A business of Marsh McLennanGeneral insurance market benchmarking:Aviation insurance market overviewQ4 2023February 20241.Executive summary 2.Airline insurance London market overview-Q4 airline premium development-Airline market capacity-Airline losses3.Aerospace insurance London market overview-Q4 aerospace premium development-Aerospace market capacity4.General aviation insurance London market overview-Q4 general aviation premium development-General aviation market capacity5.Hull War and AVN52 commentary6.ReinsuranceAppendix -Market trend analysis-Nuclear reinstatement language-Auto termination clauseContentsExecutive summaryThroughout 2023,overall loss levels in the aviation sector remained on a downward trajectory compared to previous years.With many organizations in the industry now back to operating at,or above,pre-pandemic levels,we will continue to monitor loss activity closely.Following 2023s hardening reinsurance market,many direct aviation insurers sought to maintain and grow their market share in the fourth quarter.For risks with clean loss records,some insurers appear prepared to absorb exposure increases,focusing on mitigating against premium losses rather than adhering to technical rating models.Geopolitical volatility is a concern for many war risk insurers.Nevertheless,following a protracted period of premium increases,many are hopeful that Hull War and Excess War Liability placements could move towards stabilization in 2024.The exact quantum of losses from the Russia-Ukraine war is still to be determined,with future agreements and/or settlements expected in 2024.The aviation insurance community will continue to pay close attention to any developments.Ongoing supply chain and talent shortage challenges continue to increase pressure across the industry,resulting in longer lead times.This is being experienced acutely within the aerospace sector,where the ability to meet demand for new orders remains impacted.When it comes to environmental stewardship,companies face rising pressure to improve their transparency.Aviation organizations are increasingly adopting a range of initiatives to address potential ESG issues.As we enter 2024,our team of specialists will continue supporting clients to build their resilience and capitalize on new opportunities.Garrett HanrahanGlobal Head,Aviation&SpaceExecutive summaryAirline insurance London market overviewAirline insurance London market overviewFactors impacting the London airline insurance market heading into Q1 2024Considerations for airline insurers in Q4 2023Globally,rising exposures generally remain strong despite increasing airfare costs and high passenger demand.The travel market is still behind 2019 levels but continues to grow.An increase in AFV,flights,and passenger numbers also impacts the number of attritional losses advised to the market.Increasing attritional losses are equally influenced by OEM repair and parts pricing,which has raised the quantum of associated claims paid by some insurers.Meanwhile,there is a continued focus on the development of,and deterioration in,historical losses and the impact on underwriting performance,given that loss inflation and rising liability awards continue to influence the total cost of risk.The growing trend of significant court awards in the US has led to concerns should a major incident occur involving passengers.Losses emanating from the Russia-Ukraine war remain unresolved despite reported developments around out-of-court settlements.The sentiment remains that any significant claim will likely take longer to be settled by the market than previously thought.Premium and potential loss developmentMost direct insurers have completed their treaty reinsurance program renewals.Despite some softening in the market,premiums continue to rise.Throughout 2023,the retrocession(retro)insurance market that reinsures the reinsurance market has significantly reduced available capacity,thereby restricting the appetite and flexibility of several aviation reinsurers.In this quarter,one insurer withdrew from the market.Overall,the market continues to show a desire to maintain premium income despite competition.It is difficult to predict whether and how this could change in 2024.Inflationary pressures and significant US legal liability awards can influence some insurers attritional loss ratios.Competition to hire and retain experienced staff,including pilots,ground staff,and aircrew,continues to impact the return to service post-pandemic and is adding to:Global supply chain pressures.Human capital risk.Global supply chain pressures are also impacting the availability of spare parts in the market,which can delay repairs and return to service.Influencing factors Overall,the airline insurance market shows a continued desire to compete for market share despite some uncertainty surrounding losses and reinsurance costs.Excess capacity is observed among existing All Risks insurers,and in most cases,they are adjusting pricing to seek greater market share.It appears that some leaders are trying to maintain and even increase technical ratings in principle.However,the market remains somewhat divided,with supporting insurers prepared to offer more competitive terms for increased capacity.As a result,there is continued competition among insurers,resulting in improved results for the majority of placements.In general,underwriters remain sensitive to further losses,but recent developments in the Hull War market indicate that the annual premium is approaching a level that is encouraging new capacity to rejoin the marketplace.With new capacity developing,rating increases appear to be reducing.Similarly,the Excess AVN52 market appears to be stabilizing.While still somewhat limited,there is likely sufficient capacity to be confident that larger limits can be achieved.Capacity and competitionQ4 airline premium development78Airlines Premium change analysisAdditional market considerationsIncreasing reinsurance cost.Losses emanating from the Russia-Ukraine war remain somewhat unresolved.Concerns over attritional losses persist as fleets return to pre-COVID-19 levels,but with somewhat less experienced staff.Competition remains strong among aviation insurers to increase their market share.Pressure is on lead insurers to stay in touch with rating terms and conditions of following markets.Key rating factors Insured safety record and loss history.Geographical risk.Aircraft,passenger,and departure exposure movement.Limits of liability purchased.Source:Marsh Specialty and Global Placement2.34%7.43%7.01.59%-5%0%5 % Q122 Q222 Q322 Q423 Q123 Q223 Q323 Q4Weighted average changeMean average changeWeighted average rolling four quartersMean average rolling four quartersAirline market capacityAirline insurance market overview Potential maximum London line size based on a clean loss experience non-US major passenger airline with US$2 billion combined single limitNote:QBE US has US$100m capacity to write airlines=100 seats.Subject to maximum Hull limits. Requires home state exemption or fronting by a licensed insurance company or a captive.N.B.Line sizes are estimates only and should only be taken as a guide.Markets reserve the right to decline a risk or to deploy their capacity in line with their individual risk appetites.Q4 2023available capacity267.26&7.26%Q4 2023 capacity reduced by 0.5%Q3 2023available capacity267.76&7.76%London124.10%Rest of the world103.00%Lloyds 40.16pacity changes Lloyds Chaucer exited:3%reduction.Rest of the world Abu Dhabi National Takaful new entrant:2%increase.PVI(Vietnam)new entrant:0.5%increase.Apollo2.50u Dhabi National Takaful2.00%Atrium2.50NIC2.50azley6.66rica Re2.00%Lancashire2.50%Axis5.00%Sompo6.00%GIC5.00raday3.50%Elseco7.00%IQUW3.50%Helvetia5.00%Tokio Marine Kiln10.00%HDI5.00%Travelers3.00%IRB 2.00%Total40.16%LRA15.00%Mapfre2.00%Misr*1.00%AIG15.00%Munich Re10.00%Allianz10.00%National Insurance Co2.50%AXA XL15.00%New India 3.00%Convex12.50%Oriental2.00%Chubb12.50%Partner Re3.50%CV Starr12.50%Ping An1.50%Everest Re7.50%PVI(Vietnam)0.50%Global Aerospace12.50%Rokstone5.00%Hive5.00%Sirius International2.50%Liberty Mutual5.00%Sukoon3.00%Nexus9.00%Swiss Re10.00%Fidelis7.60%Tokio1.00%Total124.10%Tokio HCC5.00%Total103.00%Available capacity267.26%Lloyds LondonRest of the worldSource:Information provided by insurers as gathered,aggregated,and understood by Marsh.Airline insurance market overview Potential maximum London line size based on a clean loss experience US major passenger airline with US$2 billion combined single limitQ4 2023available capacity211!1%Q4 2023 capacity remained the same.Q3 2023available capacity211!1%Note:QBE US has US$100m capacity to write airlines US$10m(US$m)Sum of lossesUS$10m(US$m)AverageDate of lossOperatorAircraft typeLocationLoss typeAccident category02-01-2024Japan AirlinesA350-900JapanTotal LossAll Risk04-10-2023FedEx757-200FUnited StatesTotal LossAll Risk21-09-2023DHL International767-300ERFLebanonMajor Partial LossAll Risk12-09-2023Ural AirlinesA320-200RussiaMajor Partial LossAll Risk09-07-2023Air Canada777-300ERCanadaMajor Partial LossAll Risk04-05-2023LATAM Airlines Chile787-8ColombiaMajor Partial LossAll Risk18-04-2023BADR Airlines737-800SudanTotal LossWar Risk17-04-2023BADR Airlines737-800SudanTotal LossWar Risk15-04-2023Sun Air Aviation737-800SudanTotal LossWar Risk15-04-2023SaudiaA330-300ESudanTotal LossWar RiskAerospace insurance London market overviewWhile challenges facing insurers remain,the market has somewhat stabilized following a protracted period of premium increases.Despite rising operational costs and some uncertainty surrounding claim development,many insurers remain focused on retaining(and increasing)market share and written premiums.New entrants and an increased number of aspirant“lead”insurers seem to be resulting in increased competition to participate in well-performing accounts,largely off-setting market and/or capacity withdrawals.Overall,accounts that are not particularly loss-active and/or not operating within a challenged industry segment have seen flat to nominal reductions on renewals with surplus capacity in recent months.We will continue to monitor this,mindful of the gap accounting environment insurers operate in,as well as any year-on-year claims development and potential pressures this can create.Generally,a rising cost base primarily driven by the repair costs to aircraft and/or parts,as well as the increasing cost of reinsurance with some restrictions imposed,is leading to potential gaps in coverage across the aerospace insurance industry.Insurers appear to be focusing on ways to manage costs while still providing comprehensive coverage to clients.Some uncertainty surrounding claims development,social inflation,and nuclear verdicts adds complexity to insurers portfolio management.Much like the aerospace industry,the insurance industry could face a talent shortage and knowledge gap,as some experienced professionals retire or switch industries.Increased capacity and appetite to lead business in the market appear to be adding pressure and may require insurers to differentiate themselves and/or offer innovative solutions to thrive in a challenging environment.The aerospace industry continues to face several challenges.Persisting supply chain issues and a talent shortage is increasing pressure and leading to longer lead times.This could be exacerbated by an increased demand for aerospace products and services,alongside the race to develop green technologies and supporting infrastructure.Many companies are investing in digitalization and adopting advanced technologies to mitigate some of these pressures,improve their supply chain resiliency,reduce logistical risk,attract new talent,and develop new products.Generally,in the airport sector,operators are transitioning from a post-pandemic recovery mindset to growth and preparation for the future.With national elections approaching in more than 60 countries,representing at least 40%of the global population and GDP,in addition to ongoing geopolitical instability,the global landscape remains largely transient.Aerospace insurance London market overview15Considerations for aerospace insurers in Q4 2023Industry factorsChallenges facing insurersCurrent status of marketDiffering attitudes to ancillary coveragesFactors impacting the London aerospace insurance market heading into Q1 2024In general,the ancillary coverages of Contingent Hull and Liability,Hull War,and AVN52 have been impacted by the Russia-Ukraine war and subsequent reinsurance renewals.During 2023,we saw some stabilization in capacity and the rating environment.Many insureds of these classes have been subject to premium increases in previous renewal cycles.Operating from a higher premium base,generally,we are seeing a different approach from insurers to each ancillary line and clients driven largely by geographical areas of operation.Contingent Hull and Liability:Varies somewhat per region,but capacity is stable and low single-digit increases are achievable.Some coverage restrictions remain in place.Hull War:Excluding areas of high geopolitical tension,capacity is generally stable,with insurers seeking pricing increases between 20%-50%.Excess War/AVN52:The slowest ancillary class to stabilize in terms of both capacity and premium.Premium increases are being sought by many insurers(generally in the range of 30%-70%).Market capacity can be exhausted for insureds seeking limits in excess of US$1 billion.Q4 aerospace premium development17Air navigation service providers(ANSP)and airport operatorsKey rating factorsLimit of liability.Quantum of passenger numbers and aircraft movements.Scope of responsibility of the airport vs.third parties.Whether airport handles direct flights to the US.Types of aircraft regularly operating.Loss history,especially attritional losses.Additional market considerationsRegarded as a core part of the aerospace insurers book.Although the trend to write airport liability risks on a 100sis has somewhat reduced,this class suits capacity aggregating facilities.Social inflation is impacting“slip and trip”claims,which are a feature of many airport placements.Significant cross-class exposures may suit a consolidated approach to insurer selection.Airport operatorsKey rating factorsLimit of liability.Frequency of takeoffs and landings.Air traffic density.Flight paths being handled.Staff training and welfare.Loss history,including near miss data.Additional market considerationsGood historical loss history with some major historical exceptions.Exposure is viewed as catastrophic rather than attritional.Social inflation and increasing liability settlements have somewhat tempered market appetite.Combination of multi-and single-year deals mean rating can be volatile.Can become“capacity risks”when very large limits of liability required.ANSPsSource:Marsh Specialty and Global PlacementPremium change analysis-2.73%3.18%3.13.04%-35%-25%-15%-5%5% Q122 Q222 Q322 Q423 Q123 Q223 Q323 Q4Weighted average changeMean average changeWeighted average rolling four quartersMean average rolling four quarters18Component part manufacturersPremium change analysisSource:Marsh Specialty and Global PlacementKey rating factorsCriticality of component parts produced.Limit of liability.Annual turnover.Contractual indemnities in place.Proportion of commercial vs.military sales,fixed vs.rotor wing sales,and direct US sales.Amount of legacy and past production.Additional market considerationsAn attractive sub-class among aviation insurers.Historically good loss records and profitability.Potential impact of sanctions.Insurers will require a full breakdown of sales per territory.Many clients carry a significant self-insured retention(SIR).Well-suited to capacity aggregating facilities and single insurer solutions.3.18%0.58%8.17%7.02%-30%-25%-20%-15%-10%-5%0%5 % Q122 Q222 Q322 Q423 Q123 Q223 Q323 Q4Weighted average changeMean average changeWeighted average rolling four quartersMean average rolling four quarters19Maintenance,repair,and overhaul(MRO)Premium change analysisSource:Marsh Specialty and Global PlacementKey rating factorsLimit of liability.Highest value of any one aircraft in care,custody,or control(CCC)of the insured.Total value of aircraft in CCC of the insured.Turnover.Level of maintenance.Loss history.Additional market considerationsAppetite can vary significantly in different geographical territories.Risk management is key including:Contractual protections.Clear internal processes and procedures.Staff retention.Significant historical losses.Unlikely to fit a capacity aggregating facility or single insurer solution.7.90%4.07%8.67%2.55%-5%0%5 % Q122 Q222 Q322 Q423 Q123 Q223 Q323 Q4Weighted average changeMean average changeWeighted average rolling four quartersMean average rolling four quarters20Aviation refuellersPremium change analysisSource:Marsh Specialty and Global PlacementKey rating factorsLimit of liability.Fuel throughput.Nature of operation,supply only,storage,or into-plane.Whether organization is signatory to a Tarbox agreement.Geographical split of operations.Loss history.Additional market considerationsGood historical loss history.Significant competition among insurers.Market view that premium base vs.capacity deployed is inadequate.Disproportionately large increases observed for smaller operators.Well suited to 100%solutions and/or capacity aggregating facilities.2.43%8.91%3.18%9.27%-10%-5%0%5 % Q122 Q222 Q322 Q423 Q123 Q223 Q323 Q4Weighted average changeMean average changeWeighted average rolling four quartersMean average rolling four quarters21Major manufacturers and OEMsPremium change analysisSource:Marsh Specialty and Global PlacementAdditional market considerationsHigh premium volumes.Long-tail exposure.Significant historical losses.Complex placements with a variety of ancillary coverages included.Likely to be“Schedule C”requiring insurers to obtain reinsurers agreement to write a share.Key rating factors Limit of liability purchased and any SIR.Annual turnover.Criticality of the product and/or type of aircraft manufactured.Split between military and civil manufacturing.Past production/number of units in circulation.Quantum of hull exposure during production.Aggregation of hull exposure during COVID-19.Loss history.2.87%1.41.91%4.18%-10%-5%0%5 % Q122 Q222 Q322 Q423 Q123 Q223 Q323 Q4Weighted average changeMean average changeWeighted average rolling four quartersMean average rolling four quarters22Aviation ground handlersPremium change analysisSource:Marsh Specialty and Global PlacementKey rating factorsLoss history.Level of SIR.Presence of IATA agreements.Number of flights handled per year.Type of aircraft being serviced.Geographical range of airport locations.Staff training and retention.Limit of liability.Additional market considerationsGround handlers often experience a high level of relatively low value“attritional losses”.Such losses can erode the premium base year-on-year and create a large workload in terms of claims administration.To mitigate these factors many ground handlers opt for a large,aggregated SIR.SIR removes the need to collect attritional losses from the insurance market saving both administrative costs and premium paid to the insurance market.Article 8 of the IATA Standard Ground Handling Agreement limits the liability of the handling agent to the airline in respect of damage to aircraft.For many insurers,this is a prerequisite for offering coverage.