While the sector, which incorporates aparthotels (or extended stay) and branded residences, has shown continual growth in Europe over the last few years, there is still space for it to grow further and gain similar success to those operating in the US, but only if it can adapt to smaller travel budges and offer competitive prices, report author HVS London has said.
Arlett Oehmichen, co-author of Here to Stay: An overview of the European Serviced Apartment Sector, said serviced apartments offering studios alongside larger rooms, like Accor's recently launched Adagio Liverpool, would benefit in the long-term as business travellers continued to seek out value when working away from home.
She said: “Many new extended stay properties now offer slightly smaller rooms, allowing pricing to come down, which has been positively accepted by guests. We have already seen a trend for aparthotels to increase the number of studios."
Oehmichen said serviced apartment operators were already looking at ways of downsizing their offering and creating 'triple functionality space' whereby one 20m² room could be a dining, living and bedroom through the use of retractable beds and foldaway tables.
The report, launched to coincide with London's first Serviced Apartment Summit, says serviced apartments are still a relatively new concept in Europe, but had scope to expand further due to their attractiveness to investors.
“While planning restrictions and minimum length-of-stay regulations remain issues in this sector, lenders and investors are showing more interest in serviced apartments on account of the lower operational cost structure and potentially larger profit margin,” said co-author Veronica Waldthausen.
“The market has shown continual, albeit small, growth which reflects the growing demand for the product. Additionally, as mobility improves, people will continue to travel more, making serviced apartments a highly attractive consideration for business people, relocating employees and leisure travellers."
Speaking to BigHospitality last month, Vangelis Porikis director for central and northern Europe at Accor extended stay brand Adagio, said the company saw major growth for this sector and had picked key cities in Europe and emerging markets for expansion.
"We are the number one aparthotel operator in Europe and we think we are going to grow very rapidly. Worldwide there is a demand for this kind of offering," he said.