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Demand for serviced apartments in the corporate sector is experiencing a consistent upward trend, says new report

The recently released Global Serviced Apartment Industry Report (GSAIR) 2023, which encompassed a survey of 3,000 corporates unveiled a notable surge in the utilization of serviced apartments.

Blog / News / 2023 July 11, 2023

As stated in the recently published Global Serviced Apartment Industry Report (GSAIR) 2023, conducted by Ariosi Group, a subsidiary of the Habicus Group and sister company to serviced apartment agent SilverDoor, the sector of serviced apartments is continuously expanding its portion of corporate accommodation expenditure. Moreover, alternative accommodation options are gaining popularity among business travelers.

The recently released Global Serviced Apartment Industry Report (GSAIR) 2023, which encompassed a survey of 3,000 corporates, serviced apartment operators, and agents, coupled with interviews conducted between March and May 2023, unveiled a notable surge in the utilization of serviced apartments.

According to the report, more than half (53 percent) of corporates indicated an increased usage of serviced apartments for business travel compared to the previous year, while 39 percent reported a higher demand for project or assignment work, which remained unchanged from 2022. Furthermore, the average length of stay is projected to rise, as 89 percent of corporates anticipate an increase or stable duration in 2023. Among agents, 87 percent reported an upswing in the duration of stay among their clients, a significant rise from 45 percent in 2022. However, the survey found that only 5.3 percent of corporates currently employ serviced apartments for bleisure trips.

Travel management companies (TMCs) and relocation management companies (RMCs) noted that their clients primarily experienced an increased use of serviced apartments for assignment work (64 percent), followed by business travel (55 percent) and relocation (44 percent). In comparison, in 2022, assignment work and relocation reported growth rates of 60 percent each, while business travel witnessed a 55 percent increase.

The report also highlighted the growing popularity of alternative accommodation models among business travelers. Home stay providers such as Airbnb recorded a surge in business travel bookings of up to 25 percent post-pandemic, with bookings made through various channels, including direct bookings, online travel agencies (OTAs), and TMCs.

Of the surveyed corporates, 50 percent currently permit their travelers to stay in home stay and co-living options. Moreover, 63 percent are contemplating utilizing or expanding their use of home stay products, and 25 percent are considering co-living options. Among corporates whose travelers would consider these alternative accommodations, 21 percent estimated that up to a third of their travelers would be open to such options.

Regarding sourcing priorities, the report identified overall cost as the primary consideration for travel buyers when choosing between hotels and serviced apartments, followed by value for money and traveler well-being. TMCs and RMCs highlighted location (85 percent) as the most crucial aspect, followed by length of stay, price/quality comparison, and guest experience (all 82 percent). Surprisingly, traveler preference ranked last, despite recent research emphasizing the increased importance of experience-focused metrics.

Inflationary pressure is expected to impact sourcing decisions, with 75 percent of operators planning to offset additional energy costs by charging higher nightly rates. This contrasts with the survey findings, which revealed that 50 percent of corporates and 46 percent of agents expected suppliers to cut costs in other areas rather than raising rates. Roughly a quarter of both corporates and agents anticipated operators absorbing the extra costs.

Sustainability emerged as one of the top priorities for corporates. However, the report indicated uncertainty regarding whether corporates are genuinely willing to pay more for sustainable accommodation. While 43 percent of corporates claimed that sustainability always influenced their sourcing decisions due to increased awareness among business travelers, 75 percent of operators stated that sustainability was not the primary factor driving corporate sourcing decisions, suggesting a potential underestimation of customer sentiment. Additionally, the report highlighted a lack of commitment among serviced accommodation providers concerning sustainability, as only 16 percent of them measure their carbon footprint despite 57 percent having a sustainability or environmental policy in place.

The report also revealed a shift in Request for Proposal (RFP) strategies, with 54 percent of corporates currently separating serviced apartment RFPs from hotels, compared to only 19 percent in 2022. Furthermore, only 38 percent of corporates plan to issue combined RFPs for serviced apartments and hotels this year, a significant drop from 63 percent in 2022. The authors noted that the change in RFP strategy could be attributed to the ratio of RMCs to TMCs participating in this year's survey. Moreover, the distribution landscape for serviced apartments has matured, with operators recognizing the importance of providing availability on the Global Distribution System (GDS). The report indicated a substantial increase, from less than 10 percent in 2022, to 47 percent of corporates using specialist agents to book serviced apartments in 2023. Additionally, 67 percent of TMCs and RMCs have formed partnerships with specialist agents, compared to 22 percent and 52 percent, respectively, in 2022. Furthermore, 29 percent of corporates and 27 percent of agents now include serviced apartment inventory in their online booking tools.

Europe, particularly London and Singapore, remains at the forefront of serviced apartment demand, with global growth concentrated in these established markets. Among the surveyed destinations, London experienced the most significant growth in corporate volumes within the UK (64 percent), followed by Brussels in Europe (40 percent), New York in the US (43 percent), Riyadh in the Middle East & Africa (67 percent), and Singapore in APAC (44 percent).

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