-0.25%1.42%-2.47%-0.14%-25%-20%-15%-10%-5%0%5 Q122 Q222 Q322 Q423 Q123 Q223 Q323 Q4Weighted average changeMean average changeWeighted average rolling four quartersMean average rolling four quarters23Other service providersPremium change analysisSource:Marsh Specialty and Global PlacementKey rating factorsNature and scale of activities undertaken.Proximity to aircraft.Staff training.Risk management protocols in place.Contractual indemnities.Loss history.Limit of liability.Additional market considerationsBroad range of ancillary aviation activities.Services and supply chains are often interconnected and overlapping.Direct comparison between services is difficult,so we have included these risks under the banner“other service providers”.2.25%6.48.04.05%-15%-10%-5%0%5 % Q122 Q222 Q322 Q423 Q123 Q223 Q323 Q4Weighted average changeMean average changeWeighted average rolling four quartersMean average rolling four quarters(All other ancillary services to the aviation industry)Aerospace market capacity25Aerospace London market capacityAirportMROATCGround handlerLessorsComponent manufacturerRefuellerMajor manufacturerOther service providersMaximum capacityRealistic competitivecapacityAppetite and realistic capacity varies.Although capacity is available in the aerospace insurance market,appetite varies significantly across each sub-class.Where large limits are required and/or there is limited appetite among insurers,a squeeze on capacity can occur,adding complexity and potentially cost to the renewal process.Capacity overview is in respect of primary liability placements.We are seeing a significant capacity contraction in:-Hull War-AVN52-Contingent Hull and Liability.Source:Marsh Specialty and Global PlacementGeneral aviationinsurance London market overviewGeneral aviation insurance London market overviewFactors impacting the London general aviation insurance market heading into Q1 2024The Russia-Ukraine war presents concerns for many insurers,with some significant losses considered to be approaching realization.Additionally,the wider aviation industry has experienced losses,somewhat exacerbating the situation and prompting some insurers to seek premium growth.Overall,the Hull War and AVN52 markets have experienced persistent increases of at least 30%,with certain accounts witnessing 100%.Increases are often accompanied by more restrictive coverage as insurers aim to mitigate their aggregated exposure.This is largely influencing market conditions in the All Risks sector,creating a dissonance between the Hull War and All Risks marketplace.Many insurers face challenges in terms of capacity and competition,subsequently impacting overall market conditions.Premium and potential loss developmentOngoing geopolitical instability in several regions is leading to uncertainty in the Hull War marketplace and concerns around coverage,driving up some insurance rates and impacting renewals.More widely,geopolitical tensions are casting a shadow over global markets with uncertainty surrounding the economic outlook and supply chain challenges.Against this backdrop,the retrocession insurance market that reinsures the reinsurance market is witnessing a steady reduction in available capacity for some London market reinsurers.This appears to be more evident in the AVN52 market but is also impacting other lines of business.Despite increased costs and reduced capacity,many insurers continue to demonstrate a desire to increase market share,leading to greater competition.Influencing factors Capacity and competition continue to vary within the All Risks and Hull War markets.This creates somewhat of a split in rating conditions within each marketplace.Despite the withdrawal of one insurer from the aviation market,the arrival of some new entrants in the All Risks market has mainly subdued rating increases.This trend may continue in 2024.On the other hand,throughout 2023,the Hull War and AVN52 markets continued to experience rate increases,and more recent geopolitical events are prompting some underwriters to reassess their concerns and consider raising premiums to reflect increased exposure.Capacity and competitionConsiderations for general aviation insurers in Q4 2023Q4 general aviation premium development29General aviationPremium change analysisGraph commentaryTo date in 2023 the trend of premium increases has dropped off.Q1 2023 saw an initial period of higher premiums with some insurers looking for rate increases.Hull War and AVN52 markets have maintained at least 50%increases throughout the year.Generally,there has been a rise in capacity as insurers looked to grow their lines throughout 2023,limiting increases in the All Risks market,with reductions available in some instances.Accounts that witnessed increases were typically loss active or presented significant Hull War exposure.Key rating factors Limit of liability purchased and any self-insured retention.Aircraft type.Overall fleet value and size.Geographic area of operation and aggregation of hull exposure.Business operation.Loss history.Companys operating model and safety record.Source:Marsh Specialty and Global PlacementNote:General aviation risks include the following coverages:Hull War,personal accident,Excess AVN52,Hull Deductible.6.16%8.38%2.24%4.64%-10%-5%0%5 % Q122 Q222 Q322 Q423 Q123 Q223 Q323 Q4Weighted average changeMean average changeWeighted average rolling four quartersMean average rolling four quartersGeneral aviation market capacity31Market capacityKey capacity deployment driversHull and liability limits.Aircraft type.Operation type.Area of operation.Pilot experience and age.Operators loss history.Use of aircraft.Key factors to considerRisks are multi-faceted and there are a number of components insurers will consider before deploying capacity.New entrants into the market have provided an injection of available capacity.This graph reflects capacity surrounding Hull and Liability coverages.With regards to Hull War,a number of markets have looked to minimize exposure by reducing capacity.General aviation market capacitySource:Marsh Specialty and Global Placement250 0!000%0P00 0%000%US$0US$100US$200US$300US$400US$500US$600Rotor wing blue chipFixed wing blue chipSmall to mediummixed fleetCargo operatorSmall business jet fleetGeneral aviation capacity(US$m)Liability LimitCapacityHull War and AVN52 commentaryThe changing Hull War market*332022-2024 summary1.Generally,the market has experienced withdrawals of capacity in recent quarters and increased selectivity of underwriting:2.However new entrants engaged in 2023:3.This is encouraging some differentiation based on the following considerations:OperationsFleet sizeAggregatesDomicileAIGCV StarrEverest ApolloADNICChaucerPICCTalbotAxa XLCV StarrAIGFactors impacting the Hull War market:Reinsurance costsMarket losses:-Russia-Ukraine war-Sudan conflictLimited capacityScrutiny on aggregate managementArk AscotAllianz via Hive*Information provided by insurers as gathered,aggregated,and understood by Marsh.The changing Excess AVN52 market*34CoveragePressure on primary excess points to US$350m.Insurer movement towards“excess”basis rather than“difference between”.Removal of special provision.Capacity restrictionsContinued pressure on placements from limited capacity dominated by number of insurers,especially for larger limits.New entrant Allianz via Hive in respect of aerospace risks only.Premium increasesInsurers seeking rate and premium increases.Automatic reinstatementDevelopments around automatic reinstatement provisions.Lack of consistency in relation to coverage.Pricing implications possible.Excess AVN52market*Information provided by insurers as gathered,aggregated,and understood by Marsh.35The changing Hull War and AVN52 market*$0$50$100$150$200Westfield SpecialtyTokio Marine KilnThe HartfordSompoPing AnMunich ReLibertyLancashireIQUWInigoHive-AllianzHiveHDIFidelisEverestElsecoConvexChaucerAXA XLAtriumAscotArkArchApolloUS$millionsUnderwriter Hull War risks capacity 2023 vs 2022 2023 Dollar line 2022 Dollar line$0$100$200$300$400Westfield SpecialtyThe HartfordStarrSompoMunich ReMosaicLibertyLancashireKilnIQUWInigoHive-AllianzHiveHiscoxHDIHamiltonFidelisConvexAXISAXA XLAtriumUS$millionsUnderwriter AVN52 risks capacity 2023 vs 2022 2023 Dollar line 2022 Dollar line2023 US$771m2022 US$710.75m8.48%increase in capacity 2023 US$1,548m2022 US$1,589m-2.51crease in capacity*Information provided by insurers as gathered,aggregated,and understood by Marsh.Reinsurance Aviation reinsurance market trendsMinimum excess liability(XL)retentions now generally US$250m plus original insurance loss(OIL)equivalent.Vertical limit bought within XL generally unchanged,albeit certain US carriers have increased combined single limits(CSLs)for 2023.Continued removal of drop downs for non-ABC or general aviation(GA)and with specific focus on US exposures.Some additional GA specifics placed to cater for increased retention.Reinsurance market stabilized while continuing to press for rate increases:AV52 limitation to primary US$350 million for all aviation sub classes.Coverage change effective from July 1,2023 on original policy attachment:Major risks Hull War exclusion remains but greater flexibility around“embedded/in conjunction with”GA Hull War,where detailed information provided.Sideways caps included.Contingency attracting less attention as the original market tightening limits.Grounding greater clarification of grounding coverage(viz.definition of primary US$250 million)made effective 1/1/24.Russia-Ukraine-Belarus(RUB)exclusion at 1/1/24 general alignment now around“directly arising from”.Additional deterioration of a major loss advised November 2023.Widespread concern this may worsen in 2024.Russian leasing litigation remains in the background.To date,limited reserving,but greater clarity expected from June 2024 as cases come to court.Source:Guy CarpenterAviation reinsurance market trends38Reinsurance market looking for continued rate increases to reflect continued payback and economic/social inflation.Reinsurers generally achieved in region of 7.5%-12.5%“risk adjusted”rate increase.Minimum Rate on Line(RoL)achievable generally 4%(“MR clash”).Rate increases generally consigned to middle/top layers,with primary layers deemed adequately priced.Size of increase variable by exposure change,loss deterioration,portfolio mix,capacity required,and pricing adequacy.No disruption to XL reinsurer capacity and greater risk appetite shown.While retro rates increased in line with general XL increases,and new/existing capacity stepped up following Tokio F&M class exit.No withdrawals from the general XL business.General XL capacity has grown and increasing preparedness for some markets to quote against existing leaders to secure share.New entrant:Canopius 1/4/23.Transfer:Talbot to Ren Re 1/1/24.Quota share and risk excessQuota Share(QS)capacity remains fairly stable.Reduced lines from certain long-term reinsurers has been replaced by others.Risk excess capacity is tight and sideways caps remain in place.In absence of further losses/loss deterioration,envisage XL pricing will start to level out.Source:Guy CarpenterAppendix40How we present market trendsMean vs.weighted average explainedAirline2022 premium2023 premium%changeOne airline1001022%Two airlines15018020%Three airlines1,0001,0303%Totals1,2501,312Mean premium change is the mean average of the individual airline percentage increases.(2% 20% 3%)/3=8.33%Weighted average is calculated by summing the entire portfolio for each year and showing the percentage change between these.(1,312-1,250)/1,250=4.96%This can be distorted by a small account with a large percentage change.As weighted average uses premium volume,it may distort the percentage change applicable to airlines where premium volume is low.Summary:Weighted average considers premium volume and mean average does not.Nuclear reinstatement language41The objectiveAll airlines globally would potentially be grounded by immediate automatic termination of liability cover.Aircraft already in flight would remain insured until landed and engines shut down.Several versions of a clause,intending to provide some level of continuity of cover following a hostile detonation,are now available.However,there are three principal areas where the market has not yet reached common agreement.1.Forty-eight hours versus seven days additional cover outside the“blast zone”.2.Extension only applicable to the Russia-Ukraine war.3.Extension restricted on the number of hostile detonations.Following a hostile nuclear weapon detonation,the entire aviation industry(including airlines)would be faced with immediate automatic cancellation of liability cover,regardless of where the detonation occurred and what type of weapon was involved(tactical or other).The language recognizes that termination of coverage may not be desired or necessary in all cases,allowing for a tailored approach to managing the impact of a hostile detonation event.The expressed(re)insurer intention of the nuclear reinstatement language is to provide for continuity of coverage after a hostile detonation triggers automatic termination,allowing a breathing space of between 48 hours and seven days during which(re)insurers and the insured can look to continue coverage under reviewed and agreed terms,limits,conditions,and geographical limits.42Nuclear reinstatement languageHistory and current statusThe current policy wording language relating to War Risks was drafted at a time when the hostile detonation of a nuclear weapon was considered a“doomsday”scenario.However,the advent and proliferation of tactical nuclear weapons mean that now such an event could be more localized.The Russia-Ukraine war has brought the prospect of such an event into focus.The London aviation insurance market has discussed the potential implications of automatic termination in recent months.The industry response has been“individual”with different views and solutions offered by(re)insurers and industry bodies.A lack of consistency in the(re)insurers approach has created a potential“jigsaw puzzle”solution of coverage.While generally inconsistent,the reinstatement provision is still considered better than the previous position of automatic termination.Many hope that the market will soon reach a consensus on this challenging issue,to the benefit of all concerned.43Automatic termination clauseHull&Liability Update:LIIBA AV002LIIBA AV003AXA XL AV0017AGlobal 191Global 191BGlobal 191(Fidelis amended 23/11/22)Automatic terminationAny cover extended within:500km of the point of detonation.Country of launch.Country responsible for.Country where the detonation occurred.upon the first hostile detonation.Any cover extended within:500km of the point of detonation.Country of launch.Country responsible for.Country where the detonation occurred.upon the first hostile detonation.Any cover extended within:500km of the point of detonation.Country of launch.Country responsible for.Country where the detonation occurred.Within Republic of Belarus,Russian Federation,and Ukraine(including disputed regions and Crimean Peninsula).upon the first hostile detonation.Any cover extended within:500km of the point of detonation.Country of launch.Country responsible for.Country where the detonation occurred.upon the first hostile detonation.Any cover extended within:500km from the point of detonation.Country of launch.Country responsible for.Country where the detonation occurred.Within Republic of Belarus,Russian Federation,and Ukraine(including disputed regions and Crimean Peninsula).upon the first hostile detonation.Any cover extended within:500km of the point of detonation.Country of launch.Country responsible for.Country where the detonation occurred.upon the first hostile detonation.Any additional applicable territories to be excluded to be advised within 48 hours from the hostile detonation.Non-automatic termination,limited cancellation(timeframe)Insurers may give notice to review premiums,geographical limits,and/or issue a 48-hour notice of cancellation,seven days after detonation,of one or more parts of the remaining cover within 30 days of detonation.Additional premium:TBA.In respect of the deletion of sub-paragraph(a)of clause AVN 48B,cover terminates automatically seven days from hostile detonation in all other geographical areas not listed above.Insurers may give notice to review premiums,geographical limits,and/or issue a 48-hour notice of cancellation,seven days after detonation,of one or more parts of the remaining cover within 30 days of detonation.Additional premium:TBA.Terminates automatically seven days from hostile detonation.Insurers may give notice of cancellation of one or more parts of the cover.Insurers may reinstate coverage at terms,limits,conditions,and geographical limits as agreed by each insurer.Additional premium:TBA.Terminates 48 hours from hostile detonation.Insurers may give notice of cancellation of one or more parts of the cover.Insurers may give notice to amend the premium and/or geographical limits.Terminates automatically 48 hours from hostile detonation.Insurers may give notice of cancellation of one or more parts of the cover.Insurers may reinstate coverage at terms,limits,conditions and geographical limits as agreed by each Insurer.Terminates 48 hours from hostile detonation.Insurers may give notice of cancellation of one or more parts of the cover.Insurers may give notice to amend the premium and/or geographical limits.Subsequent hostile detonationProvisions of AVN52E/G apply unamended.Provisions of AVN52E/G apply unamended.Provisions of AVN52E/G apply unamended.Provisions of AVN52E/G apply unamended.Provisions of AVN52E/G apply unamended.Provisions of AVN52E/G apply unamended.N.B.Automatic termination clause as of February 1,2024.Description of insurer offered clauses are examples and should only be taken as a guide.Insurers reserve the right to decline to offer such wording or to offer adjusted wording in relation to individual risks.A business of Marsh McLennanThe information contained herein is based on sources we believe reliable and should be understood to be general risk management and insurance information only.The information is not intended to be taken as advice with respect to any individual situation and cannot be relied upon as such.Registered in England and Wales Number:1507274,Registered Office:1 Tower Place West,Tower Place,London EC3R 5BU.Marsh Specialty is a trading name of Marsh Ltd.Marsh Ltd is authorised and regulated by the Financial Conduct Authority for General Insurance Distribution and Credit Broking(Firm Reference No.307511).Copyright 2024 Marsh Ltd.All rights reserved.MC240227936.
