What is a Serviced Apartment?

By Mark Harris

The term 'Serviced Apartment' is usually positioned by operators and agents alike as an alternative to hotel accommodation for long stay leisure
or business travellers.

However, there are two types of accommodation to which the description serviced apartment applies. Although - this being the hospitality industry - there are sub
categories, clones and wannabes, all claiming to be serviced apartments. Here is The Apartment Service's guide to what is - and isn't - a serviced apartment.

How big, how many?...

Although 2007 research by HVS estimated that the average number of
apartments in an extended stay property in European cities ranges from 100
to 120 units, (or 'keys'), in London the average size of a property is greater at
around 150 keys.
Source: HVS Research
Extended Stay hotels and Aparthotels
Operators such as Staybridge, Residence Inn, Studio 6, Frasers, Citadines, Ascott and others are targeting the business (and leisure) markets with an extended stay
product. This type of serviced apartment grew rapidly in the 80's at a time when costs for both operators and guests were a major consideration and the concept delivered
the required results for both.

Typically their apartments will be in urban locations, range in standard from budget to deluxe and offer hotel services such as 24hr reception desks, many are run by major
players in the hotel market such as Marriott, InterContinental, Accor, Hyatt and Hilton.

In an extended stay hotel the guest can expect a no frills approach - compared to mainstream hotels. There are usually no restaurants, large lounge areas or room
services, although some operators serving the luxury end of the market such as Parkview Suites in Hong Kong (non urban) and high-end hotels which have apartments
annexed to their buildings (such as the Athenaeum in London or The Harbour Hotel & Residence in Dubai) make a full range of services available to their clients.

Extended stay hotels (such as Staybridge) are urban products, offering a high standard of accommodation in configurations of one, two, and/or three bedrooms. They tend
to have a higher level of hotel services than mainstream serviced apartments and Aparthotels which - usually a leisure or resort based product, also come in standards of
accommodation and range of services from budget to deluxe. Serviced

Serviced apartments in extended stay hotels vary in style and standard, however most are fully furnished with en suite bathrooms, a fitted kitchen/kitchenette &
lounge/dining area sometimes including a sofa bed or 'bed in a cupboard'/pull down bed.
Apartments serving the business market usually provide a working area, a desk & an office chair, internet access & direct telephone and/or fax lines. Public areas are
usually limited to a hall and the communal lounge/dining area and urban locations may provide a small meeting room or meeting rooms. The services provided include
once or twice-weekly (sometimes more in the higher end product) cleaning, laundry and reception. High end properties may provide laundry equipment in each apartment,
whereas properties of a lower standardmay provide access to shared laundry facilities.
The term corporate housing was coined in and is still used mostly in the US
Apartments serving the business market usually provide a working area, a desk & an office chair, internet access & direct telephone and/or fax lines. Public areas are
usually limited to a hall and the communal lounge/dining area and urban locations may provide a small meeting room or meeting rooms. The services provided include
once or twice-weekly (sometimes more in the higher end product) cleaning, laundry and reception. High end properties may provide laundry equipment in each apartment,
whereas properties of a lower standardmay provide access to shared laundry facilities.

Extended stay properties rarely offer a restaurant or bar, but will usually have a roster of partner establishments in the area.

Corporate housing
These are residential apartments which are up-graded for shorter term rental and packaged together with services such as cleaning, utility charges, local taxes telephone
and TV for stays of 30 days or more. This type of product also works as company apartments for either regular visitors or those on extended projects. The term corporate
housing was coined in, and is still used mostly in the US. There are two types of corporate housing; apartments let and maintained by the operator on an on-going basis,
and those rented specifically for a particular housing requirement and length of time, after which they are handed back to the owner. The latter category is also referred to
as virtual housing.

With no official worldwide classification system for extended stay accommodation, standards and terminology inevitably vary between properties, creating confusion about
the generic serviced apartment product.

Some extended stay properties have adopted the international hotel star-rating system to indicate the level and quality of the amenities provided. However, if an apartment
operator wished to be approved by the tourist board, they were assessed under the leisure market focused self catering accommodation quality standard, which was
largely inappropriate to most serviced apartments.

This also meant that an apartment operator could choose to label a product five-star based on similar standards set for hotels, but without an official grading.

