, successfully managing his own property development and investment company.