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PUBLICATION2023EMEAIN ASSOCIATION WITHContact the Ariosi team today 44(0)20 8168 8168 Serviced Apartment advice you want to hearBespoke,independent and specialist advice to guide business objectives and lift standards.Industry specific courses focusing on developing capability,productivity,and performance.Data informed analysis,tools and reports to support planning and decision making.Ariosi is an accredited member of ITOL,supporting the development and delivery of current content and learner experience.Published by Ariosi Supported by Travel Intelligence Network www.the- Designed by EXP DisclaimerWhilst every effort has been made to ensure accuracy,neither Ariosi nor Travel Intelligence Network can be held responsible for any errors or omissions.Confidentiality noticeCopyright 2023 by Ariosi(the Company).All rights reserved.This document or any portion thereof may not be reproduced or used in any manner whatsoever without the express written permission of the Company.The information contained within is strictly confidential and/or protected by law.If you are not the intended recipient of this document you must not make any use of this information,copy,store,disclose or show it to any unauthorised person.Report MethodologyGSAIR EMEA 2023 has been responsibly compiled by undertaking extensive research using primary sources including conducting interviews and curating and collecting self-written pieces from contributors both in and closely aligned to the serviced apartment sector.For this edition we have focussed on primary sources,with secondary sources kept to a minimum.Where secondary sources are used,information sources are fully attributed.Global Serviced Apartment Industry Report EMEA 2023 in association with:Oasis&Oasis Collections,Skyside International,Forenom,Roomspace,res:harmonics,Staycity Aparthotels,Wilde Aparthotels by Staycity,Charles Hope,AppartCity and SilverDoor3Welcome and IntroductionPage 05Editorial teamPage 06AcknowledgmentsPage 07SustainabilityIts all about capitalPage 08Opening the door at room2Page 10Traveller preferences with Gavin PereiraPage 12Key destinations and rates in EMEAPage 14Alternative ModelsPage 18EMEA SupplyPage 20Licensing and compliancePage 22Hospitality tech with Sally RichardsPage 26Glossary of termsPage 28ContentsGSAIR 2023:EMEA4Were excited to bring GSAIR EMEA to you at a time in the industrys evolution when the region shows so many incredibly positive future indicators piqued investor appetite,transformative technological advancement,growing buyer understanding and one of the strongest post-pandemic recovery arcs in hospitality.The tenth edition of GSAIR,launched at the Charlotte Street Hotel on 22nd June 2023,highlighted the continuing importance of the EMEA market in the global serviced apartment industry.London remains a key destination for the business traveller with Dublin,Paris and Dubai being the next 3 most cited by corporates as being amongst their top 5 destinations.1In this publication we explore further how the findings from the global survey are reflected locally in the experiences of respected industry partners.In the publications feature article,Ufi Ibrahim shares how hospitality should gear up for the transition to a more sustainable future.We also hear from Stuart Godwin how room2 are incorporating sustainability into all their properties.We learn about the key destinations for business travel across Africa from Ren Stegmann.Wesley Shelling shares his experience of the market in mainland Europe and Martin Kubler describes the landscape across the Middle East.Supply challenges experienced in Africa are explained by Trevor Ward and he signposts a future outlook which gives reason for optimism and Samuel Toribio gives the lowdown on supply in Europe.Deborah Heather outlines the current state of play in relation to the proposed introduction of serviced accommodation licensing across the UK and Sally Richards shares her vision for the future of hospitality tech and answers the question.what is middleware?!We hope you enjoy reading about all the above and much more besides in GSAIR EMEA!WelcomeWelcome to the first regional publication in the new look GSAIR!By Sacha SandharHead of Insights,Ariosi1.Global Serviced Apartment Industry Report 20235Editorial teamMark HarrisSupporting EditorMark joined the business travel industry in 1990,has been a Director of Travel Intelligence Network since 2005 and originated GSAIR.He was voted the business travel industrys Personality of the Year in 2006 and has notched up four Business Travel Journalism Awards.TINs output includes over a million words in reports,white papers and blogs,co-creation of the Serviced Apartment Awards and hosting many others.After lunch,he is chairman of the PitchingIn Northern Premier League and an FA councillor.Sacha SandharHead of InsightsAriosiA qualified accountant,Sacha joined SilverDoor in 2019 in Quality Assurance,within the Partner Relationships department,after several years of working in finance across a number of different commercial analysis roles.He then became International Expansion Manager before progressing to Head of Insights upon the inception of Ariosi Group Limited.Sacha travels extensively for both business and leisure.He speaks fluent German,Punjabi,Hindi,Urdu,and Spanish.GSAIR 2023:EMEA6AcknowledgmentsJermaine Browne Co-founderre:shape living and ARK Co-livingStuart GodwinDirectorLamington GroupJuha HmlinenSenior Project ManagerForenomUfi IbrahimChief Executive OfficerEnergy and Environment AllianceStephen MartinDirector&Chief Executive OfficerISAAPGavin PereiraDirectorCheck-in-LondonWesley ShellingGroup Head of OperationsSilverDoorSamuel ToribioHead of EuropeHomelikeSally RichardsManaging DirectorRaspberrySky ServicesUlrike TognonSales&Business Development ManagerARIV ColivingKurtis MurphyHead Partner Account ManagerSilverDoorOzge OzturkArea Director of Sales,UAERotanaAdam Kane-SmithFinance Managermyresidence.africaMartin KublerFellow of the Institute of HospitalityDeborah HeatherChief Executive OfficerQuality International Assessment ServicesMark HoustonChief Operating OfficerCharles Hope LivingRen StegmannManaging Shareholdermyresidence.africaTrevor WardOwnerW Hospitality GroupWe would like to thank the GSAIR EMEA contributors for their time and invaluable support!They are:72.Global Serviced Apartment Industry Report 2023GSAIR 2023 highlighted the ever-increasing importance of sustainable accommodation options to agents and corporates with 64%of agents saying it is important to their clients.2 What does this mean for the hospitality industry and how can we be ready?Ufi Ibrahim explainsIts all about capitalNew regulation will transform prospects of attracting capitalBy Ufi IbrahimCEO Energy&Environment Alliance When it comes to sustainability,most businesses in the hospitality and lodging sector have been focused on energy related regulation,such as the UK minimum energy efficiency standards and energy performance certificates.The reason is that a failure to meet the required standards could result in a ban on the commercial use of a building.Coupled with the huge spike in energy costs,such regulation has encouraged improvements in energy efficiency and thereby,the operational carbon performance of many hotels and serviced apartments.Improvements in energy use have largely been achieved through behavioural change and low capital expenditure,such as switching to more efficient light bulbs.However,achieving more substantial improvements will require substantial capital expenditure;and thats a challenge,given high interest rates and the sums required.However,the pressure to invest in transformational change is about to increase,starting with new,mandatory climate disclosure requirements,which are expected to have a sobering effect on global financial markets,akin to rules initiated following the stock market crash of 1929.Back then,regulators grappling with ways to avoid another great depression granted powers to the Securities and Exchange Commission(SEC),which was licenced to regulate business practices.This led to the creation of globally accepted accounting and auditing principles which,even today regulate business practices worldwide.Given this proven track record of success,it should come as no surprise that almost 100 years later,regulators are adopting the same principles to tackle growing concerns over misinformation and greenwashing.New sustainability and climate disclosure requirements were launched in June at the London Stock Exchange.These new rules,governed by the International Financial Reporting Standards(IFRS)and International Sustainability Standards Board(ISSB),aim to consolidate and rationalise sustainability reporting globally.They were drafted in conjunction with world securities regulators from 130 countries,all of whom are expected to mandate them in their jurisdictions over the coming months.The US(SEC),Singapore,Hong Kong,the United Kingdom,Australia,South Africa and Japan have already done so;and the EU has confirmed interoperability between the IFRS/ISSB and European reporting requirements.They will take effect in the 2024 financial year.So,financial reports in 2025 will be very different to the audited accounts of the past.First,annual reports will include non-financial,as well as financial risks and prospects.Just as financial information is audited,non-financial information will have to be assured by independent auditors.The non-financial information,which,at the outset,covers general sustainability and climate-related material disclosure,will have to be conveyed using a common language,allowing investors to compare performance across any given sector or market.GSAIR 2023:EMEA8 Quality,space and comfort/Safety and compliance Exceptional customer services/Over 40 locations to choose from London&the South East,Madrid and Lisbon.Were here to Telephone: 44(0)208 944 3662 or email SERVICED APARTMENTS FOR BUSINESS FOR OVER 25 YEARS Bringing a Human Touch to the Digital WorldFOCUS ON SUSTAINABILITYAccommodation your business can depend on3.Over the past few months,we have worked in partnership with Kings College London to launch the first ESG Executive Education programme specifically for hospitality industry leaders.It will cover all the upcoming new regulation and much more besides,including the implications for attracting capital.So,if you are responsible for managing or investing in hospitality,and you want to be thoroughly briefed,please sign up.Furthermore,sustainability and climate disclosures must be connected to financial reports,detailing the projected impact on cash flows,capital expenditure,profits and losses.Investors and financial markets will use this information to assess asset values.The provision of capital,be it equity or debt,will soon rely on climate and sustainability disclosures as much as on financial statements.As with the introduction of globally accepted accounting principles,IFRS/ISSB sustainability standards will very quickly trickle down to businesses of all sizes.So,what does all this mean for the lodging industry?It means that sustainability must be embedded throughout the entire business,with responsibility shared by all the functions and executives in the organisation including the CEO,Chief Financial Officer,Risk and Compliance Officer,HR,the investment committee,and the board.This is the start of a challenging period of transformation for our industry.Its a period in which we will need to re-engineer the way we design,construct,refurbish and operate our buildings.We will need new controls and,processes,including board level oversight,applying the same level of rigour to non-financial information as we apply to formal financial statements.With more than 600 green certification programmes,the majority of which are based on self-reporting,investors are at a loss when it comes to the reliability of information and comparability of operational,asset or portfolio performance.That is why we established the Energy&Environment Alliance(EEA);to unite hospitality and lodging industry leaders and to advocate a standardised approach.In doing so,we aim to prioritise initiatives that are scientifically robust and commercially sustainable and discourage those that are not.39Opening the door at room2Have Lamington calculated their scope 1,2 and 3 emissions?We wouldnt be doing a very good job if we hadnt!The answer is Yes since 2019.Whats a hometel?Product offerings in the aparthotel category vary greatly.We created the hometel category to set a new product standard based on what we expect to see,so that it meets our customers needs.Its a place where our guests can be the best versions of themselves.What is the most sustainable feature of a room2 property?Theres no one thing where you can say,“Ive done that.Thats solved.”Its many things.Taking out dishwashers from our build specs gave a 1%energy saving.Solar on the roofs provides around 5%of our energy needs.In-room light and movement sensors mean we dont have key cards to switch off appliances when someone leaves,again reducing consumption.Water restrictions to reduce water consumption and critically hot water consumption.This offers a further energy saving.Sustainabilitys a culture built through our team.We keep chipping away.Are there any new sustainability initiatives coming at room2?Were putting a lot of emphasis on third party accreditation.Without it we are marking our own homework.In todays world its a massive risk to say one thing and not be it.When we launched,there wasnt a clear framework of net zero accreditation.But fast forward 2 years,and our industry now has specific targets.Were always in pursuit of progress and driving our industry forward.In Belfast we are aligning to the WELL accreditation which is more commonly seen in offices but its about enhancing wellbeing in environments.So were excited to align with that.How do you vet your supplier sustainability and ESG credentials?We have a supplier checklist including 5 different standards.For example,we looked at purchase to pay systems recently.There was one which uses teams in India to outsource invoicing and because of concerns over welfare,we didnt proceed to engage them.Bottom line:if theyve got no ambitions or road map towards an improved sustainability positioning,we just wont look at them.Shortly,well be consolidating our entire supply chain to only suppliers who share similar visions.Top tip to easily implement something sustainable in a serviced apartment offering?Well whats the low hanging fruit?Recycling.We have them at home,so why not in apartments?The answer is:because its easier to just chuck rubbish out.So the first tip is be prepared to do more work and also that it will cost more,then hope that at some point someone will be willing to pay a little bit more for it.Other than that:Fitting LED lights is pretty easy.Use water restrictors.Align to renewable energy supplies generated from green sources.Are all room2s build projects or refurbishments?Southampton was a refurb.It was an office building which was converted.Chiswick was a new build.Belfast and York are new,and Manchester will be a mix of new build and an old building.Lamington openings over the next 12 months?Room2 Belfast opening in October 2023 will be 175 keys with meeting and event spaces,gym,laundry,all day caf&bar,coworking,tea shop and concession space supporting local suppliers.Quickfire Q&A with Stuart GodwinGSAIR 2023:EMEA10 11Traveller preferencesHow cost conscious are serviced apartment customers?Business travellers,project workers,groups,and longer leisure stays(3-6 weeks in prime locations)are returning to pre-pandemic booking habits by allowing time to research all accommodation options to match their organisational and personal needs.Corporates are balancing travellers preferences in terms of location,service,space,and amenities,against procurement objectives around ESG and duty of care.Although price is usually a priority at the planning phase,service,reviews,accreditations,and overall value are ultimately the deciding factors.Despite an overall increase in supply in tier 2 and tier 3 locations across cities like London,some locations still carry a premium.However,when location is flexible as with intern placement groups or short term project workers travel time becomes more important.The London Undergrounds Elizabeth Line means people can travel from Canary Wharf to Tottenham Court Road in under 11 minutes.5After location,floorspace is the next most important criteria,especially for travellers on extended stays in cities like London.One bedroom apartments are most requested for travellers staying 28 nights or longer,although senior executives request additional bedrooms to accommodate family visiting during the weekends or holidays.6Designated workspaces and internet speedAs of 2023,corporate customers are no longer requesting designated workspaces because their trip purpose is to meet with clients or colleagues at an office or project site.Instead,they expect reliable,high speed internet suitable for when they choose to work from the apartment,together with a decent work desk separate to the dining table when space permits.This is where professionally managed serviced apartments triumph over other categories of accommodation due to greater floorspace in each unit and a more consistent quality of amenities.Top level executives might request a separate bedroom or room to be used as an office.Although corporates are not specifying a specific internet speed,some agents like us ask operators to disclose the internet speed available in their apartments so that customers have a point of reference.This usually averages about 150 mbps7 in London region,although some have connections of up to 500 mbps to enable guests to receive calls online without any interruptions.Traveller wellbeingThe increased awareness around wellbeing and mental health brought about by the pandemic has evolved further.Customers now want to find out more about The top 4 preferences of the corporate traveller are connectivity,in-apartment cooking facilities,a designated workspace and in-house services according to the GSAIR survey.4 Gavin Pereira,founder of Check-In-London,a London based serviced apartment agency shares what he is seeing in terms of emerging traveller needs.4.Global Serviced Apartment Industry Report 2023 5.TFL.gov.uk 6.Check-in-London reviewed 200 bookings between June 2022-July 2023 for stays over 28 nights.58%booked 1 Bedroom Apartments vs 21.5%choosing to book Studios.7.Megabits per secondIn conversation with Gavin PereiraGSAIR 2023:EMEA12the local area and experiences on offer,like being near parks so they can go for a walk or run.Close proximity to entertainment venues,popular cafes and supermarkets puts travellers at ease.Corporate buyers increasingly select or prefer apartments with a 24 hrs reception or an on-location guest services team and this allows the traveller to have some form of onsite human interaction while they settle into a new location.Emerging traveller preferencesRequests for pet-friendly apartments rose by 20%during the pandemic.However,due to the cost of living crisis and the return to office,these have slowed down,although pets still remain popular with relocation stays.Corporate customers now want a seamless digital booking experience,backed by the human touch of specialist consultants to help them navigate the planning,selection,and pre-stay phases.This is because of the overwhelming amount of information available online and the time required to make sense of the myriad of options,and because customers can benefit from the on-demand experience with lower rates and time saved.