INCREASINGLY, corporate travelers are favoring extended stay options over traditional hotel offerings, opting instead for home comforts and greater freedom.
These hybrid properties allow guests to stay for weeks rather than days without a fixed term contract, and unlike a typical suite, often provide enhanced facilities like a full kitchen and a larger living area alongside luxury amenities.
Although extended stay accommodation also includes “aparthotels” (apartment hotels) and residential suites, the segment is still largely dominated by serviced apartments with a worldwide number of 826,759, according to The Global Serviced Apartments Industry Report (GSAIR) 2016/17 published by the Apartment Service.
Demand in Asia
The Asia-Pacific region accounts for more than 10 percent of the global serviced apartments market, with properties in 700 locations, the GSAIR revealed.
Here, demand has increased 25 percent in the last ten years and serviced apartment operators are predicting further growth as more companies post employees to short-term or temporary assignments. Overseas business travelers are also a key driver, especially in Japan, where occupancy levels in Tokyo can reach between mid-80 to 90 percent in certain seasons.
Quoted in the GSAIR, Loraine Berry, head of development at Lanson Place, a company that manages 11 serviced suites and residences in Asia, explained their appeal: “Our consumers are savvier with accommodation choices … they look for unique ‘home away from home’ experiences to satisfy both their business traveling requirements alongside their need for seamless connectivity to their social lives in a more relaxing environment.”
While serviced apartments have a keen following, they aren’t the only option for corporate travelers that require a longer stay and more flexibility. According to the GSAIR, Airbnb and other “sharing economy” platforms are driving expansion in the short-term rental market, providing another alternative to hotels.
American Express Global Business Travel is one TMC working with Airbnb. Quoted in an article for CEI, American Express Meetings and Events APAC director Belinda Doery explained the move: “This shift towards embracing non-traditional accommodation options is a result of traveler demand.
Such options are becoming increasingly appealing for workers on extended trips, as well as smaller groups involved in internal meetings or incentives.”
However, Skift, referencing a recent study from the Global Business Travel Association, found only 17 percent of travel policies actually allowed employees to use such services. “As attractive an alternative as
“As attractive an alternative as homesharing is for many business travelers, it presents a number of considerations travel managers must take into account,” Skift quoted from the report.
These concerns include duty of care compliance, risk management issues, and inconsistencies in levels of quality as well as booking and cancellation policies. As such, it remains to be seen whether Airbnb could really pose a threat to the stronghold that serviced apartments from established brands have in the extended stay market.
That said, some companies have moved to address this potential all the same. Last year, Ascott – one of Asia’s principal serviced apartment operators – joined forces with Tujia, China’s equivalent to Airbnb, to launch Tujia Somerset Serviced Residences to improve online accessibility and to meet the increased demand from China’s middle-class travelers.
Prospects for the extended stay sector in the Asia-Pacific region are mostly positive. Large operators and brands are continuing to invest in serviced apartments and similar properties to expand supply in response to consumer demand – many keeping the needs of business travelers at the front of mind.
This year, new openings include Marriott’s Element Kuala Lumpur, an eco-conscious hotel that includes generously sized studios and multi-room suites with kitchenettes, spa-inspired bathrooms, and ergonomic work areas. Hyatt, too, is scheduled to debut its extended stay product, Hyatt House in Malaysia.
However, although there is still scope for growth in this sector, the GSAIR cautions uptake among corporate programs could be “leveling off”. This may well prompt a shift in consumer demographics in the future.