Elkstone Real Estate – Monthly Update April 2018
While much is written about the low supply of housing and the resulting crisis, less has been written about progress in fulfilling demand in other sectors. For example, there has been some growth in the number of student beds. We are currently adding beds to our Copley St property in Cork and expect to see new beds in both Cork and Dublin in the next six months. In the hotel sector, quite a number of developments are planned and coming to market in Dublin, but we are still some way off meeting demand. Serviced Apartments and Aparthotels have emerged as a growing market in the hospitality sector. In recent years however, providers have become increasingly innovative in attracting guests to their properties. Below we look at attraction methods employed and also illustrate the different characteristics of Apartments and Aparthotels.
Padraig Owens is a Real Estate professional and co-founder of Elkstone Partners
ELKSTONE REAL ESTATE UPDATE – HERE TO STAY!
This month Elkstone will introduce a planning opportunity to clients: an infill site in Christchurch, Dublin 8, where we will seek a grant of planning for a 72 bed aparthotel.
Less than two years ago, Savills identified Dublin as one of five cities with the most promising growth prospects for serviced accommodation, due primarily to a severe lack of supply, and demand from the growing corporate and tourism markets. Supply is catching up and Dublin 8 continues to be the focal point of this growth in the capital, particularly in the area around Christchurch. Further improvement in the greater area is expected from the redevelopment of Diageo’s St James Quarter and the development of the National Children’s Hospital.
Squeezed in between the traditional sectors of Private Rented Accommodation and Hotels, Serviced Apartments and Aparthotels have emerged as a growing market in the hospitality sector in recent years. The market has very distinct sub-markets and the diagram below from JLL is helpful in clarifying the differences between: Extended Stay; Serviced Apartments; and Aparthotels.
Table Source: JLL
Most large cities are now well served by basic aparthotels, which provide a studio room, with minimal services, usually in a central, but sub-prime city location. This product tends to be aimed at business travellers Monday to Friday and tourists on a budget at the weekend. Guests don’t expect, nor do they wish to pay for additional services.
Naturally where guests spend longer periods of time in a location, they are more likely to seek a more focused offering that appeals to their personal requirements.
At a basic level, this may be a gym, swimming pool or food offering. In recent years however, providers have become more and more innovative in finding ways to attract guests to their properties and keep them coming back.
Food: Some providers replaced unprofitable food and beverage offerings with simple service provided through concessions in-house or with local delivery channels (e.g. Deliveroo, JustEat, Flipdish). Adagio on the other hand, with 11,500 apartments in 11 countries have a “table d’hote” offering, including homely kitchen where they have guest evenings, with food and cookery demonstrations from resident chefs.
Staff: a number of chains in Japan are trialling AI Concierges, offering 24 hour availability, performing tasks such as booking restaurants and event tickets.
Fitness: Cotels target business customers looking to combat the negative effects of travel, providing yoga mats and blenders in their rooms and partnerships with nearby gyms.
Accessibility: Guests with wheelchairs often find access to be an issue when booking aparthotels. A study even revealed that disabled guests are more likely to be rejected by Airbnb hosts. The two founders of Accomable both suffered from disabilities. They now operate in 60 countries, emphasising features such wheelchair access, hoists and roll-in showers.
Our feature article this month focuses on aparthotels and serviced accommodation and is from the Emerging Accommodation Segments Hotel Alternatives Report. It is an edited version of a full report that takes a look at emerging accommodation markets from traditional hotels right through to private rental accommodation and everything in between, including aparthotels, serviced accommodation, emerging concepts, such as pod hotels and identifies the main players within selected European markets.