“Professionally managed serviced apartments triumph over other categories of accommodation due to greater floorspace in each unit and a more consistent quality of amenities.”13EuropeBy Wesley ShellingA combination of pent-up demand and emergency travel saw average rates reach an all-time high in 2022 for most Eurozone destinations.However,since the turn of the new year,that additional demand has tailed off,with key business travel destinations across Germany,Spain,Ireland,France,and The Netherlands all seeing occupancy levels return to what would be considered normal-not a word to be used often in recent years!Working in tandem with this,average rates were down 11%for the first quarter of 2023 and fell again by a further 3%during the second quarter.Good news for the many client segments who have expressed increased sensitivity around managing cost as part of their renewed travel policies.Latest trends suggest rates will stabilise through Q3 with some seasonal fluctuation around tourist hotspots.Whilst relocations into these destinations have been pared back in the second quarter,weve seen a steady uptick in business travel from corporate clients booking directly with us,as well as clients arranging their travel through a TMC.Were seeing the highest demand for business travel in cities such as Dublin and Amsterdam,particularly within the financial and professional services sectors,something we expect to continue into 2024.Middle EastBy Martin KublerIn the wake of Covid,Middle Eastern markets faced a slow recovery initially.However,an increase in demand driven by the war in Ukraine bolstered the industry,benefiting Gulf states,particularly the UAE and Bahrain.Saudi Arabia,with its ongoing touristic and economic opening and numerous mega projects,saw a rise in serviced apartment supply and usage.While European and US markets experienced economic challenges and high inflation,key Middle Eastern markets like Jeddah,Jordan,and Qatar saw healthy gross operating increases in the first half of 2023.The construction pipeline also exhibited promising growth of around 8%in projects and 6%in rooms year-over-year.9 The outlook for the serviced apartments industry in the Middle East remains positive due to three principal factors.First,an expanding business landscape.The regions status as a global business hub attracts expatriates and corporate travellers,with Gulf powers like the UAE and Saudi Arabia effectively mitigating inflationary pressures through economic strategies.Second is tourism growth.Successful efforts to diversify economies and promote tourism led to an upsurge in leisure travellers,aided by a decline in the competitiveness of Airbnb.Key destinations and ratesThe 2023 GSAIR survey shows that serviced apartment usage in on the rise once again,whether for business travel(up 53%)or assignment working(up 38%)year-on-year.8 So,where are they travelling to,and why?Wesley Shelling,Martin Kubler and Ren Stegmann share their insights8.Global Serviced Apartment Industry Report 2023 9.LE:Middle East construction pipeline grows 8%-GSAIR 2023:EMEA14Third is the growth in flexible visa options.The Introduction of golden visa options in many Middle Eastern countries enables longer stays for visitors and attracts professionals likely to favour serviced apartments over other accommodation options.In the coming year,Dubai,Abu Dhabi,and Jeddah are expected to be key growth areas,attracting a mix of regional and international operators and brands like The Address,Fraser Suites,Staybridge Suites,and Rotana.AfricaBy Ren Stegmann After Europe and the Americas,Africa is becoming one of the most popular locations for business travellers.Serviced apartments in some of Africas most buzzing cities are in high demand as they continue to attract more business travellers and appeal to a larger crowd.The most booked destination in Africa for serviced apartments is Lagos,Nigeria.Nearly half of the citys population conducts business,and its citizens are reported to have a mutual commercial mindset.70%of new business owners all around the world target Lagos for future business opportunities.10Cte dIvoire is one of the most politically stable countries on the continent.Thats why many business tycoons choose to extend their projects there.Casablanca,Morocco is amongst the cities with the most business investments.Morocco is also the first African nation to invest in other African countries.Johannesburg,South Africa is the largest city in the southern half of the continent.Given the governments continued efforts and investments to improve infrastructure,we predict that Johannesburg will certainly continue on this upward trajectory.Nairobi,Kenya has the largest stock exchange in Africa,and the influx of tourism in this region certainly contributes positively to its economy.Amongst the five biggest international industries in Africa,Agriculture makes up 15%of the continents GDP.11 Africas banking assets are comparable to that of European nations such as Russia.Mining is another major market.Most of the natural resources that the continent produce is traded globally.Africa has the majority of the worlds most precious resources and minerals including diamonds,gold,phosphate,and platinum.Nineteen out of fifty-four African countries are amongst the worlds most significant producers of oil and gas.12 Finally,the telecommunications sector is competitive and lucrative in Africa,with plans to develop this industry by extending into rural areas.A combination of a rise in input pricing and an overall increase across Africa in investment and activity suggest a general rate rise across the continent.Nigeria will witness an overall increase in prices in all sectors,including the housing and hospitality sector.13 Casablanca,Morocco presents amazing investment opportunities that provide for even more growth in the sector.Business travel in East African countries is predicted to show a steady increase,and Nairobi is at the centre of this development due to Kenyas positive investment climate.10.How Africa,https:/ path to growth:Sector by sector|McKinsey 12.McKinsey&Company,https:/ 13.Africas tourism:A global destination for investment and entrepreneurship|BrookingsGSAIR 2023:EMEA16Credit:Rotana Burgu Arjaan17“Were seeing the highest demand for business travel in cities such as Dublin and Amsterdam,particularly within the financial and professional services sectors,something we expect to continue into 2024.”Jermaine Browne Our vision of co-living and alternatives is creating dynamic spaces where residents and guests forge meaningful relationships and lifestyles.Our alternative living brands are tailored to different needs in different locations.For example,ARK Coliving is curated to embrace urban dwellers seeking a vibrant community led experience whether they stay for a few nights or months.In the UK,weve seen the rise of innovative alternatives blurring the lines between hospitality and residential,exemplified by brands like The Other House and Locke Living.These appear to have mastered seamless living in beautifully designed and luxurious self-contained serviced apartments.Our approach puts greater emphasis on the shared economy model and being an affordable alternative.Looking ahead,we envision a convergence of different models,all anchored in the principles of community,flexibility,and enhanced lifestyle experiences.Its a dialogue that echoes the desires of modern resident,commuter,and nomad the quest for connections and curated living,rather than just a place to rest.Juha Hmlinen Forenom operates an extensive portfolio of 9,000 units,comprising serviced apartments,aparthotels,hostels,corporate housing,and a flexible project housing section.The company also has its own agency across Europe,giving it a comprehensive view across the sector.The Nordic serviced living market has witnessed a significant increase in new capacity,The mainstream serviced apartment category,which includes a wide range of options from corporate housing to co-living,has experienced substantial growth in the Nordics.Brands such as Noli Studios,Unity,Bob W,and Forenom have collectively added 2,700 new units across the region in just a year.15 16 17 18 Pure co-living,featuring shared apartments,has been introduced by brands like Umeus,Allihoop,and Evergreen,adding 500 new units in the same timeframe.19 20 21 Home share has rebounded in 2023,surpassing previous levels,with the Nordic capitals boasting a total of 26,000 Airbnb listings.Copenhagen has the highest number of listings,while Stockholm has the fewest,mainly due to challenging regulations.Oslo has experienced the most significant growth,doubling its listings within a year.22 23 24 25 The serviced living sector is expected to expand significantly,especially flexible concepts which are able to accommodate stays from short-term to over a year.26 However,pure co-living with shared apartments is only expected to grow modestly due to travellers privacy needs.Alternative modelsAccording to the 2023 GSAIR survey,corporate usage of alternative accommodation models such as home stay and co-living are growing as corporates evaluate the potential cost savings and traveller preferences.25%of corporates are considering using co-living products.14 We hear from Jermaine Browne of re:shape living,Juha Hmlinen,Mark Houston and Ulrike Tognon of ARIV Coliving as to all things alternative models.14.Global Serviced Apartment Industry Report 2023 15.Noli Studios:https:/ 16.Unity:https:/unity- W:https:/bobw.co/18.Forenom business intelligence database 19.Umeus:https:/www.umeus.no/20.Allihoop:https:/ 24.https:/www.airdna.co/vacation-rental-data/app/no/default/oslo/overview 25.https:/www.airdna.co/vacation-rental-data/app/se/default/stockholm/overview 26.Interview with Natalia Nikola,Head of Serviced Living Noli Studios/Nelio ConceptsGSAIR 2023:EMEA18According to Forenom market research,low-cost project housing solutions are anticipated to increase substantially,primarily driven by planned major infrastructure,industrial,and energy projects.Home share will continue to grow at a moderate pace.Hotel chains have not yet introduced new extended stay portfolios on a large scale in the Nordics,but this is expected to change in the future.Mark HoustonCharles Hope Living is a build-to-rent management(BTR)company with plenty of experience in the serviced apartment industry under our sister brand,Charles Hope Apartments.We predominantly operate in multifamily properties(those with different unit types)in the BTR sector but there are other models in the alternative space such as HMOs,co-living accommodation,PBSAs(purpose-built student accommodation)and assisted or residential retirement living.All sectors have seen increased demand because they provide complete and convenient solutions including furniture,fitness facilities,and communal areas.The increase in demand for BTR rentals has also been inflated by a higher percentage of private landlords now selling property,as inflated interest rates have made letting a property no longer profitable for many.70%of global institutional investors are forecast to become active in the suburban BTR market within the next five years;a big increase on the current 42%.27 However,increased inflationary pressures on building materials,rising energy and borrowing costs are escalating the pressure on developers from investors to control costs whilst maintaining a healthy yield.There are always opportunities for those looking to capitalise on the increased rental demands.The pipeline for 2023 in the BTR sector at the start of this year was over 113,000 homes(including those in planning)taking the total UK BTR stock to 242,500 homes.28 This trend certainly outpaces growth in the private rental sector.Ulrike TognonCo-living is quite new in Switzerland,and ARIV Coliving is a start-up based in Zurich with its first property in Basel.Co-living products usually target young people with lower budgets,who share kitchens or bathrooms or both.However,all ARIV units have private kitchens and bathrooms,which is essential for corporate clients,so we essentially offer a serviced apartment plus co-living space and coworking.Our corporate guests are very mixed in age.Our building in Basel is a former hotel with 150 studios and one bedroom units,although our next ARIV Coliving,which opens in Zug next year,will include two bedroom units.We accommodate short stays of between 1 to 29 nights,although our focus is on bookings of 30 nights and more.Our average stay is five months.Community is an integral part of the ARIV Coliving concept.In Basel we have 1,500 square metres of communal space.Theres a coworking space where everyone can go.The space has a printer and private cabins to make calls.Switzerland is not a place where you meet people easily,so our communal spaces enable a sense of community.Our average guest is aged in their early thirties;theyre mainly corporate clients in a student or trainee programme,but sometimes managers too.We even have couples in their eighties living with us,while their own homes are renovated.We also have families,although thats not typical because we dont have two bedrooms here.There will be more 2 bedroom units in Zug,allowing us to host more families there.Looking ahead,I believe that co-living will grow because it focusses on the social aspects of a stay,especially when you retain some key private facilities.27.https:/ 28.https:/www.savills.co.uk/research_articles/229130/339547-0“We envision a convergence of different models,all anchored in the principles of community,flexibility,and enhanced lifestyle experiences.”19Opportunities and challenges for the Serviced Apartment industry in Europe EuropeBy Samuel ToribioEuropes serviced apartment market has experienced remarkable growth over the past few years,driven by an increasing number of business travellers,corporates preferring apartments over hotels for long stays,and a preference for more flexible and comfortable accommodation options.Moreover,in the last 2 years,the industry has expanded its footprint from the traditional markets(UK,Ireland,Germany)towards Southern Europe with relevant projects in Lisbon,Madrid,Barcelona,Milan,AthensWe see opportunities aplenty for two reasons as follows:Broader audienceAs more projects are deployed,this segment is expected to attract more clients from the non-traditional corporate sector to digital nomads,workation programs and b2b2c clients coming from self-booking tools.Furthermore,the rise of new platforms entirely focused on this audience will enable a new demand driver.Disrupting new marketsSecond/third tier cities will be a hot spot as investors will find better deals from a yielding point of view but also uplifting cities like those mentioned above(Southern and Eastern Europe)will benefit from this,as the current options are limited.Whilst these opportunities are exciting,unavoidable headwinds are being faced and will continue to provide obstacles,which the industry needs to overcome,particularly the following:Inflation and price increasesRecent inflation levels have had a massive effect on prices,and this has created a gap between apartment and hotel ADRs that for shorter stays was not as noticeable.Deducting extra costs(like cleaning fees)from the price might be a solution to make apartments“look”cheaper to clients.Alternative real estate projectsWhile serviced apartments have enjoyed a steady rise in popularity,they are facing stiff competition from co-livings,which have gained traction among the millennials and digital nomads.Europe is experiencing a boom on co-living projects.Quality-wise,some of them offer 40%-50%cheaper rates than current city serviced apartments for premium corporate travellers.In a nutshell,Europe has a brilliant outlook in the serviced apartment market,but BTR(build-to-rent)projects pose a question mark as to where the limit will be.Middle EastBy Kurtis MurphyThe Middle Eastern serviced apartment market continues to grow and mature with many new openings across the region.As the region develops,product standards are evolving to appeal to a more international consumer.In the UAE,there has long been a clear focus on attracting international inbound tourism and this continues.It is much more typical now to find businesses operating during Ramadan than it was five years ago,and in 2022 we also saw an alignment of UAE weekends with the internationally recognised Monday to Friday business week.It is not just tourism that has driven sector growth here;the UN Expo and COP28 are clear indicators that this region is keen to attract international businesses to establish permanent bases in the region.The UAEs historically more conservative neighbours-Saudi Arabia and Qatar-are emerging as heavyweights in the sporting world;the 2023 World Cup,Liv Golf,World Championship Boxing,the Saudi Football League are undoubtedly generating demand and interest in the region.KSAs$500bn Neom megacity on the Red Sea coast,eventually projected to become home to 9 million people and supporting the Kingdoms aim to become less dependent on oil,has already driven significant numbers of relocations to the region.While this is all generally positive for the GCC economy,for extended stay guests and corporates,it can cause spikes in the year of low availability and higher rates.SilverDoor Apartments has increased their portfolio by over 4,000 units over the last 12 months in growing markets across the Middle East including Bahrain,Israel,Oman,Qatar,Saudi Arabia,Turkey and UAE.Key players have established a strong foothold in the market over the years such as Rotana,IHG,Ascott,Dusit,Millenium Hotels&Resorts and Accor;many of whom continue to open new stock on an annual basis.Cheval Collection are also new entrants to the region with 131 rooms on the prestigious Palm.EMEA SupplyGSAIR 2023:EMEA20The ability to offer sustainable options has rapidly become a hot topic across the industry and,while areas such as the Middle East have historically lagged behind in this area,the region is gaining ground here too.IHGs Green Engage programme allows the hotels to choose from over 200 Green Solutions designed to help them reduce their energy,water and waste,and improve their impact on the environment.Similarly,The Ascott Group have partnered with Bureau Veritas to audit its Serviced Residences globally.There is great expectation for the Middle Eastern market to follow in a similar vein as companies look to hit carbon reduction targets in business travel.AfricaBy Trevor WardTo describe Africa as undersupplied with serviced apartments is an understatement!Africas a huge continent,with 54 countries.This is more than a quarter of UN members.It has a population of 1.5 billion.That is about 19 per cent of the global total.However,according to Fino Hospitality,29 at the start of 2023,international hotel chains had just 14 properties bearing their extended-stay brands in nine African countries(Algeria,the DRC,Egypt,Ethiopia,Kenya,Morocco,Nigeria,South Africa,and Tanzania)!With about 1,550 units,thats an average of 110 units per property,ranging from the 164-unit Somerset Westview in Nairobi,Kenya to the 48-unit Executive Residency by Best Western,also in Nairobi.Marriott,one of the biggest operators in Africa,alongside Accor,lead with four properties under their Element,Residence Inn,and Marriott Executive Apartments brands,with Accor,Ascott,BWH,Dusit,Frasers,Hyatt,IHG,Pan Pacific,Rotana and Wyndham having one apiece.Most of these properties opened in the last five years.Its a 12-hour flight from Cairo to Cape Town(N to S),and 9 hours from Dakar to Dar es Salaam(W to E),and these long distances,with arduous road journeys,and other factors mean that there is strong demand for extended stay accommodation.So why so few branded properties?In fact,with the exception of notable markets such as Nairobi,Cape Town and Johannesburg,theres a shortage of any extended-stay hotels.Well,there are many reasons,picking on just two,much of Africa has lagged behind other regions in terms of modern hotel development,and new entrants,both owners and the hotel chains,have focused on core full-service brands.And a lack of understanding of the extended-stay sector means that both owners and lenders have shied away from getting involved.Looking to the future,there appears to be some traction in terms of development.According to our annual pipeline survey,30 the chains have signed management or franchise deals for 37 new extended-stay properties with 5,300 units,which is about 6 per cent of the total hotel development pipeline in Africa.The average size of an upcoming extended-stay hotel is 147 units,quite a lot more than the existing supply.Marriott again lead the pack,with 13 new properties coming into the market in the future containing 2,100 units.However,the Ascott are also doing well,with 8 properties containing 900 units.Of the total,about 50 per cent are already under construction,the remainder are still waiting to break 30.https:/w- and complianceThe regulatory framework for serviced apartments across EMEA is highly fragmented.To contrast the current landscape across the region,Deborah Heather examines the UK governments proposed introduction of serviced accommodation licensing despite the presence of several accreditation schemes for serviced apartments,Stephen Martin sheds some light on compliance in mainland Europe,Adam Kane-Smith considers the main African markets which have a mature set of standards for the industry and Ozge Ozturk discusses the commonality and points of divergence in standards across the GCC.Deborah HeatherAlong with the entire UK hospitality industry,the accommodation sector is waiting for the results of various consultations on registration or licensing.Scotlands licensing legislation is currently being reviewed,whilst the Welsh government are predicted to deliver a mix between Scotlands sledgehammer and Englands expected light touch version.Given existing legislation,legitimate,professional operators in England should have nothing to fear.Despite long-standing issues with bad actors operating without public liability insurance,or the right Health and Safety checks,anyone operating responsibly wants to protect their guests as much as possible.In the eyes of the law,its a case of mitigating risk.Theres the added benefit that this is what consumers,business travellers and those that procure accommodation on behalf of others,want.Operators who dont recognise their responsibilities can be managed out or made to conform by ensuring suitable checks and balances are in place.Registration is a simple education process for those with their heads in the sand,ensuring they are aware of their legal responsibilities.Each of the devolved governments are trying to manage housing issues.In Scotland,the infrastructure of long term lets was nearly