Serviced apartments


➔remain inevitable. “The general corporate


client’s accommodation 'touchstone' will always be the hotel sector, so anything that has less conformity or less globally recognised standards may appear inconsistent,” says Grosvenor House Apartment's Steve Thorne. “Furthermore, many operators have sought more transient business and in doing so have increased their rates to meet, or sometimes exceed comparable hotel rates, leading to a mismatch in expectations between the corporate buyer and the eventual guest.”


Corporate demand So how is the sector shaping up to suit the corporate buyer? According to GSAIR, 60 per cent of corporates say their travel policies now include serviced apartments and TMCs report that 77 per cent of their clients’ travel programmes now include serviced apartments. HRG has preferred relationships with


SACO and GoNative. The latter has accommodation in Ilford, a ten-minute, £2.40 journey from London's Liverpool Street station, which costs considerably less than an apartment in the City. “Pioneer Point has 159 units and 71 per cent stabilised occupancy,” says managing director of GoNative, Shaun Prime, of the company’s mixed use development in Ilford. “The serviced apartments cost £450 per week, against around £850 in Liverpool Street. There is no contest.” Supply in London is still


constrained by lack of funding, but Marie Hickey, associate director of commercial research at Savills, says, “I think that will change this year and there is a significant develop- ment that may see a well-funded new brand come on to the market. “Ascott’s acquisition of the


Cavendish Hotel in St. James’s shows confidence in the market and it has got C1 (hotel) planning use, so it can be converted easily. At £158.8million, it was the biggest hotel transaction last year in value and raises the profile of the industry. It is a positive sign,” says Hickey. Cycas Hotel Partners has also seen


evidence of an upturn. “Our development pipeline is stronger than it has been in three or four years, with 25 deals under development in the UK, including two hotels in one building in Manchester, one of which will be a Staybridge Suites,” says director John Wagner.


A new report on the industry prepared by


Savills for GoNative, finds that occupancy in the UK fell over the six months from October 2011 to March 2012 but recovered to 85 per cent and 82 per cent in Q2 of 2012. It continued to rise in Q3 before dropping back in Q4 last year. Rates in 2012 were up 17 per cent in the capital against 2011, outstripping London hotel tariffs, which increased by four per cent. Savills anticipates further rate growth in London during 2013. Members of ASAP (the Association of


Serviced Apartment Providers) agree, with 74 per cent expecting their business to increase during 2013 and although 59 per cent will be increasing rates, 32 per cent will be holding 2012 tariffs. Many members are also introducing added value for clients such as earlier check-in,


later check-out and


complimentary wifi. “It is encouraging


that, in spite of the challenging economic


climate, the majority of our members are expecting a good


level of growth for their business in 2013 and they are finding new ways to deliver additional value to clients,” says chairman of ASAP, David Smith.


The UK picture During the past 12 months, there has been a marked increase in the number of global players entering the UK corporate housing market. “It is likely they have identified the market as being under serviced, with apartments being an excellent way of gaining a foothold into an otherwise mature hotel market,” says managing director of


a“ With commercial property values t historically low levels, this is a


rare opportunity for operators to acquire or lease developments which in normal circumstances would have been out of their reach


”


Pictured: Top: SACO Trinity Tower; Above left: Marlin Empire Square; Above right: Go Native


72 THE BUSINESS TRAVEL MAGAZINE


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