In 2007, Visit Britain included a grading system for serviced apartments into their Quality in Tourism initiative, to provide an independent, objective and reliable grading
against which to judge UK serviced apartment providers. A new category was created specifically for apartments, developed in conjunction with the Association of Serviced
Apartment Providers (ASAP) to provide travellers with an independent, reliable and objective rating with which to judge each serviced apartment or corporate housing
provider.

This grading system for serviced apartments looks at similar criteria as the hotel industry, which is graded by the star system.

Apartments are graded according to general fixtures and fittings, arrival process, handling of reservations, cleanliness and general services.

Internationally the picture is fragmented, with different bodies operating their own schemes, from the Residence de Tourisme in France to the Tourism Grading Council of
South Africa; India's Department of Tourism and the Australian Automobile Association, all have produced their own guidelines with differing levels of adoption.

Unsurprisingly, the result is that even when a grading system is in place, those booking apartments pay scant attention. In The Apartment Service's survey, only 15% of
booking agents of corporate clients interviewed said they were guided in their choice of apartments by grading information, preferring instead to inspect as many
apartments being booked on their clients' behalf as possible.

This is probably due to bookers and occupants wanting to checkout a potential temporary home, find out whether a tenancy or lease has to be signed, as well as learning
more about the local area and amenities. Usually, the tenant arrives in the country before being taken on an accompanied search to find the most appropriate property.

For leisure bookings or those booking long-distance even the best property description will not provide enough comfort on its own. This is where grading systems come
into their own.

Types of serviced apartment - by region

All
Europ S/Americ M/Ea Afric Australas A
respons USA India
e a st a ia sia
es
Studio 60.8% 60.9% 65.6 80% 85.7% 62.5 50% 75% 90
(room
with
% % %
kitchenett
e)
1
bedroom
90.6 87.5 90
(with 78.5% 77.0% 100% 100% 50% 91.7%
% % %
separate
lounge)
2
bedroom
84.4 87.5 81.3 90
(with 84.8% 85.1% 100% 100% 83.3%
% % % %
separate
lounge)
71.9 56.3 60
Other 48.1% 37.9% 60% 57.1% 50% 66.7%
% % %
Source: The Apartment Service Global Survey 2008

Demand
This grading system for serviced apartments looks at similar criteria as the hotel industry
An analysis of types of apartments being booked by corporates and agents reveals some striking contrasts. Whereas 68% of corporates book extended stay products,
compared to 45% booking corporate housing, amongst agents the demand for corporate housing is stronger; 80% of agents who responded to the survey are booking this
type of apartment for corporate clients compared to 57%booking extended stay. This includes travel, relocation or hotel booker agents.

The strongest regions for both extended stay and corporate housing are unsurprisingly North, Central and South America, however in Australasia extended stay scores
well over corporate housing.

Corporate purchasing patterns vary significantly, fromthose utilising apartments for corporate relocation, to those using aparthotels for customers visiting for periods of
more than 30 days and condominium-style apartments for staff on assignment for 6 months or more.

The other types of product categorised as apartments by corporates and agents include single family homes, self-contained apartments within bed & breakfasts, family
accommodation, country cottages and even some holiday lets in areas where there is little corporate housing available.

Agents reported the presence of a concierge or reception desk as ranking highly in their clients' priorities when booking an apartment.

The responses of operators to The Apartment Service's survey suggests that most operators are focussing on the upper end of the market, with the four star category
being claimed by most in all regions.

Five
Two Star Three Star Four Star
Star
Europe 6.4% 43% 59% 26.9%
North America 12.9% 45.2% 71% 25.8%
South America 0% 75% 75% 0%
Middle East 0% 0% 80% 40%
Africa 0% 50% 33.3% 16.7%
Indian sub continent 0% 70% 50% 0%
Australia / New
0% 16.7% 83.3% 16.7%
Zealand
Asia 0% 20% 90% 50%
Source: The Apartment Service Global Survey 2008

Indicative unit sizes for extended stay hotels (m2)

Mid - Market Upscale De Luxe
Studio 30 35 35
One-
40 50 55
bedroom
Two-bedroom 60 70 85
Source: HVS Research