crippled by changing legislation to favour tenants which has since impacted short lets too.Wales is looking to solve its second home problem but failing to understand that second homes operating commercially bring year round revenues,helping communities to exist.In England,where levelling-up and registration consultations are running concurrently,the risk is that consultation recommends using planning permission to solve housing issues,and that England also has a licensing system rather than a simple registration system.The Channel Islands and Isle of Man successfully operate different versions of licensing.In the Isle of Man,the OTAs and Airbnb have never been a threat to housing,communities,or legitimate business operators,as its manageable through already robust systems.The legacy licencing has always included appropriate planning permission and fire and health and safety checks for all accommodation providers.For me,registration should not be a problem for professional or responsible operators,as it helps withdraw the bad actors from the market.The real issue is over complex,one-size-fits-all legislation,designed to solve housing issues rather than support business tourism and the communities it supports.Stephen MartinFollowing the release of ISO 31030(Travel Risk Management)in September 2021,we have seen increasing demand for serviced accommodation to obtain a safety-based accreditation.Across EMEA region,we deliver our Compliance Accreditation(health&safety centred)to clients in 19 countries,encountering varying national standards.Our Compliance“global standard”cannot be applied verbatim in all countries,but the content and level of verifications required for each accreditation module can be achieved by approaching each one from the perspective of what needs to be verified.For example,a Fire Risk Assessment(FRA);widely recognised and understood in the UK,but not necessarily a system used in other countries.There are other mechanisms by which the output of a FRA can be verified,from annual inspections by the fire department to a governmentally applied license(incorporating fire safety assessments),renewable annually.GSAIR 2023:EMEA22 23By applying this approach to other criteria,we can verify that the standard is being upheld globally.Serviced accommodation providers are required to make prescribed pieces of evidence available to us so we can help them achieve compliance,as required by their corporate clients.In European countries like Switzerland,the state operates a more top-down approach to safety regulation in accommodation providers properties.This means operators are not used to requests from accrediting bodies for evidence that the building is fire safe,for example.For them,the fact that the property is provided with a permission to operate through insurance is evidence enough of building safety.The challenges we encounter,and the way in which we meet them,allow us to work with serviced accommodation providers across countries to achieve continuous improvement in safety standards,to help to make serviced accommodation recognised as safer and better for everyone.Adam Kane-SmithThe regulatory framework in Africa varies from country to country.In South Africa,the Short-Term Accommodation Act of 1993 requires all serviced apartments to be registered with the Department of Tourism and to comply with a number of safety and quality standards.By contrast,in Nigeria there is no specific regulatory framework for serviced apartments.Instead,they are subject to the same laws and regulations as any other type of property.The specific risks and mitigations required for serviced apartments in Africa will vary depending on the region.However,the common risks include fire safety,due to the prevalence of old buildings and poor fire safety standards;security to protect guests from theft and other crimes,such as CCTV cameras,security guards,and access control systems,and health risks including malaria,typhoid,and cholera.Licensing requirements for serviced apartments also vary.In some countries,serviced apartments are required to be licensed as hotels,while in others they may be licensed as a different type of property,such as a guesthouse or bed and breakfast.When it comes to sustainability,Africa may lag behind the initiatives being taken in Europe and the U.S.,but there is a growing awareness of the benefits of operating more ecologically.Some examples include using energy-efficient appliances;reducing water consumption,recycling,and composting.Ozge OzturkIn the UAE and Qatar,serviced hotel apartments are a part of the hotel classification and fall under the“Tourism Establishment”category.The Department of Economic Development in the UAE and the Qatar Tourism Authority in Qatar,are the governing bodies which issue licenses to operate as a hotel or a serviced hotel apartment,based on compliance with the respective tourism licensing laws which set out certain pre-requisites to be met.These mostly relate to safety and the existence of certain minimum facility and service standards.One of the pre-requisites for obtaining a license is the achievement of certification from the civil defence and food control authorities.Health and safety measures are constantly audited by the governing bodies across the establishments,with fire drills taking place twice a year,and HACCP audits taking place regularly.In the UAE and Qatar,serviced hotel apartments are not allowed to serve alcohol,tobacco or shisha,as per the regulations for that category.However,hotels and serviced hotel apartments co-located in the same complex,are able to serve alcohol and shisha at designated outlets,if they have obtained a separate licence from the respective government bodies.All tourism establishments are inspected annually and on a random basis,for the validation and/or extension of the licences and for compliance audits.In Istanbul,individual apartment owners can rent their apartments by using Airbnb etc.and they usually provide housekeeping services too upon request.A license is needed for them as residents identities must be declared to local law enforcement.However,as there are thousands of individuals who rent their apartments in this way;it is very hard to control and there is probably a high proportion which operate without a license.As a summary,all accommodation facilities including motels,aparthotels,serviced apartments,and hotels(1 to 5 stars)need a license.There is not a different definition in Turkish law between serviced apartments&hotels and all are obliged to have a tourism license.When it comes to sustainability and how properties are built,there is a move towards regulation.2023 has been designated the year of sustainability in the UAE.31 31.https:/uaeyearof.ae/GSAIR 2023:EMEA24Credit:Rotana Burgu Arjaan25“Registration should not be a problem for professional or responsible operators,as it helps withdraw the bad actors from the market.The real issue is over complex,one-size-fits-all legislation,designed to solve housing issues rather than support business tourism and the communities it supports.”Hospitality TechSally,could you start by giving a bit of background about yourself and RaspberrySky?Sure,RaspberrySky Services started nearly 18 years ago.As the industry has evolved,so has the kind of projects that we do.My background is travel agency,tour operator,airline and hotels.I came to consulting with a really good understanding of supply and demand.A lot of the business that we get is from the demand generators as well as from supply,whether thats hotel or serviced apartment,hostel,or campsite,OTA,Tour Operator etc.Thats an incredible background of experience.So specifically,what technology elements of the typical hotel or serviced apartment customer journey do RaspberrySky Services support with?More recently,our focus has really been on technical audits,reviewing our clients IT stack.We undertake commercial reviews and those generally lead to a system requirement.We then conduct the technical system RFP processes and if required,we can help the client implement the new solution into their business with project management services.A big part of the implementation is business process reengineering.Often organisations decide that theyll change a piece of kit,for example their PMS,but then try to“shoehorn”the old processes into the new technology leading to them not fully realising its benefits,so reengineering the process is very important.You also need to engage the teams to ensure you change their“hearts and minds”,not just the technology stack.Ive been in the industry all my working life,and so many clients give me fairly fluid briefs”Our occupancy has gone down but we dont know why.”I call it a“point of pain”brief and we investigate where the issue lies and then recommend and implement solutions.What do you consider to be the main areas of change from a business and customer perspective,over the last 18 years?I think the light bulb is going on that we cant dictate how the customer interacts with us.Whether its digital,traditional or hybrid,its our role as a hospitality organisation to enable all of them.We often see,particularly in full service markets like luxury,the belief that the guest wants to walk in,go to the front desk,have that human interaction and fill out the paperwork.But the reality is that the luxury guest is changing,and they dont want to check in at the desk,they want to check in online.They want to get to their room,instant message the concierge and not to have to go down to reception or pick up an in-room phone.Its about realising there arent two different guest types-traditional and digital,but theres a hybrid depending on how youre travelling,when youre travelling and for what purpose.So we need to offer the guest choice in how they interact and be aware that it may change,but however they decide to interact,just make it seamless.The GSAIR survey showed the appetite amongst serviced apartment operators to adopt technology that supports them offering a more digitised stay,with PMSs having been widely employed,followed by self-service check in,mobile apps,and digital access control systems.32 Sally Richards,Managing Director of RaspberrySky Services,with over 20 years experience within hospitality technology provides her insights into the digital customer journey now and in the future.32.Global Serviced Apartment Industry Report 2023In conversation with Sally RichardsGSAIR 2023:EMEA26Data is more important than ever-the single view of the customer,that enables you to understand and anticipate their needs.But we have a load of data silos in our industry.A lot of data,but not a lot of intelligence.We know what we want to achieve,but its difficult to consolidate and pull and I think thats a really big focus.And then theres data ownership.In the future you will not own the customer data-the customer will own and control their data and decide who will have the right to use which data sets.Middleware is also now a huge growth area enabling better integration of systems,but it will also help with providing a single view of customer data.What is middleware?Middleware enables you to connect all your systems,such as your PMS,through one central platform and share data.No silos mean that you can then pull that data out and manage it.Everything interacts with just one layer and no 1-1 systems.Youre then less reliant on any one system,making it easier to replace it,as your interface is with one central system via APIs.Yes,it means a new piece of kit that you probably didnt have before,but it gives you much more flexibility.Some examples are IReckonU and Hapi Cloud.Got it!How do you see this trajectory of change continuing to evolve for the business traveller with the customers that you work with,for example?Business travellers want flexibility and its now a diverse demographic-digital nomads,bleisures etc.They want a more rounded experience.They want to be able to book more non-room elements online-scenarios such as the business traveller who wants a meeting space and somewhere to eat in a property but no bedroom reservation or perhaps they want a bedroom but only to conduct a daytime meeting.We are seeing system capability evolving to support a range of inventory types and without being restricted in being linked to a one night stay,with the ability to book online.Coworking spaces,retail outlets and community spaces,are increasingly a feature.The property becomes more of a destination as opposed to a collection of rooms with an unused central space.You increasingly see these mid-scale,limited service offerings with more funky spaces a nice bar,groovy restaurant,and convenient retail fostering more of a community and now you can even have subscription models covering your coffee,workspace etc.Finally,Artificial intelligenceThe buzzword of the moment,right?Do you see it playing a part in every aspect of hospitality now,or are there any aspects where a human is still better?You would hope a human is still better in a lot of cases!But where AI and machine learning is brilliant is taking away all those repetitive tasks that a human being is doing today,to automate so that the human can actually interact with a guest and offer some kind of service.I dont think its going to replace humans entirely,but it is certainly going to automate repetitive tasks.Machine learning is already here.We need to be aware of it,but I personally am more interested in the virtual reality(VR),the mixed reality,the extended reality.How will we evolve the physical and the digital world together to enhance experiences?Thats the fun stuff!VR devices will become more user-friendly moving from massive VR goggles to the overlay being in your glasses for example.Thats the future.But I would just be happy if people werent still asking the question,should I move my key systems to the cloud?!Its true!Im still working with hotels that have on premises PMSs,and its a big change for people.In serviced apartment and hotel back of house theres still a lot of paper and manual processing.Automation and integration through APIsthats where the opportunity is.“The light bulb is going on that we cant dictate how the customer interacts with us.Whether its digital,traditional or hybrid,its our role as a hospitality organisation to enable all of them.”27ADR:Average Daily Rate.Agent:Used more generally to describe an intermediary,either individual or company,booking travel or accommodation on behalf of another party.AI:Artificial Intelligence.Aparthotel:Fully furnished and equipped apartments,which include hotel services such as manned reception and cleaning.Typically used for shorter stays and suitable for business and leisure use.API:Application programming interface.Assignment working:A short or long term stay,undertaken to perform a specific task or project based trip.Stays can last between 30 days and three years33 and are temporary,whereas Relocation(see below),is permanent.Assignment workers are often referred to as assignees.B2b2c:Business to business to consumer.Bleisure:Bleisure trips combine leisure with business,usually by tacking extra days onto a business trip.BTR:Build To Rent.Business travel:A journey specifically taken for work purposes,usually but not always up to seven days.Business travel excludes daily commuting,leisure trips or holidays.CHPA:Corporate Housing Providers Association.Coliving:Coliving refers to accommodation where multiple unrelated people can live together.Units usually contain large communal spaces as well as private bedrooms.Developments often feature social areas and programmes designed to foster a sense of community.Corporate housing:Residential apartments,packaged up to include servicing and bills,typically bookable for a minimum of 30 nights,either let and maintained by the operator on an ongoing basis or rented specifically for a particular housing requirement and length of time,after which they are handed back to the owner.Corporate housing is also the term used in the U.S.to describe serviced apartments.Digital nomad:A person who earns a living working online in various locations of their choosing,rather than a fixed business location.EEA:Energy&Environment Alliance.EMEA:Europe,the Middle East,and Africa.ESG:Environmental,Social,and Governance.Extended reality:An umbrella term encapsulating Augmented Reality(AR),Virtual Reality(VR),Mixed Reality(MR),and everything in between.Glossary of termsSeveral acronyms or abbreviations are used in this publication.These are as follows:33.https:/ GSAIR 2023:EMEA28FRA:Fire Risk Assessment.GCC:Gulf Cooperation Council.GDP:Gross Domestic Product,the monetary value of goods and services produced in a country in a given period of time.GSAIR:Global Serviced Apartment Industry Report.HACCP:Hazard Analysis Critical Control Point.HMO:House in Multiple Occupancy,a building,or part of a building(for example,a flat)in which more than one household lives and shares an amenity,such as a bathroom,toilet or cooking facilities.Home Stay:Generic term for products like Airbnb,Onefinestay,or home rental.IFRS:International Financial Reporting Standards.ISSB:International Sustainability Standards Board.Mixed reality:a medium consisting of immersive computer-generated environments in which elements of a physical and virtual environment are combined.Nordics:The region consisting of Denmark,Norway,Sweden,Finland and Iceland,the Faroe Islands,Greenland and land.Occupancy:Percentage of occupied bedrooms/apartments during a set period.OTA:Online Travel Agent(e.g.Expedia,B).PBSA:Purpose Built Student Accommodation.PMS:Property Management System.QNDC:Qatar National Development Council.Relocation:Relocation(also referred to as Relo),involves permanently moving an employee,and family,to another city or country.RFP:Request For Proposal.SEC:Securities&Exchange Commission.Serviced apartment hotel:Terminology used in the UAE for the classification of serviced accommodation in the issuance of licenses.Serviced living:Generic term to describe the expanding number of emerging extended stay concepts.Fully furnished accommodation including kitchen facilities,with some private and communal spaces.TMC:A Travel Management Company manages the business travel requirements of an individual or organisation,in line with their corporate travel policies,where relevant.UAE:United Arab Emirates.UK:United Kingdom.U.S.:United States of America.Workation:Working in a usual mode whilst travelling.In comparison with the term digital nomad,it is generally considered to denote a less permanent state of working travel.29GSAIR 2023:EMEA30 Thomas CarlyleTo start a conversation on how insights will help your business,contact Sacha Sandhar,Head of Insights. 44(0)20 8168 8168 Could you benefit from understanding your competitor set better?Do you need support with rate-setting?Would you like to have data for underserved markets,which might have a space for you?“Nothing is more terrible than activity without insight”Are you setting up a serviced apartment building in a new market and in need of customer insights?31More nimble.More current.More bite size.4 publications throughout the yearto keep you up-to-date.GSAIRSurvey&ResultsGSAIREMEAGSAIRAmericasGSAIRAsia-PacificIf you would like to advertise in or contribute to GSAIR Americas please contact us on Follow Ariosi on social media for updatesGSAIRAmericasComing SoonYour trusted guide to the serviced apartment sectorCreated with care,by industry experts,with real CELEBRATING 10TH EDITION
