Irrespective of your thoughts on Christianity or evolution, there is one thing that most cultural camps can agree on: Caves were amongst the earliest accommodation offerings. Prehistoric caves, in fact, have a lot in common with serviced apartments.
First off, depending on the weather or the imminent threat of a rabid pack of T-Rexes, the local population might decide to stay in the cave for a week or even a month. Wa-la, a hotel segment was born. Let’s face it, caves catered to extended stays with the earliest known convenience kitchens, spacious lounge areas and, of course, amenities like a firepit.
Moving on to more modern times, arguably the meager American motel was an early adopter of extended-stay, when highly standard roadside properties started creating a small number of more spacious living suites or units with kitchenettes to cater to a mobile workforce.
We all know how things evolved from there. On came niches such as apartment hotels, corporate housing and focused brands that were either amalgamated into chains or else became part of a hotel group’s hierarchy of brands. Today most of the largest hotel companies have one or more brands in what has grown into a more sophisticated segment. From a business travel slant, it was clearly a no-brainer why attaching brand loyalty and scale for corporate accounts lured hotel operators.
In the decades that followed, serviced apartment brands were transported to Europe, where the model was often challenged, with retrofits more common than new-builds in historic and preservation-challenged locations. Then into Asia, the Middle East and all points between, with varying degrees of success. In certain markets the segment could best be summed up as bigger rooms with lower rates, and oftentimes the American-centric model didn’t translate to local markets with cultural or business differences.
In the end, the best way to describe serviced apartments and extended-stay was as the ultimate mash-up product. With a legacy of toaster ovens, Barcaloungers and tattered veneer, it was high time for a change. I’m optimistic because the nature of the beast is so all-encompassing that it doesn’t have the boundaries of select-service or upper-midscale offerings. A Scarface, aka Tony Montana-style “The world is yours” catch-phrase is what I think of at the moment.
In a way, the sector can be applied to a plethora of products including suites, condo hotels, hotel residences, homestays (Airbnb) and more. They are some of the fastest-growing and most dynamic in the accommodation industry, so sticking to a one-page script of highly standardized blah-blah-blah is not there.
Cool new entries in the space
Hallelujah, the heavens have suddenly opened. Looking at the space, some of the coolest entries have been Zoku in Amsterdam, which created a hybrid hotel and apartment model, or Capri by Fraser, which was born in Singapore and is rapidly expanding. The spin doctors are also tapping into trends to merge the core serviced-apartment ethos with co-working, co-living, fitness-focused products and even digital nomads.
As in any great adventure, aside from the vast upside, there lurk demons in the dark corners. A great example is Asia, where the rise of mass emerging tourism markets like China and India is creating more momentum on products, and the larger extended-stay inventory cannot get similar returns to traditional hotels. Despite the biggest spaces, the value of real estate and ability to drive yields simply isn’t there.
What is emerging from the chaos monkeys at play is a new breed of hybrid offerings. There is likewise the undeniable global rise of hotel residences that fit well into the space. This is occurring at all tiers, from budget and economy all the way up to luxury, where brands like Four Seasons and Ritz-Carlton have pipelines populated by vast expanses of branded residences.
Hopefully by now my excitement has worn off a little and you can see the clear space the serviced apartment sector is already experiencing – and more so, how it can draft momentum in the age of tech and trends into some very exciting products. The T-Rex might just have to wait a while longer for dinner.