Why a Serviced Apartment Can Be A Lot Better Than A Hotel
If you are interested in investing in serviced accommodation you can contact Paul Winder and his team by filling out the form on this page.
Paul Winder is an investment consultant with Residential Estates, who provides investment advice and property investment sales throughout the UK. You can see his company’s website here.
If your employees travel a lot, a serviced apartment is a lot more cost-effective than a comparable hotel. But more than that, they are more convenient and they are more comfortable for your employees who will be happier in their own space and more productive in their work.
Rob: Hi, it’s Rob from Property Investments UK, and in today’s video we’re going to be looking at why companies specifically would favour serviced accommodation for their team members and employees over maybe using local hotels.
One of the very big benefits of serviced accommodation from the investor’s viewpoint is going to be the returns and all the other aspects that come into it.
But you’ve got to consider the end user.
So, who’s actually going to be staying in the property and who’s booking it?
It might be a company booking it on behalf of their staff member or team member, or maybe it’s somebody that they’re trying to entertain, that needs to stay in the local area.
Or maybe even it’s somebody that’s going to be short term. Say they have contracts in an area, or they’re working for a company for three or six months.
When it comes to the companies that you work with, Paul, you’ve got an idea in mind of what they’re going to look for.
But what are the benefits that you tend to see? Why do they contact you guys and say, “Look, have you got a serviced apartment?” Rather than a hotel, for example.
What Are The Benefits To A Serviced Apartment?
Paul: I think this is very important to raise, Rob, as well.
I would challenge any of our viewers to have a look – go online – for any city centre location, go on a booking site and book a four-star hotel, at least, which of course – this [serviced apartment] is at least comparable to a four-star.
Rob: Yeah, the quality, the location, the furnishings.
Paul: So try and book a four-star hotel for thirty days in any city centre and see what cost comes back.
As we’ve stated in a previous video, the longer they stay in a serviced apartment, the less the nightly rate. With a hotel, it’s higher because obviously, you’re accommodating that room.
Companies will see it as a chance. Let’s say we’re in a two bedroom apartment, they’ve got two people coming down on contracts, them two people can share that two bedroom apartment, otherwise they would have to get two hotel rooms.
They save on expenses, people will cook their own food rather than go out eating. They will save on laundry – All these little things that you might not consider.
I think it’s very important to understand why businesses are doing this now, because ultimately for them it’s more cost efficient.
But also they’re getting better from their staff. Because – I don’t think anyone could argue with this – people would rather stop in an apartment they can call their own for thirty days, rather than a hotel room, living out of a suitcase.
Rob: It’s a win/win across the whole chain.
But also, for the person that’s staying in the place, it’s a much better lifestyle than living out of a suitcase, as you said.
So you may be charging more for a serviced apartment than a straightforward rental, but the company that is renting the property is comparing it to a hotel, and what they will have to pay for a hotel.
So everybody gets a benefit, as it were.
But also, I think one of the unknown benefits to a serviced apartment is, you were saying before, productivity.
If you’re staying in a Travel Lodge for a period of thirty days or something …
Paul: It’s depressing.
Rob: You’ve got your bedroom space, maybe a little desk in the corner, but it’s going to be hard work just going out to that restaurant every single night and living that kind of lifestyle.
If you’re working in a city and you’ve got your own place – you’ve got your own ability to cook, do your washing, all that kind of stuff, in the apartment – it’s a home from home.
Paul: It’s the simple things – Have you got a mate in Manchester?
Rob: Yeah.
Paul: Ring up, come and stopover, you know?
It’s those little things, which is why the businesses like it, from a psychological point of view.
But also a cost point of view.
They are looking at it now because you’re looking – we’ll take Manchester for example. We always base the nightly rates relatively conservatively.
But against a four-star hotel… You will find that Hotels can be extortionate, for a weekend they’re extortionate, et cetera.
So companies would rather do it [rent a serviced apartment].
Plus, it’s the reliability, if they say, “Right okay, we’ve got this guy, he’s coming down next month” – But they’ve already booked this out for six months.
Then they’ve got the reliability knowing they’ve got somewhere and they’ve got somewhere good.
They’re not being placed in somewhere like Rawtenstall, where they’re having to travel in because that’s all they can get.
Or if they want to book for thirty days but they can get a ten day period there, they’ve got to move the staff somewhere else, they’ve got to fit them in somewhere else.
With serviced accommodation they have got somewhere stable.
Rob: It’s that consistency. Nothing against Travel Lodge, I mentioned Travel Lodge before.
Paul: No, no absolutely. Other hotel chains …
Rob: …Are available.
There’s a right place for that type of market, but when it comes to somebody – they know they’re going to be in the area for three months, six months, twelve months or whatever it might be.
For them to go and get their own rental and have to worry about furnishing it, have to worry about setting up all the bills with the suppliers and stuff, it’s a real pain.
The option usually is for them to say, “Okay, well I’ll go and stay in a hotel for six months”, and then it’s got its own nightmares and problems when you’re bouncing around hotel rooms or even hotels.
So something like the serviced model, it’s a perfect fit, isn’t it?
It just fills those gaps for that tenant.
Paul: And I think it offers companies something more.
Because I certainly know companies I used to work for where they would look to own a property and do it themselves.
But then it’s still another hassle for them to look after everything for you.
Now they’ve got that medium option, where they don’t have that, they can just say, “Right okay, for the same cost of what we would pay, whatever we can just put someone in there“, and they will get looked after.
They’ll have a beautiful apartment that’s of a high standard.
They’ll have their freedom to do what they want and they know that they can come and go as and when they please and they’re not going to have to reap out their suitcase, move to another room because that room is booked out.
It works very, very well for companies, and that’s why serviced accommodation is getting more and more popular.
Rob: There’s not always the flexibility for a company just to go and say, “Oh, I’ll go and buy a house.”
Paul: No, absolutely.
Rob: It’s this big asset, they’ve got to put money into it.
Paul: A lot of implications for them, yeah.
Rob: And it’s not flexible either.
Paul: No.
Rob: The whole market is changing, like office space, shared accommodation, all that kind of stuff is working really well.
I think it’s got a good market for it to work.
Paul: Yeah, absolutely.
Rob: There are lots of benefits why companies would do it, and that’s important because ultimately it’s potentially your own client, although it might be a staff member that stays in the property – or a director.
If the company are paying the bill they’re probably going to be the ones that are going to be choosing those locations and making the decision on where their staff members are going to be placed.
You have to bear that in mind.
But remember that you are bringing a lot of value to those types of companies with serviced accommodation, that’s why it can work really well.
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