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GSAIR Industry Report 20231PUBLICATION2023IN ASSOCIATION WITHContact the Ariosi team today 44(0)20 8168 8168 Serviced Apartment advice you want to hearBespoke,independent and specialist advice to guide business objectives and lift standards.Industry specific courses focusing on developing capability,productivity,and performance.Data informed analysis,tools and reports to support planning and decision making.Ariosi is an accredited member of ITOL,supporting the development and delivery of current content and learner experience.Global Serviced Apartment Industry Report 2023 in association with:Oasis&Oasis Collections,Skyside International,Forenom,Roomspace,res:harmonics,Staycity Aparthotels,Wilde Aparthotels by Staycity,Charles Hope,AppartCity and SilverDoorPublished by Ariosi Compiled by Travel Intelligence Network www.the- Designed by EXP Consultancy DisclaimerWhilst every effort has been made to ensure accuracy,neither Ariosi nor Travel Intelligence Network can be held responsible for any errors or omissions.Confidentiality noticeCopyright 2023 by Ariosi(the Company).All rights reserved.This document or any portion thereof may not be reproduced or used in any manner whatsoever without the express written permission of the Company.The information contained within is strictly confidential and/or protected by law.If you are not the intended recipient of this document you must not make any use of this information,copy,store,disclose or show it to any unauthorised person.3Report methodologyPage 05Editorial teamPage 06AcknowledgmentsPage 07Glossary of termsPage 08Welcome and introductionPage 10GSAIR nowPage 12Extended stay trendsPage 14Demand trendsSourcing and usagePage 16Key destinationsPage 22Traveller preferencesPage 24Alternative modelsPage 28SustainabilityPage 30Cost of living crisisPage 34Supply trendsOperator and supply updatePage 38Blurred linesPage 40Pipeline,planning and guest experiencePage 46Hospitality techPage 50Future outlookPage 54Essential takeawaysPage 58Key cities rates tablePage 60Directory listingsPage 68List of tablesPage 70ContentsGSAIR 20234The 2023 edition of the Global Serviced Apartment Industry Report has been responsibly compiled from annual proprietary research and selected secondary sources,both in and closely aligned to the serviced apartment sector.The bulk of this report is based on data from the dedicated survey undertaken especially for this report.This was conducted during Q1 of 2023 amongst a refreshed and consolidated database of 3,000 corporates,serviced apartment operators and agents.The surveys findings were then presented to,and discussed with leading corporate buyers,agents,and operators in a series of one-to-one interviews conducted between March and May 2023.Although the questions posed in this years survey have been updated to reflect current market trends,comparisons with previous years have been included to highlight trends where appropriate.For this edition,we have focused on primary sources,with secondary sources kept to a minimum.Where secondary sources are used,information sources are fully attributed.Report methodology5Credit:AdagioEditorial teamJoanna CrossChief Operating Officer,AriosiJoanna started her hospitality career at the Four Seasons Hotel in Sydney in 2001,moving to London in 2005 and joining the team at COMO Metropolitan Hotel.Her interests switched to serviced apartments in 2006 when she joined SilverDoor.In 2015 she moved into the operational side of the sector and several years followed at both Supercity Aparthotels and Clarendon Apartments.2022 saw her re-join Habicus Group,and in November 2022 she launched the industrys newest serviced apartment consultancy,Ariosi Group Limited.Mark HarrisContributing EditorMark joined the business travel industry in 1990,has been a Director of Travel Intelligence Network since 2005 and originated GSAIR.He was voted the business travel industrys Personality of the Year in 2006 and has notched up four Business Travel Journalism Awards.TINs output includes over a million words in reports,white papers and blogs,co-creation of the Serviced Apartment Awards and hosting many others.After lunch,he is chairman of the PitchingIn Northern Premier League and an FA councillor.Sacha SandharHead of Insights,AriosiA qualified accountant,Sacha joined SilverDoor in 2019 in Quality Assurance,within the Partner Relationships department,after several years of working in finance across a number of different commercial analysis roles.He then became International Expansion Manager before progressing to Head of Insights upon the inception of Ariosi Group Limited.Sacha travels extensively for both business and leisure.He speaks fluent German,Punjabi,Hindi,Urdu,and Spanish.Bard VosProperty Content,SilverDoorBard has contributed to all ten editions of GSAIR;when he was Marketing Manager at The Apartment Service,and then as part of the Partner Relationships team at SilverDoor,following the acquisition of the former,by the latter,in 2021.He has strongly supported the Ariosi team in 2023,ensuring continuity and context for comparability with previous editions,and has assisted with the compilation of the latest surveys that form the basis for all editions of GSAIR,past and present.Shani ClarkeClient Manager,AriosiShani began her serviced apartment journey in 2013 in the SilverDoor Account Management team.Learning about the extended stay and corporate housing industry from the ground up,she progressed to the role of Account Manager where she led a team to service global mobility and travel management clients.Her experience was then augmented as sales manager at London based property operator,Cycas Hospitality.10 years on in 2023,Shani is Client Manager at Ariosi Group Limited,applying her years of varied industry experience to all pillars of the business and providing integral support to each Head of Department.GSAIR 20236AcknowledgmentsRachel Angell Chief Operating Officer Domus StayShabina AwanHead of Partner Development SilverDoorSteve BanksChief Commercial OfficerAgiitoCarol Fergus Director-Global TravelMeetings and Ground Transportation Fidelity InternationalNiko KarstikkoCo-founder&CEOBob W.Alex NealeGroup Head of Partner Relationships SilverDoorHanish VithalChief Information and Technology OfficerSilverDoorGeorge SellEditor-in-ChiefInternational Hospitality MediaServiced Apartment NewsJosef VollmayrCo-Founder&Managing Director limehomeBeverly KingVice PresidentBusiness Development&ConsultingEMEA&APAC,GraebelTom MeertensChief Operating OfficerInternationalNational Corporate HousingSteve FreyChief Executive OfficerOasisGiles Horwitch-SmithChief Executive Officerres:harmonicsBen DavisCo-founderSaxburyRichard EadesGlobal Category ManagerTravel,Meetings&Events bp7ADR:Average Daily Rate.Agent:Used more generally to describe an intermediary,either individual or company,booking travel or accommodation on behalf of another party.AI:Artificial Intelligence.APAC:Asia-Pacific.Aparthotel:Fully furnished and equipped apartments,which include hotel services such as manned reception and cleaning.Typically used for shorter stays and suitable for business and leisure use.Assignment working:A short or long term stay,undertaken to perform a specific task or project based trip.Stays can last between 30 days and three years1 and are temporary,whereas Relocation(see below),is permanent.Assignment workers are often referred to as assignees.AST:Assured Shorthold Tenancy-the most common tenancy when renting from a private landlord or letting agent,typically for 12 months or more.Bleisure:Bleisure trips combine leisure with business,usually by tacking extra days onto a business trip.BTR:Build To Rent.Business travel:A journey specifically taken for work purposes,usually but not always up to seven days.Business travel excludes daily commuting,leisure trips or holidays.CHPA:Corporate Housing Providers Association.Co-living:Co-living refers to accommodation where multiple unrelated people can live together.Units usually contain large communal spaces as well as private bedrooms.Developments often feature social areas and programmes designed to foster a sense of community.Corporate housing:Residential apartments,packaged up to include servicing and bills,typically bookable for a minimum of 30 nights,either let and maintained by the operator on an ongoing basis or rented specifically for a particular housing requirement and length of time,after which they are handed back to the owner.Corporate housing is also the term used in the U.S.to describe serviced apartments.CSR:Corporate Social Responsibility.DE&I:Diversity,Equity,and Inclusion(also referred to as EDI).EMEA:Europe,the Middle East,and Africa.Glossary of termsSeveral acronyms or abbreviations are used in this report.These are as follows:1.https:/ 20238ESG:Environmental,Social,and Governance.FTE:Full Time Equivalent,equal to the number of hours a full-time employee works for an organisation.GBTA:Global Business Travel Association.GDS:Global Distribution System(e.g.Amadeus,Travelport,Sabre).GDV:Gross Development Value.Generation Z:Generation reaching adulthood in the second decade of the 21st century.GHG:Greenhouse gas.Greenium:A premium paid to purchase comparatively more sustainable options.GSAIR:Global Serviced Apartment Industry Report.Home Stay:Generic term for products like Airbnb,Onefinestay,or home rental.OBT:Online Booking Tool.Occupancy:Percentage of occupied bedrooms/apartments during a set period.OTA:Online Travel Agent(e.g.Expedia,B).PBSA:Purpose Built Student Accommodation.PMS:Property Management System.Relocation:Relocation(also referred to as Relo),involves permanently moving an employee,and family,to another city or country.RevPAR:Revenue Per Available Room.RFP:Request For Proposal.RMC:A Relocation Management Company provides outsourced relocation logistics management for organisations of different sizes and needs.ROI:Return On Investment.Serviced living:Generic term to describe the expanding number of emerging extended stay concepts.Fully furnished accommodation including kitchen facilities,with some private and communal spaces.TMC:A Travel Management Company manages the business travel requirements of an individual or organisation,in line with their corporate travel policies,where relevant.UK:United Kingdom.U.S.:United States of America.YoY:Year on Year.9Fifteen years after the first publication of this industry stalwart,fondly known more commonly as GSAIR,we gather again to celebrate the 10th edition.A significant milestone for this trusted publication,which has long been recognised as an industry pioneer and piece of thought leadership.In 2023,GSAIR seamlessly sits in its new home,Ariosi Group Limited,part of the Habicus Group and sister company to the worlds leading serviced apartment agent,SilverDoor.GSAIR was published under the SilverDoor banner in 2022,following the acquisition of The Apartment Service by Habicus Group in 2021.Whilst the team behind the report has changed,the commitment to deliver value and insight,remains.At Ariosi,were proud to continue the long and valuable tradition of GSAIR and support its continuing evolution.Over the last 12 months,many of you have reached out to emphasise the value of the publication to your organisation,so its a pleasure to bring it to you again,this year,particularly as it reaches its double digit birthday.Serviced apartment operators,agents and corporate buyers of temporary living products continue to hold GSAIR in high regard,as the place to come for an annual amalgamation of survey results,data analysis and expert industry commentary and opinion.Additionally,it provides tangible and real insights for developers and investors alike,lifting the lid on a maturing sector that brings an ever appealing proposition to the market.The root and strength of GSAIR remains in its global survey and in those that power it with their organisational responses and data.The broad and far reaching fingers of GSAIR make it a robust collection of data informed intel,allowing it to continue to bring true insights for another year.Industry consultancyWe launched Ariosi in November 2022 and have been delighted by the support weve received and thrilled with the business opportunities weve had;were busy delivering a suite of bespoke training courses and operator workshops,compiling data and market insights,and curating comp sets and research papers for a diverse range of clients.Our business aspirations are now a reality,and turning real experience into a tangible product,is a result of many years of vision and hard work.Our purpose remains clear to drive stability and increased growth and performance within the serviced apartment sector.An evolving landscapeAs we continue to put the pandemic behind us,what remains clear is that collaboration and partnership are what strengthen us as a global community.Whilst healthy competition is good for business,working together to overcome new and evolving challenges is what our sector does best.Global or localised crises,regulatory hurdles,and environmental targets,all propel us towards a future landscape where were focused on a better product,service and offering.The diversification of serviced apartments provides almost relentless opportunity,and the optimism in this years survey results shows us theres plenty to be positive about.Thank youA special thank you goes to our sponsors,advertisers,contributors,and supporters all of you continue to make GSAIR possible,whilst ensuring it remains current and relevant,and further strengthening its value.Welcome to the 10th edition of the Global Serviced Apartment Industry Report.Welcome and introductionBy Joanna CrossChief Operating Officer,AriosiGSAIR 20231011Credit:Charles HopeCredit:limehomeSince 2008,GSAIR has delivered expert commentaries and unbiased analyses of regional and global supply and demand,rates,and market trends.This year,weve refreshed both the recipients of the GSAIR survey and the format of the publication.Regular readers of,and contributors to GSAIR,may recognise it as a publication within an 18 month cycle.This changed in 2022,when the decision was made to annualise it.Further strategic discussion followed,and in 2023 were publishing GSAIR in bite size chunks.Firstly,the annual survey results and supporting commentary and supplementary articles,next,regional reports with specific focus on trends or challenges in those regions.Whilst it might be a deviation in deliverable format,the contents and purpose will be largely following a trusted and workable formula.Driver of changeSmaller and more frequent GSAIR publications make it more consumable,nimbler,and easily adaptable to current themes and trends,more relevant,valuable,and engaging,and ultimately more memorable and therefore a better servant to our sector.Engagement and relevanceEngagement with our GSAIR audience has been a central theme in the curation of the report this year.Weve looked at who the audience is,and there are multiple and very distinct areas of interest.By reaching out to trusted industry partners who have interacted with GSAIR in previous years,we have gained illuminating insights which have informed the way it will be delivered in 2023 and beyond.It is clear that the report continues to have real importance for readers,as a reliable reference point and tool for aiding strategic business decisions.The collation of input from operators,agents and corporate buyers of serviced apartments is seen as a unique feature which enables the reader to benefit from a holistic view of supply,demand,and pricing.Regional reporting shines a useful spotlight on local dynamics impacting markets across the globe.A view of rates by region is a great resource in developing investment cases and for making tactical pricing decisions.These diverse use cases and points of interest show that GSAIRs continued relevance to multiple stakeholders would be best served by several smaller,regionally focussed publications.Regional focus on global themesThe sections of GSAIR previously referred to as the Regional Reports will be dedicated publications in their own right.They will cover Europe,The Middle East and Africa(EMEA),Asia Pacific(APAC)and The Americas,and will deliver a closer look at how global findings are reflected at a local level.Smaller print=smaller footprintThe evolution of GSAIR is further reflected in a change to the media used,as well as the delivery of refreshed and valuable content.This 10th edition is part of a much smaller print run than previous years.GSAIR is often consumed by its audience“on-the-go”,upholding the importance of a strong digital presence.Whilst the regional publications will be purely digital,this survey results analysis report will be supported by a limited print run.GSAIR nowBy Sacha SandharHead of Insights,AriosiGSAIR 202312More nimble.More current.More bite size.4 publications throughout the yearto keep you up-to-date.GSAIRSurvey&ResultsGSAIREMEAGSAIRThe AmericasGSAIRAsia-PacificIn last years GSAIR we made several predictions and raised a number of issues that we felt would have the biggest influence on the serviced apartment sector in the year ahead.Having risen magnificently to the challenges of Covid,we speculated about whether the serviced apartment sector could maintain their competitive advantage over hotels.In terms of occupancy,they have.2022 saw a significant boom in business as demand returned post-pandemic.By June 2022,when last years GSAIR was published,UK serviced apartment occupancies nationwide were 78%compared to 73.5%for hotels.Outside London,they were 76.2%compared to 73.4%for hotels,and in London averaged 80.5%versus 73.8%.2Last years boom has settled but travel,assignment and relocation business continues to grow,despite inflation and rising energy costs driving rates up.Although fewer trips are taking place,employers are encouraging their travellers to stay longer to maximise productivity and minimise travel.Cost containment,sustainability,traveller safety and duty of care still head the list of priorities for travellers,travel,and mobility managers,yet it remains unclear whether corporates are really prepared to pay more for a more sustainable accommodation product.Meanwhile,the traveller and assignee demographic is changing.Gen Z now make up 30%of the worlds population and are expected to account for 27%of the workforce by 2025.3 This shift has opened eyes in the C-Suite to the need to provide accommodation,such as Home Stay and Co-living,that appeals to those travellers.2.STR data in The Business Travel Magazine 2023 Serviced Apartments3.https:/ sharing economy,consumer desire for travel and flexible lifestyles,and a lack of affordable housing are amongst the factors driving fragmentation of the extended stay sector which,in turn,has generated serviced living as a new,generic term to describe the range of concepts that have emerged in recent years.Demand for,and supply of serviced living-fully furnished accommodation including kitchen facilities,with some private and communal spaces are growing.Thats because they are cheaper to rent and profitable to build.In London,serviced living grew by 26.7%in 2022,with further growth predicted.4Indirectly,the pandemic enabled serviced apartments to overcome some pre-existing barriers to growth.Distribution is now more mature,with operators recognising the importance of providing availability on the GDS,whilst many TMCs are complementing their technology stacks with rich content from non-GDS providers.As the lines between serviced apartments,Home Stay and Co-living continue to blur,the question is precisely what is a serviced apartment?By the time the survey results from the next GSAIR are published,the future landscape may become clearer.Or perhaps well just have to become more comfortable with the ever shifting sands of what temporary living means to operators,corporates,agents,and guests.Extended stay trendsBy Mark HarrisContributing EditorGSAIR 20231415“As the lines between serviced apartments,Home Stay and Co-living continue to blur,the question is precisely what is a serviced apartment?”Credit:Bob W.Corporate usage of serviced apartments continues to grow across its three main source markets.Business travel and relocation are now joint top source markets for serviced apartments,with assignment work placed third.As Fig.1 and Fig.2 show,53.3%of corporates say they are now using serviced apartment for business travel more than they were twelve months ago.38.46%report increased use for project or assignment work,which is unchanged compared to 2022.This should be seen in the context of external research which says 78%of travel managers anticipate that their companies will make more business trips in 2023.5 As Fig.3 and Fig.4 show,TMCs and RMCs say their clients use of serviced apartments is growing most for assignment work(63.64%),followed by business travel(55%)and relocation(43.48%).By comparison,in 2022 assignment work and relocation were both reported to be growing by 60%,and business travel by 54.84%.The YoY differential is likely to be due to the return of business travel to near pre-pandemic levels.Despite 57%of businesses allowing employees to add leisure time to their business trips6 and 45%of hotel guests intending to add a leisure element to business trips in the future7,our survey showed that just 5.26%of corporates are currently using serviced apartments for bleisure trips.Business travelIncreased demand for serviced apartments for business travel is directly attributable to the pandemic,as Richard Eades,Global Category Manager(Travel,Meetings&Events)at bp explains.5.2023 CHPA Trends&Forecast for the Corporate Housing Industry Report6.Forbes-https:/ 7.Crowne Plaza-https:/ utilised apartments quite heavily during the pandemic through our safe passage programme.Our crews needed to get to certain locations for ships,refineries,or oil rigs,so we used serviced apartments for quarantine provision,and as medical centres because of their flexibility.That traction has continued post-pandemic.”A travel manager in the entertainments sector agrees.