Why Invest in Serviced Accommodation?

Mike Hill / November 15, 2018

As with just about any industry you think of out there, technology has transformed the way the public interacts with it - to the extent that the industry itself has altered, very often beyond recognition.

Such is the case with the hotel industry. First there was Airbnb. Now there are serviced apartments. These days hotels are much further down the list when it comes to choosing accommodation for your holiday, weekend away or business stop-over. The reasons for that are plentiful, as you’ll find as you read on.

First though, what exactly is a serviced apartment? And why is it such a good idea to invest in one?

Definition of a serviced apartment
This tends to be a very high quality, well-furnished living apartment with kitchen and bedroom/s. This will typically be in a block of apartments where there is access to a concierge, cleaner, laundry services and other amenities such as a bar, even a restaurant, pool and gym. There may also be other communal areas where inhabitants can ‘chill out’, such as a garden. The idea is to give those living there an upmarket ‘home from home’ experience.

Advantages of serviced apartments
They tend to be less expensive than hotelsEntire families can be housed under the one roofThey are less formal than a hotel environmentIt’s possible to cook your own meals (and so save money on eating out all the time)They offer the freedom of a private rental with the added bonus of serviceThere is around one third more space than in a hotel roomThey are from 15% to 30% less expensive than a hotelThere’s no hidden costs such as the contents of the mini bar or internet service to pay for at check outStays tend to be longer than for those in hotelsIt’s a great hands-off investment so good for investors who want to ‘continue with their day job’

Such is the growing popularity of serviced accommodation that in 2017 that the sector boasted a 81.7% occupancy rate - an increase of 0.2% on the previous year. Meanwhile, the cost for a serviced apartment in the UK last year had increased at a much quicker rate over the same 12 month period, to the extent the average cost was £148.48 per property. The research was carried out by the Association of Serviced Apartment Providers (ASAP) and global data benchmarking company STR.

The most popular location for a serviced apartment was the capital with a 2.2% increase in usage in 2017 and an occupancy rate of 83.8%. The typical daily rate for such a property there was £198.74 - an increase of 9.8% on the previous year.

Manchester’s serviced apartment sector boasted an occupancy rate of 80.5%, with an average daily rate of £100.09. cities. In Scotland’s capital Edinburgh, occupancy was 84.4%t, with a daily rate of £119.21.

Long-term investment opportunity
Why are serviced apartments such a good long term investment opportunity? Well, certainly it looks like they are set to play a main role in the UK’s holiday, tourist and business travel sector. For starters they are already beating hotels in terms of occupancy rates.

Then there are the high yields serviced apartments offer. Investors can expect yields of 6.5% to 9% compared to 5% to 6.5% for a hotel, according to investment analysts.

All in all serviced apartments seem like a very sound investment to the team here at Sourced. Find out more at our website: www.sourced or call us on: 0333 123 1330.

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