The Global Serviced Apartments

Industry Report 2008/09

a TIN report
Contents

2-5
About The Apartment Service

6-9
What is a Serviced Apartment?

10 - 23
Industry Overview

24 - 37
Industry Benchmark

38 - 41
Rates Analysis

42 - 47
Chain of Fools

48 - 50
Duty of Care

51 - 53
Tomorrow’s World

54 - 55
Global Apartment Listings

56 - 60
Ask the Expert

61 - 62
Appendices
2 The Apartment Service New Horizons
New Horizons
The rise of the serviced apartment
By Charles McCrow, The Apartment Service
The corporate market has waited a long time for serviced
apartments; just over 20 years in just about every region
outside the USA.
Serviced apartments, mainly in the
form of Extended Stay Hotels, are now
proliferating in countries such as Australia,
Singapore, Thailand, South Africa,
Germany, Brazil, Dubai, France and
India, all places where there is room for
substantial future growth. In the USA,
which currently accounts for 77% of
world stocks, for example, extended stay
product is still the fastest growing and a
highly profitable sector of the US lodging
industry reinforcing the view that a high
level of growth is also probable and likely
in all these other global regions as well.
Another notable fact is that 86% of the
world’s serviced apartments are operated
by the top 15 players in the marketplace!
The top serviced apartment brands are
operated mainly by mainstream hotel
chains who looked to lower their
operating costs and to reduce their
staff/guest ratios. They did this by
adding a lounge and kitchen into the
rented space which created a more
spacious alternative and also cut away
the cost of restaurants or lounge areas
which were typically low or non-profit
making. Lower costs all round, consumers
are delighted and operators are happy -
a recipe for a perfect growth story!
To add to this mix, over the last thirty
years, the worldwide trend of companies
going - and growing - globally has lead
to greater staff mobility resulting in the
requirement for them to stay away for
longer on business trips or on temporary
assignments. Expatriate populations have
grown strongly too as well due to
growth in corporate relocations. The
sector’s agency members are reporting
that relocation assignments are getting
more numerous and also their shorter
stay assignments are growing in numbers
as well.
Finally, independent operators started
to create larger units to house families
relocating or on temporary assignments
(at a time, coincidentally, when demand
for hotel bedrooms also outstripped
supply worldwide) delivering higher
yields by using residential property
packed up with services. This was
sometimes due to lack of extended stay
availability but also in respect to the size
of the units which tended to be much
larger and more suitable for families.
Charges and cost savings feature highly.
This industry has become known as
Corporate Housing in the US and is a
concept that is set to also grow rapidly
in other regions.

The UK’s first apartments
booking service
Started in 1981, The Apartment Service
was one of the first companies to create
a global network of corporate serviced
apartments, and today we are the largest
European booking agent for serviced
apartments.
We book apartments all over the world
on behalf of our clients, delivering
comfort and average savings of 15-30%
on the equivalent standard of
accommodation in a hotel - stays can
be from a few nights to a over a year.
The Apartment Service operates in both
the extended stay and corporate housing
markets recommending options and
solutions with expertise built up over the
years. Knowing what and where to go
for inventory is paramount to get the
best option available.
3
Apartments allow people
to live as they do at home
and with their family
We started purely as an agency, sourcing
& booking apartments owned by 3rd
parties, setting up a network of sales
agents across the globe to help market
the service to the corporate market as
well as to locally source and inspect
suitable property options.
It’s taken a long time for serviced
apartments to carve a niche in the
business travel market for reasons of
visibility, availability and bookability.
Or rather a lack of it.
There is now some accessibility to
extended stay inventory via the global
distribution systems (GDS) which are
used by most travel management
companies. However, this inventory is
hard to find and not clearly segmented
in the GDSs so specialist knowledge is
needed to find it.
4 The Apartment Service New Horizons
Specialist market
The result was that apartments were,
until relatively recently, regarded as a
specialist market with different systems,
standards, rate structures, payment
processes and stringent cancellation
policies. Although commonplace in the
private rental market, payment in advance
is not a familiar concept in most forms of
business accommodation, however there
were – and are – synergies with the
meetings and conference market.
This, combined with procurement
departments increasingly taking hold
of previously fragmented spend may
explain why more and more companies
are using apartments. Now, more and
more buyers are beginning to understand
how apartments work.
Business travel buyers’ principal needs
were for one or two night stays, perhaps
extending to a week, but many
apartments in the 80’s and 90’s required
a minimum stay of up to 3 months.
So even if a corporate could find an
apartment product, there was no
information about what to expect, and
booking them was even more difficult still.
Corporates received little education
or encouragement from their TMC’s or
HBA’s either. Intermediaries were
Whilst every effort has been made to ensure accuracy, The Apartment Service,
Travel Intelligence Network nor Creativo can be held responsible for any errors or omissions.
reluctant to buy into the concept because
apartment booking processes did not
conform to the traditional hotel model.
Instead, most decided to concentrate on
what they knew instead.
2nd coming of the serviced
apartment
So what changed? Despite the apartment
product being in short supply until
relatively recently, the 90’s saw increased
competition at agency level. High
occupancy in hotels began to drive
consumers to look elsewhere for
alternatives, helping extended stay hotels
to become the fastest-growing sector of
the US lodging industry.
At the same time, demand for corporate
housing also took off in the UK, as greater
mobility became a more important facet
of British workforces. Working away from
home on assignment has become common-
place since the late 90’s.
The building boom of the last 10 years
has seen developers look to the corporate
market to fill otherwise empty apartments,
resulting in more supply to the market,
especially within the corporate housing
sector. This period also saw developers
join together to create property investment
clubs, offering to manage apartments on
behalf of their owners. When it was
The building boom of the
last 10 years has seen
developers look to the
corporate market to fill
otherwise empty apartments