“Pre-pandemic we only used serviced apartments for relocations or the occasional long stay.During the pandemic we started using them extensively because we were still making movies and TV shows,and serviced apartments kept our crew and actors away from contact with others.”“Since the pandemic,people are continuing to use serviced apartments because their perceptions changed from needing a full-service hotel.”Assignments and relocation88.89%of corporates report no change in their use of serviced apartments for relocation YoY,compared to 52%who were using more serviced apartments for the same purpose in 2022,against the previous year.In 2022 60%of TMCs and RMCs reported that serviced apartment usage was growing for relocation and assignment work,rather than business travel.This is most likely due to surging demand for business travel during 2022 which has slowed in the first months of 2023.Sourcingand usageBy Mark HarrisContributing EditorGSAIR 202316Fig.1 Reasons for corporates using serviced apartments in 2023Fig.2 Reasons for corporates using serviced apartments in 202217Fig.3 Reasons for agent clients using serviced apartments in 2023Fig.4 Reasons for agent clients using serviced apartments in 2022 GSAIR 202318Beverly King,Vice President,Business Development&Consulting,EMEA&APAC and Global Diversity,Equity&Inclusion Council Member&EMEA Regional Lead at Graebel,who specialise in temporary and permanent relocations.“We have seen fewer long-term assignments since the pandemic and more permanent moves since before lockdown”she says.“Where there are assignments,we have seen a more recent uplift on short-term as opposed to the traditional long-term assignments.”“If a stay is long term,clients and their employees opt for permanent housing.But if they are only in location for a couple of months,they wont be renting a property because of complexities in terms of break clauses and so on.Serviced accommodation is often a much more flexible option.”Having enjoyed a bumper 2022,corporate housing providers also report a reluctance amongst many companies to hire because of lingering fears that the pandemic might return.Steve Frey,CEO at Oasis,points to higher interest rates as another major factor.“Coming out of Covid lockdowns,we saw demand ramp up quite significantly.This pent-up demand needed to be served,however,there was a shortage of available staff,so companies had to raise wages to attract good people.The increases in wages then caused those companies to have to increase their prices,continuing the inflationary cycle.“As we entered into 2023,transaction volumes started to level.Some of the largest tech companies were significantly reducing their staff sizes.That meant they were not hiring as many people or moving more people around the world,which is what our business relies upon.”“Our view is that the major employers have done their massive rounds of layoffs and that by the second half of 2023 we will start to get back to normal provided the soft landing recession prediction proves accurate.”Fig.5 Average length of stay-2023 corporate predictions19Average length of stayAs Fig.5 shows,44.44%of corporates say their average length of stay will increase in 2023,with a similar proportion predicting no change.TMCs and RMCs are more bullish,with 87.10%predicting longer stays.Corporates like Fidelity International are actively encouraging their travellers to travel less and stay longer,as Director-Global Travel,Meetings and Ground Transportation Carol Fergus explains.“Cost containment and sustainability are driving migration from hotels to serviced apartments.We are encouraging our travellers to stay in serviced apartments for any stay of five nights or more where available.We also highlight that serviced apartments also give them a home from home experience with the option to work in the apartment similar to their current working patterns.”Relo perspectiveThe way permanent accommodation is sourced is changing,as Graebels Beverly King explains.“Demand for permanent housing in places like London,Dublin,Berlin,Sydney,Perth,and Melbourne,is so high that people need longer to find solutions that work for them and this has led to competition for new stock.”“Five years ago,employees took look-see trips to view their prospective new home and see whats there(and what isnt).That stopped during Covid and now,they do their viewings virtually,moving to another country and then taking a couple of weeks to find their permanent accommodation.”“Its reducing the cost and carbon footprint,but Covid changed the way people approached relocation because virtual became normal and costs are now even more important to organisations.”Booking channelsMore corporates and agents now use specialist serviced apartment agents to source and book serviced apartments.In 2022,the GSAIR survey indicated that less than 10%of corporates used specialist agents.One year on,47.06%of corporates do so.66.67%of TMCs and RMCs also partner with specialist agents,compared to 22.27%and 52.27%respectively in 2022.29.41%of corporates and 26.57%of agents now have serviced apartment inventory in their online booking tools,bookable in real-time.Yet,whilst a higher proportion of serviced apartment bookings are made via TMCs(29.41%vs.23%in 2022),our survey suggests that usage of OTAs like Expedia and B is dwindling.Thanks to improved distribution amongst operators,and TMCs investing in content-rich technology platforms,there is a small(5%)increase in agents offering serviced apartments as a core service,or via a partner.However,operators say 23.16%of bookings still come direct to their own websites.Fidelity International uses a specialist agent.“They manage our preferred extended stay suppliers,with bookings channelled through the phone or emails.The traveller then receives up to three options based on location,safety,standard,cost,and other criteria specific to the guest.The individual decides and then its booked”explains Carol Fergus.Sector maturingThe post-pandemic surge in demand for serviced apartments has slowed-especially from relocation-but remains strong across extended stays three source markets.The growing maturity of the sector is highlighted by corporates and agents alike turning to specialist serviced apartment agents able to provide the knowledge,insight and ancillary services needed to meet customers business critical needs;cost control,sustainability,and duty of care.GSAIR 202320CMYCMMYCYCMYKSilverDoor_ad_1_June_2023.pdf 1 01/06/2023 11:13Key destinationsAs Fig.6 shows,Asia Pacific(APAC)accounts for the largest share of corporate serviced apartment volumes.The UK has 42.73%share,compared to Europes 30%,with the Americas receiving 18.89%and the Middle East and Africa 18%.8Our survey shows that London is the UK destination seeing the greatest growth(64%),compared to Brussels in Europe(40%),New York in the U.S.(43%),Riyadh in the Middle East&Africa(67%)and Singapore in APAC(44%).Apartments in the Middle East are in high demand,both for residential and commercial purposes.50,000 sqm of office space has brought total inventory to 4.9 million sqm in Riyadh and 1.2 million sqm in Jeddah.Two major retail developments in Riyadh have increased retail space in the capital to 3.4 million sqm,whilst the launch of Riyadh Air and a new transit visa service will boost the Kingdoms hospitality sector.9Amongst agents,London is the most frequently booked destination(16.49%),followed by Dublin(6.19%),Paris,Dubai,and New York(all 5.15%),and Singapore(4.12%).Strong demand for Singapore is also reflected in the citys status as one of the top seven cities by bookings.Top destinationsFig.7 shows survey respondents collective top five destinations.They include Miami,where a combination of low taxes,great weather,and a business-friendly environment have attracted entrepreneurs and major investors alike.Miamis economy is likely to keep growing even if,overall,the U.S.economy struggles to fight inflation,and other Sun Belt cities may struggle to fill new apartment properties.1090%of Fidelity Internationals serviced apartment business is centred upon London,but Carol Fergus also wants to use serviced apartments in India and some parts of Asia.“Thats where our back office team are located and theyre the ones that tend to stay longer as opposed to the client-facing team.However,the standard of serviced apartments in India is not yet up to the standard that we require for our travellers.”The U.S.is another country in which Carol says theres plenty of opportunity for serviced apartments.“Our stays are based on 30 days so the business tends to be relocation-focused.Id like to see more opportunity in France,Germany,Switzerland because theyre hot spots for us.”8.The totals do not add up to 100cause multiple respondents are giving values relevant to them.9.https:/ 10.https:/ Mark HarrisContributing EditorFig.6 Corporate serviced apartment volumes by territoryUnited Kingdom EuropeUS,Latin America,CanadaMiddle East&AfricaAsia Pacific42.730.00.89.00C.00%GSAIR 202322Impact on ratesThree of Graebels top European locations are London,Dublin,and Amsterdam,but changes in demand are actually driving rates down in these locations,as Beverly King explains.“We are still seeing inventory challenges.We know more business travellers are using serviced apartments,which is putting extra stress on the market,but we are starting to see some rates come down,even in traditionally more costly places.“In these locations you would think prices would be going up,but people are moving out of London so theres more availability.The same applies in Singapore.Theres also more competition,particularly in Sydney,Perth,and Melbourne.The market in China continues to be slow,whilst in the U.S.lead times are going back to pre-pandemic levels,which helps with supply.”The major cities and business hubs continue to be the key destinations for business travellers and assignees using serviced apartments.Meanwhile,hotel chains are introducing new extended stay brands whilst expanding the reach of existing ones as they seek to capitalise on the macro trends of longer stays,community-focused activities,and sustainability.Fig.7 Top 5 destinationsCity2023 most booked by corporatesLondon 16.49%Dublin 6.19%Paris 5.15%Dubai 5.15%New York 5.15%Amsterdam 4.12%Singapore 4.12rlin 3.09%Miami 2.06%Munich 2.06#The needs and accommodation preferences of business travellers,assignees,and relocatees are changing as Gen Z accounts for an ever-increasing proportion of the workforce.As Fig.8 shows,evidence of sustainability initiatives in serviced apartments is now a key requirement for almost a third(28.57%)of corporates.However,sustainability aside,travellers needs remain largely unchanged compared to 2022.Reflecting the growth in digital nomads,remote jobs and the work from anywhere culture,connectivity remains a top priority for travel managers and travellers staying in a serviced apartment.Agents rank the ability for travellers to cook in-apartment as most important,although Gen Zs preference for authentic local experiences,including dining out,suggest this could change.This is followed in second place by the need for connectivity(#1 in 2022).Fig.8 Essential requirements in serviced apartments-corporates and agentsTraveller preferencesBy Mark HarrisContributing EditorGSAIR 202324In-house services is jointly ranked third most important by corporates(#3 in 2022).Alongside this,corporates also rank the need for a designated workspace in third place.Quality and security assessment jointly ranks fifth amongst corporates(#4 in 2022).24/7 support also ranks fifth(#2 in 2022).Agents rank 24x7 support as third most important(unchanged from 2022)and family accommodation fourth(#4 in 2022).Perceptions and needsAgiito is a leading UK-based TMC.Chief Commercial Officer,Steve Banks believes Covid changed traveller perceptions of serviced apartments and made travel managers realise that extended stay products are a better fit for their travellers post pandemic.“Corporates want to empower their travellers to make decisions,and as people travel again after Covid,they want more of a home from home experience.They want more space.They want to feel secure and safe,obviously,as well.”“Consequently,serviced apartments are now an integral part of corporate travel programmes.Travel managers want properties on their programmes to be compliant with travel policy and from a regulatory perspective.The guest experience is really important too.”The same applies to relocators,as Oasis Steve Frey confirms.“Gen Z are used to the sharing economy.For their personal travel,theyll book Airbnb and VRBO because its a more cost-effective option.However,there have been well documented issues with these types of bookings when there is a lack of accountability and duty of care.That creates an opportunity within our space to harness that type of inventory,while adding the accountability that is required for clients(vetting properties,quality control procedures,24/7 ultra-responsive guest services,duty of care,DE&I,environmental sustainability,technology,reporting,etc).“These younger generations have grown up with products and services that are customisable and exactly the way they want it.With alternative accommodation,they want the same thing.They dont want a generic,one-style-fits-all accommodation.They want to book a place that has a style and feel that speaks to their own style.The really cool part of harnessing the sharing economy is that every unit is different,and the travellers can find the accommodation that speaks directly to their personal taste.”Fig.9 Importance to corporates when deciding between a hotel and serviced apartment-(weighted average score out of 5)25Hotel or serviced apartment?As Fig.9 shows,total cost of stay is corporates most important consideration when deciding between a hotel and a serviced apartment,followed by value for money and traveller well-being.Agents say their clients most or very important priorities are location(85.18%),followed by length of stay,price/quality comparison and guest experience(all 81.48%).Traveller preference is ranked last,which is surprising given that external research highlights the increased importance of addressing evolving traveller preferences.11 In the relocation market,Beverly King says Gen Zs needs are simpler than their predecessors.“They will typically only want a single or double bedroom but not multiple bedrooms.They also need fewer amenities.”“Gen Zs are currently mainly lower level employees so the budgets for their stays are typically lower too.During Covid people got used to being in their own homes,so when they go away now,they dont want to sacrifice the living space they have at home.”“Availability is my first benchmark”says Carol Fergus.“Next,I look at location in relation to our offices or the city centre,then safety,and quality standards.I expect the serviced apartments we use to be very clean,very spacious,with all the facilities required,after that I look at the value-adds like concierge,meet and greet,how maintenance is managed,or where travellers can eat nearby.”RFP strategyOur 2023 survey shows that corporate thinking around RFPs has performed a U-turn over the last 12 months,as corporates move away from combined to separate hotel and serviced apartment RFPs.This may be due to the ratio of RMCs to TMCs that took part in this years survey.This year,53.85%of corporates say they will issue separate hotel and serviced apartment RFPs,compared to 18.52%in 2022.38.46%will issue a single,combined RFP,compared to 62.96%in 2022.In the first quarter of 2023,Graebel received around a third more new client RFPs than they did in the corresponding period of 2022.The content of those RFPs is changing too,as Beverly King explains.“Were getting broader questions on sustainability and Diversity,Equity,and Inclusion.Theres definitely greater focus on the user experience,on flexibility within the package offered and how technology links the two.”Barriers to greater useAs Fig.10 shows,availability in required locations remains the biggest obstacle to extended stay taking further market share from hotels.The inconsistent quality of stock is another major barrier,although distribution channels and lack of clarity around ownership are cited as secondary issues,as they were in 2022.“Availability is the key to further growth”agrees Carol Fergus.“Next,operators need to embrace distribution technology.Our TMC needs to be able to book apartments through the GDS.”As Fig.11 shows,agents also cite a shortage of apartments in their clients required locations as the primary barrier to further adoption of serviced apartments,followed by inconsistent quality standards and guest services.Changing demographicThe GSAIR survey shows that traveller and assignee needs are changing,a fact operators will ignore at their peril.Gen Z expects greater individuality in apartment design and layout.Their definition of a home from home means high-speed internet connections over parking,gyms,and laundry facilities.12 54%of Gen Z spends four or more hours online every day.13 Employing and evolving sustainability initiatives are also key to attracting this values-driven generation.As employers increasingly empower their workers to make travel-related choices that meet their personal and business needs,we expect the guest experience to come to the fore over the next 18-24 months.11.https:/www.gbta.org/travel-managers-weigh-in-on-business-travels-outlook-for-2023/112.https:/ 202326Fig.10 Barriers to greater use of serviced apartments by corporates(weighted average score out of 5)Fig.11 Barriers to greater use of serviced apartments by agent clients(weighted average score out of 5)2714.STAA A New Alternative-https:/ukstaa.org/business-travel-white-paper/Corporate usage of,and further interest in,alternative accommodation models such as Home Stay and Co-living are growing as corporates evaluate the potential cost savings and traveller preferences.As Fig.12 shows,half of corporates now permit their travellers to stay in Home Stay and Co-living products.62.5%are considering using or increasing their current use of Home Stay products and 25%are considering using Co-living products.Of those corporates whose travellers would use these products,21.43%say that up to a third of their travellers would be receptive.As yet,theres no evidence of Build-to-rent(BTR)gaining traction amongst corporates,mainly because the global mobility community isnt aware of the distinction between BTR and standard long lets.We believe that the lines between BTR and other,historically long stay products,will become more blurred.Its possible that we may see this style of product transition to a model that can be consumed by short term and temporary living operators and travellers.Half of agents who took part in our survey confirm their clients are booking more Home Stay and Co-living products.By contrast,in 2022,whilst a broadly similar(52.63%)proportion of corporates were already using Home Stay,21.05%did not permit their use,suggesting travel managers are seriously considering adoption.Travellers willingness to stay in a Co-living space with shared communal facilities follows a similar pattern to their employers,as Fig.13 shows.Half of business travellers would consider a Co-living space with shared facilities.These come predominantly from the engineering,professional services,and technology sectors.Barriers to adoptionAlternative accommodation models are not an option all corporates are willing to permit in their travel or mobility programmes.The travel manager for a global entertainment group has seen some employees stay in Airbnb but says,“its very much been on a we dont advise this so on your head be it basis.”