As the travel and hospitality sectors inch toward what is now the new normal in a post-pandemic world, serviced apartments have quietly emerged as one of the few bright spots in an industry that has been thoroughly battered by COVID-19. During the pandemic, they have provided a safe haven for travellers marooned in foreign cities, as well as individuals in isolation. But even before that, the serviced apartment segment was poised for dramatic growth.
Pivoting Towards Sustainable Growth
Since the first quarter of 2020, Oakwood has been transitioning its operating model from one that was focused on its long-standing position as a corporate housing solutions provider to that of a trusted hospitality management company. The shift in focus was led by the foremost move out of the global solutions business in March 2020, to allow for a pivot towards strengthening its transformation into a management company that is fit for sustainable growth and business success.
These efforts not only serve to support Oakwood’s plans to strengthen and streamline its brands and operating models, as well as eliminate the risk of vacancy during demand changes when holding long-term inventory, but also enable the group to maintain agility in order to respond dynamically to changing market needs and reinforce dedicated levels of service excellence for all guests.
Serviced apartments have demonstrated notable resilience during this crisis, especially when compared to the lodging and accommodations industry at large. In a widely released study that monitored international hotels and serviced apartments in Bangkok, Thailand, between January – April 2020, JLL, a real estate consultancy, found that over 80% of the city’s serviced apartments were still open at the end of April, though occupancy rates had declined by 30 percent year-over-year. While it’s too early to say ‘the worst is behind us,’ there is strong evidence that serviced apartments will be the key model that will lead the accommodations sector ahead.
Stable Inventory in Key Markets
With mobility programmes gradually returning to pre-pandemic levels, we have seen a corresponding uptick in the demand for home rentals with flexible leases. While corporate housing suppliers have made strong efforts to hold less long-term inventory in recent times, Oakwood’s early shift towards the model of managed serviced apartments has allowed the group to offer a stable suite of branded accommodation offerings that span both the short and extended stay sectors. From short transient stays for a night to extended stays of a month or even up to a year, Oakwood is equipped with over 13,000 accommodation units globally, both furnished and unfurnished, spanning brands that cater to any purpose of stay, for any life stage.
Transforming from Alternative to Mainstream
Amidst the current pandemic situation, we have seen a strong trend of serviced apartments developing as a preferred form of accommodation. In recent years, travellers have recognised the flexibility of serviced apartments in meeting their individual lifestyle preferences without compromising on hospitality excellence. Serviced apartments are designed for residential lifestyle providing the luxury of bigger living spaces, well-appointed kitchens and amenities, as well as comfortable and generous workspaces that are hardly seen in typical hotels. With ‘bleisure’ and the trend of remote work here to stay, the offerings of serviced apartments play into the requirements of a work environment with the comfort and ease of home.
During this period in particular, the safest accommodations are the ones with the fewest touch points – and our serviced apartment offerings provide exactly what is required in a personal, self-contained sanctuary. Companies with global business travel and relocation needs know that employees simply won’t accept staying in properties that don’t maintain stringent cleaning and safety protocols. Oakwood’s serviced apartments offer a ‘best of all worlds’ approach, allowing guests to work from home with ease but also pampering them with hotel-style amenities, clean facilities and services, without the need to be tied down by a long-term lease.
Oakwood Clean360 is an accredited hygiene programme that ensures the safety of all guests and associates at Oakwood. Built on three key pillars – continuous enhancement of operational standards, provision of a safe sanctuary to call home, protecting the welfare of associates, this robust programme that has been implemented at all Oakwood properties globally, underscores the group’s unwaivering commitment to protecting the health and safety of all stakeholders.
In the United States, the extended stay hotel segment is the fastest growing segment. With more than 54,000 hotel properties in the U.S., approximately 8.5 percent is extended stay and increasing. The term ‘serviced apartment’ is not commonly used stateside, which leaves the door open for a global brand to dominate the market by educating consumers and create a connection.
Even in developed markets, serviced apartments are appealing to guests seeking safe, spacious alternatives to hotels – but prefer the security of an established global brand. These locations include ski resort destinations like Chongli, China, which is within the Beijing 2022 Winter Olympics Zone; popular tropical destinations like Phuket and Pattaya in Thailand; and Tokyo, home of the recent Summer Olympics. The flexibility to accommodate travellers for all lengths of stay is always appealing, but especially now. With a growing number of companies stretching their work-from-home mandates well into 2021 and beyond, there’s never been a better time for workers to explore the benefits of living and working in a location that was previously inaccessible.
The ease of booking and securing long-term accommodation with instant booking confirmations online, complemented by the assurance of a safe home with a trusted hospitality brand, has definitely set the benchmark for the sector, transforming serviced apartments from the alternative to the mainstream.
Corporate travel programmes have relied on furnished and serviced apartments for decades and that will continue in the future. Serviced apartments and extended stay properties will similarly continue to play a critical role in keeping travellers safe as the global economic engine hums back to life.