cheaper to buy, rentals were cheaper,
but increased supply demands new
and broader distribution channels.
Additional impetus for the proliferation
of players has been from travel manage-
ment companies and hotel booking
agencies wanting to offer cheaper
accommodation alternatives to their
corporate clients despite the hurdles of
integrating the very different booking
processes of apartments with traditional
hotels into a total travel management
service.
Our focus
The Apartment Service’s focus has been
to meet the needs of those who need
accommodation for more than a week at
a time. The company was among the first
responsible for bringing the corporate
housing market to the UK, and therefore
a wider range of accommodation options
to both the business travel world, and
also to the relocation market.
Business travel buyers are now being
tasked with housing extended stays and
long term assignments. At the same
time, relocation agents are reporting a
proliferation of shorter-term assignments,
which in their terminology, is anything
less than a year. The year-long stay is an
important benchmark, as for instance,
longer stays have IRS implications for
US nationals.
Both ends of the temporary assignment
market are therefore converging to create
greater demand for the same sort of
product, and in some ways things have
come full circle and we are once again
providing information and reservation
services. However we are now creating
more strategic, consultancy-style solutions
for specific organisations as well.
When the Royal Danish Air Force needed
to train its pilots and mechanics on the
(then) new Hercules aircraft, The
Apartment Service housed rotating
5
groups of personnel in 20 apartments
at RAF Lyneham for the two-year duration
of the project, effectively providing a
facilities management service. In fact,
we are now working with relocation
agents around Europe to provide a network
able to offer this kind of bespoke solution
on projects of six months or more.
Knowledge and expertise
Today the company is developing data
feeds that enable clients to access
inventory, availability and content
through different channels including
GDS. Clients and agents are at differing
levels of advancement in terms of
knowledge and actual integration of
apartments into corporate programmes;
So we are meeting a real need by
providing that knowledge and expertise.
A whole new world is opening up to
business travel buyers that few knew
existed. 21st century corporate
accommodation solutions are no longer
simply about business travellers staying
in hotels. It now encompasses short and
long term assignments, meetings,
remote working and even commuter
travel patterns, whilst Duty of Care has
made HR a stakeholder in the travel
procurement process.
Where have we come to after 27 years
in business? I believe that today The
Apartment Service is now a ready-made
reference source and font of knowledge
to companies willing to take a more
holistic view of their travel needs.
Welcome
by Chris McCrow
A final message from
Charles McCrow
Managing Director
The Apartment Service
“I hope you have found this report
informative, interesting and useful from
whichever perspective you are viewing
it - as a buyer or a provider.
This is an exciting time for the Serviced
Apartment sector – both in meeting the
challenges of the current global economic
situation and in capitalising on the
growing acceptance that serviced
apartments are viable alternatives to hotels
especially when it comes to longer stays.
We invite you to provide us with your
feedback on this report by visiting the
blog area of our website and, indeed,
if you or a colleague would like to
download any of the articles in the
report, please log on to:
www.apartmentservice.com
At The Apartment Service, we have
some exciting plans for the coming year
to allow bespoke apartment programmes
and data feeds to meet your individual
business rules.
If you are a Travel Manager; Travel
Management Company; Travel Agent;
Web Portal; Letting or Relocation Agent
or a Hotel Booking Agent, we can offer
you real time availability link for online
bookings through an XML link to our
network of worldwide serviced
apartments. In addition to this API we
also offer a personalised extranet area.
We aim to build upon our position
as Europe’s leading booking service for
serviced apartments worldwide and we
welcome your valuable feedback”.
Charles McCrow
Managing Director
The Apartment Service
THE BEST OF BOTH WORLDS
The comforts of home when you are away on business

The Apartment Service is the largest European booking agent for extended
stay hotels and serviced apartments worldwide.

We offer cost savings and convenient locations to suit every individual

business traveller, many SMEs and large corporate client’s needs.

Voted Best The Apartment Service is your gateway to a greater world of choice – visit our
Serviced Apartment
Company 2007
new look website, call us directly or email: mikes@apartment.co.uk

Established 1981
Members of:

0870 0802303
www.apartmentservice.com