The serviced apartment sector continues to grow its share of corporate accommodation spend and alternative accommodation is also gaining traction among business travellers, according to the Global Serviced Apartment Industry Report (GSAIR) 2023, released today by Ariosi Group, part of the Habicus Group and sister company to serviced apartment agent SilverDoor.
The report, which included a survey of 3,000 corporates, serviced apartment operators and agents, along with a series of interviews conducted between March and May 2023, revealed that serviced apartments usage is on the rise.
More than half (53 per cent) of corporates said they are now using serviced apartments for business travel more than they were twelve months ago, while 39 per cent report increased use for project or assignment work, which is unchanged compared to 2022.
Average length of stay is also set to rise, as 89 per cent of corporates predict this will increase or stay the same in 2023, while 87 per cent of agents reported an increase among their clients, compared to 45 per cent in 2022.
Despite bleisure trends gaining traction among corporates, the survey revealed that just 5.3 per cent are currently using serviced apartments for these trips.
Travel management companies (TMCs) and relocation management companies (RMCs) said their clients’ use of serviced apartments is growing most for assignment work (64 per cent), followed by business travel (55 per cent) and relocation (44 per cent). By comparison, in 2022, assignment work and relocation were both reported to be growing by 60 per cent and business travel by 55 per cent.
Alternative accommodation models are also increasing market share among business travellers. According to the survey, home stay providers such as AirBnB have reported seeing increases of up to 25 per cent in business travel bookings following the pandemic, with bookings made via a combination of channels, from direct to OTAs and TMCs.
Half of the corporates surveyed currently permit their travellers to stay in home stay and co-living products. Sixty-three per cent are considering using or increasing their current use of home stay products and 25 per cent are considering using co-living products. Of those corporates whose travellers would use these products, 21 per cent said that up to a third of their travellers would be receptive to alternative accommodation options.
Report authors said that despite the duty of care risks for travel managers, the home stay format offers potential cost savings and that, as a result, adoption rates will likely increase in the year ahead.
Sourcing priorities
Overall cost was listed as the most important consideration among travel buyers when deciding between a hotel and a serviced apartment, followed by value for money and traveller wellbeing.
TMCs and RMCs said their clients’ “most or very important priorities” are location (85 per cent), followed by length of stay, price/quality comparison and guest experience (all 82 per cent). Traveller preference is ranked last, which the report described as “surprising” following recent GBTA research highlighting the increased importance of experience-focused metrics.
Increasing inflationary pressure will likely also impact sourcing decisions as the report revealed 75 per cent of operators are planning to mitigate additional energy costs by charging higher nightly rates. This may come as a surprise to some as 50 per cent of corporates and 46 per cent of agents expect suppliers to make savings in other areas instead of charging a higher nightly rate, according to the survey. Roughly a quarter of both corporates and agents expect operators to absorb the extra costs.
Sustainability was featured among the top priorities for corporates, but according to the report, “it remains unclear whether corporates are really prepared to pay more for a more sustainable accommodation product”.
Forty-three per cent of corporates said greater awareness among business travellers means sustainability “always influences” sourcing, while 64 per cent of agents said the same of their client base.
However, 75 per cent of operators deny sustainability is the biggest factor in corporate sourcing decisions, suggesting instead that the strength of feeling among their customers may be underestimated.
The report also cited external research conducted by The Apartment Network and ISAAP that pointed to a lack of commitment on the part of serviced accommodation providers when it comes to sustainability.
The research shows that while 57 per cent of serviced accommodation providers have a sustainability or environmental policy in place, only 16 per cent actually measure their carbon footprint.
RFP strategy
More than half (54 per cent) of corporates are currently separating serviced apartment RFPs from hotels, compared with just 19 per cent in 2022, according to the survey. Only 38 per cent will issue a combined serviced apartment and hotel RFP this year, compared with 63 per cent in 2022.
Report authors acknowledged the rapid shift in RFP strategy could be due to the ratio of RMCs to TMCs that took part in this year’s survey.
Nevertheless, distribution in the serviced apartment sector has become more mature, with operators recognising the importance of providing availability on the GDS.
In 2022, the GSAIR survey indicated that less than 10 per cent of corporates used specialist agents to book serviced apartments. In 2023 this has jumped to 47 per cent. Sixty-seven per cent of TMCs and RMCs also partner with specialist agents, compared to 22 per cent and 52 per cent, respectively, in 2022.
Additionally, 29 per cent of corporates and 27 per cent of agents now have serviced apartment inventory in their online booking tools.
Europe remains the epicentre of serviced apartment demand, with global growth concentrated in the established markets of London and Singapore, according to the report.
In terms of corporate volumes, the survey revealed that London is the UK destination seeing the greatest growth (64 per cent), compared to Brussels in Europe (40 per cent), New York in the US (43 per cent), Riyadh in the Middle East & Africa (67 per cent ) and Singapore in APAC (44 per cent).