“That could change when a millennial becomes president of the company,but I dont see that changing in the foreseeable future while there are reasonably priced products like aparthotels.”“Culturally,we dont want a big brother is watching scenario”says bps Richard Eades,“but we dont permit Airbnb or other alternatives to be used,anywhere in the world.We analyse our payment card data and block this type of property distributor.The booker is then contacted by security and referred to our Global Policy.”All bps Global Travel&Meetings data is fed into Group Security for incident management and duty of care.“Our travel dashboard area,where people go to for related information is very clear on this,although you cant just say dont do that.You have to provide simple to comprehend and bookable alternative solutions”explains Richard.Change is happeningAgainst the cautious approach being adopted by many corporates,Home Stay providers report seeing increases of up to 25%in business travel bookings since the pandemic ended,coming through a combination of channels,from direct to OTAs and TMCs.14 Meanwhile,for digital nomads,Co-living offers the perfect mix of independence and community.For travel managers,despite the duty of care risks,the Home Stay format offers potential cost savings,so it would be surprising not to see adoption of both formats increase in the year ahead.AlternativemodelsBy Mark HarrisContributing EditorGSAIR 202328Fig.12 Current corporate use of alternative accommodation formatsFig.13 How many of a companys travellers might consider Co-living accommodation?29The importance of sustainability to travel managers,travellers and assignees alike is highlighted in our survey findings,including the importance of sustainability in serviced apartment sourcing.As Fig.14 shows,42.86%of corporates say greater awareness amongst business travellers means sustainability always influences sourcing,with a further 57.14%saying it sometimes does so.64%of agents say sustainability is important to their clients,thanks to greater awareness amongst travellers.However,74.77%of operators deny sustainability is the biggest factor in corporate sourcing decisions,suggesting instead that the strength of feeling amongst their customers may be underestimated.66.48%of corporates,62.65%of agents,and 62.62%of operators say RFPs either always or sometimes demand evidence of sustainability credentials.However there appears to be an element of do as I say,rather than do as I do in play.As Fig.15 shows,almost two-thirds(64.29%)of corporates and 68.10%of operators have not calculated their GHG emissions.Of those who have,21.43%of corporates have either achieved Scope 2 or Scope 3.Theres a greater spread across operators,where 22.41%have achieved Scope 1,15.52%Scope 2 and 13.79%Scope 3.A corporates Scope 3 depends on an operator measuring their Scope 3;should operators fail to achieve Scope 3,corporates could be prevented from achieving the same.Fig.14 Importance of sustainability to corporates and their trav-ellers,and how is that driving serviced apartment sourcing?SustainabilityBy Mark HarrisContributing EditorGSAIR 202330Walking the talk?“Walking the talk around sustainability is a must”says bps Richard Eades,“but its made harder by the immaturity of the travel industry.Its not just the carbon,its aligning and measuring against the people,the planet,the places and so on.”“Culturally,sustainability is definitely a recognised requirement across the western world,especially in the UK and Europe.But when you move into the Middle East,Africa and Asia Pacific,sustainability is not.”“bp is always under the microscope from shareholders,the public and media.We have committed to becoming net zero by 2030,so we have dedicated teams that capture our data,and we also have global offsetting programmes.”“Our focus is working out how to bring more of an informed position at the point of transaction,so sustainability is added into our booking tool as a selection criteria alongside location,cost,and traveller safety.Then we have to decide how these criteria are weighted so that bookers can make the right choices.”Actions speak louderGraebels Beverly King sits on the organisations CSR steering committee.Graebel has embraced sustainability as members of the United Nations Global Compact,is already certified to the ISO 14001 environmental standard,and is going through the EcoVadis sustainability rating for global supply chains.“Weve started to move towards accommodations that have independently assessed accreditation”she says.“We absorb any cost implication as part of the cost of doing business because whilst some clients are very savvy about sustainability,others needed to be guided and we dont yet have consensus on what good best practice is.”“Our other challenge is that,whilst we can measure ourselves within Graebel,theres no agreed global approach on how global suppliers sustainability should be measured,so they are measured differently by location and practice.This is something we all need to work on together across industry to help drive positive,sustained change and a more mindful approach to mobility.”One brand to set an example is Bob W.,as Co-Founder and CEO Niko Karstikko explains.“People deserve to know our CO2 emissions on a per apartment basis.Having made the numbers public,we then double offset those emissions.100%of our electricity is renewable.We have second hand furniture,fixtures,and equipment in every apartment.”Fig.15 Have you calculated your GHG emissions?31AccreditationAgiitos approach starts by establishing whether a serviced apartment operator has an ESG policy,whether sustainability accreditation has been secured,and from whom,as Steve Banks outlines.“Its one thing for a corporate to know what theyve booked,and where,but another to know why.By adding reason codes,frequency of travel and average length of stay to our data,we can make recommendations on how to reduce GHG.”However,George Sell,Editor-in-Chief,Serviced Apartment News questions whether the industry is taking sustainability seriously and believes a big storm could be brewing.“The travel buyers sustainability tick list is getting longer and longer but,with a few exceptions,I dont think there is much inventory out there that actually meets those requirements other than new-builds because they are energy-efficient and well insulated.A lot of extended stay inventory is not performing on an environmental level because its not cheap to retrofit this stuff and bring it up to standard.So,unless owners of poorly performing inventory put their hands in their pockets and bring it up to standard fairly quickly then theyre going to fall off corporates preferred accommodation programmes.”Looking aheadDo operators realise how important sustainability is to their customers?External research shows that 57%of serviced accommodation providers have a Sustainability or Environmental Policy in place.More than 60%check their carbon impact,but only 16tually measure their carbon footprint.15And are serviced apartment customers prepared to pay more for a sustainable stay?Recent research says a third would pay a greenium of 10%.If so,its up to operators to deliver.GSAIR 20233215.https:/ HopeThe cost of living crisis,and soaring energy costs in particular,are already impacting corporates and operators.For operators,despite the dramatic recovery of the UKs hospitality sector,the cost of living is arguably the biggest challenge they have faced since the pandemic.In our survey,we set out to establish the size of serviced apartment operators energy increases so far,how they will impact rental rates and the degree to which operators are willing to mitigate the extra financial burden,or not.Counting the costAs Fig.16 shows,20.49%of global operators say their energy costs have risen by 11-20%over the last twelve months,with a further 15.57%experiencing smaller rises of between 1%and 10%.When set against the broader landscape,serviced apartments operators seem to have got off lightly compared to residential properties,although the reasons for this disparity are unclear.In October 2022,total utility costs for London hotels increased by 56%and by 79%for those in the regions,compared to the same month in 2019.16 In response,the UK government launched an energy bill relief scheme for businesses between October 2022 and March 2023.17In comparison,household energy bills increased by 54%in April 2022 and were due to increase by a further 80%in October 2022 before The Energy Price Guarantee limited the increase to 27%.Overall,gas prices were up 129.4%in the year and electricity prices up 66.7%in the year to March 2023.Fig.17 shows 27.05%of global operators are budgeting for increases of 1120%over the next 12 months,with a further 24.59%budgeting for smaller increases.Mitigating the impactAs Fig.18 and Fig.19 show,50%of corporates say they expect operators to make savings in other areas instead of passing on higher costs to the customer.21.43%expect suppliers to absorb the extra costs completely.From our survey,42.86%of corporates expect suppliers to charge a higher nightly rate,with a further 7.14%levying a surcharge above a monthly consumption cap.As Fig.20 shows,corporates can expect to be disappointed.With electricity accounting for roughly 15%of a hotel room cost,the hospitality industry is predicted to increase prices by at least 25%.18 In our survey,three-quarters of operators(74.80%)say they will mitigate additional energy costs by charging a higher nightly rate.Just 34.15%intend to make savings in other areas,whilst just under a third(30.08%)say they will absorb the extra costs.Two-way streetAs one travel manager points out,higher energy bills are just one part of the challenge to operators margins.“They need to increase staff wages at a time when its hard to attract staff.Historically,we would share the pain with our partners to mitigate the impact.”Cost of living crisisBy Mark HarrisContributing Editor16.HotStats17.https:/www.ons.gov.uk/economy/inflationandpriceindices/articles/costoflivinginsights/energy 18.https:/ 202334Fig.16-Increase in operators energy costs over the last 12 monthsFig.17-Operators expected energy increase in cost over the next 12 months35“However,we would also be wary of whats happened with the airlines where theyve increased fares when the price of oil has gone up,but not decreased them when the price of oil has come down.We have to be aware of pricing creep.”Carol Fergus says that travel managers will need to manage internal expectations.“Dont expect prices to be flat or reduced.It would be nave to think any operator is not going to pass on price increases in part or full.”“My job is to assess the market in each of the locations we place business and try and negotiate below market predictions/trends and also get as much value as I can.”Transparency requiredAgiitos Steve Banks says his clients are expecting accommodation providers to pass on some of their additional costs but to mitigate costs as much as possible.“Our customers also want to know how operators intend to mitigate those increases,say by reducing energy or food waste,and how they can help.In real terms,that means us as a TMC advising them on the optimum day or time to travel,or how far in advance they should be booking to secure the lowest accommodation rate.”That room rates will increase in the wake of increased energy costs is virtually certain.Whilst some corporates will try to negotiate their way out of accepting those increases,others will work with their suppliers to share the burden.Suppliers need to be careful.Should energy prices fall,travel managers will expect to share the benefit too.Fig.18 -How corporates expect operators will manage higher energy costsGSAIR 202336Fig.19 -How will operators react to higher energy costs-corporate expectation v operator realityFig.20 -How operators will mitigate higher energy costs37Over the last 12 months,several new brands have come to market,and established brands have continued to broaden their footprints across the industry landscape.As SilverDoors Head of Partner Development,Shabina Awan,observes,“New players have emerged in Europe with very healthy stock levels and are complementing what you can procure in those markets.Equally,existing brands are expanding their current inventories and going into new markets.Thats incredibly healthy.”New entrantsBob W.has emerged as a prominent,new,tech-enabled brand in the short stay space with an inherent scalability in their operational design.This has enabled rapid expansion with the brand recently announcing their acquisition of Germanys multi-city Charly Hospitality,adding eleven new properties and three figures in new units,which has also given them a presence in Amsterdam.Blueground and limehome have also continued to expand.Blueground acquired Travelers Haven,a Denver based provider of on-demand housing,and have opened stock in two new cities in the Americas;San Diego(22 units)and Mexico City(61 units).Munich-based limehome used their recent 45m Series B funding for further development of their proprietary tech stack and expansion,with recent acquisitions in Iberia,namely in Madrid,Barcelona,Seville,Malaga,Lisbon,and Grenada.They have also invested in their domestic market with the signing of 82 apartments in Bremen,which will form a new mixed use development,including shops,and food and beverage outlets.Skyside International is a new provider based in the underserved Luxembourg city market.The brand aims to reach over 100 units,with plans to expand beyond the Grand Duchy into Berlin and London,together with other prime locations.Established brands are expandingEstablished players are also continuing to expand.SilverDoor Group Head of Partner Relationships,Alex Neale notes that“several operators have secured significant levels of financial backing,particularly those that have an asset acquisition foundation,like edyn and Staycity.These players have large amounts of capital behind them and are expanding aggressively.”The purchase of Oakwood has enabled The Ascott Limited to absorb approximately fifty properties in APAC,where they are also opening 70 new buildings including India.The Ascotts Co-living brand Lyf,is also expanding into Europe with an upcoming opening in Vienna.Edyn has continued the expansion of their Locke brand in the UK with the creation of Locke Kensington by acquiring NH Kensington.This property will feature 121 apartments.European expansion continues with the opening of their East Side Gallery property in the trendy former East Berlin neighbourhood of Friedrichshain.Other established brands that are expanding include:Staycity are growing significantly across Europe with their pipeline of new locations including Lisbon,Porto,Munich,and Amsterdam.The Aparthotel chain now has 6,000 apartments across 32 properties.Radisson Hotels have expanded their presence in Zurich by now taking on operation of a property previously run under the Joyn serviced living brand.19.Knight Frank-https:/ 20.Savills-https:/ and supply updateBy Sacha SandharHead of Insights,AriosiGSAIR 202338 Dao by Dorsett is about to open its second London property.Located in Crouch End,the property will comprise approximately 60 keys consisting of studios and one bedroom apartments.Flying Butler,soon to be known as Viridian,has opened a new property in Hammersmith.Southerton Mews is a combination of apartments and mews houses,each containing one or two bedrooms.Lamington Apartments Room2 will open in Belfast with 175 units,followed by York with 116 apartments In the Americas,Hyatt has launched Hyatt Studios which is its first upper mid-scale brand providing accommodation across 100 locations.The first property will open in 2024.TFE Adina Europe has opened 140 new units in Geneva which is a mix of studios,one and two bedroom apartments.Barcelona based platform UKIO is expanding across Europe with 48 one,two,and three bedroom apartments in Madrid,106 of the same in Barcelona,with smaller unit additions in Paris and Lisbon.Uma Suites,the serviced apartment brand of Smart Rooms Company,has added to their presence in Madrid and Barcelona with 20 one and two bedroom units in the former and 50 in the latter.Cheval Collection has entered the Dubai market with the opening of Cheval Maison The Palm offering 131 apartments which are one,two,and three bedroom units.A combination of rising awareness of the sector amongst developers and investors,and operators desire to expand into new markets,is fuelling increases in serviced apartment inventory across the globe.By the end of 2022,the UK serviced apartment sector was predicted to grow to over 27,000 units,with annual growth forecast at 5.7%.19 Looking ahead,external research forecasts that European serviced apartment supply will expand by 21.2%over the next three years.20 Expect to see more brands,independent operators and existing players capitalise.Experience comfort and convenience with Charles HopeApartments in over 15 prime UK and European locations.Your home away from home with exceptional amenities and personalised service.WWW.CHARLESHOPE.CO.UK39In this article,we look at the fragmentation of the alternative(i.e.non-hotel)accommodation market;at what makes a serviced apartment a serviced apartment,and what is making these lines blurred.Firstly,George Sell,Editor-in-Chief of Serviced Apartment News looks at how the supply landscape is changing.Then,Ben Davis of real estate practice Saxbury,which represents commercial landlords and developers with projects ranging 10-110m GDV,provides an investors perspective,predominantly on the UK market.What is a serviced apartment?Serviced apartments are custom built or residential blocks converted for business travel-related long stays.We also have aparthotels which also serve the business travel market,but for shorter stays,and which also target the leisure market.Then there are short term and vacation rentals,which both serve the serviced apartment and short-stay markets.The lines between these products become blurred when a hotel room has a kitchenette and when an operator takes standard residential stock from a traditional residential building and turns it into a corporate/commercial product,and then everything in between.For example,a recent London entrant chose not to include hobs/a stove top in their offering as their research showed that their guest demographic didnt want them.In reality,these and others like them are niche products that may confuse the customer,but its a good example of the continued diversification and layering of operator solutions that are now available to the corporate market.Such a property is restricted in their ability to target long or even medium term business due to the limitations of their kitchens.Its unlikely to be too much of an issue for their given guest demographic,due to the plethora of eateries on their doorstep.Changing demographicsTheres a new guest demographic out there called Global Nomads;people who have jobs where they dont need to be located in one particular place,and who can move around and do their job from anywhere.This group is small but growing and increasingly;they tend to be younger people who want something with more character and individuality.Co-living appeals to the same audience and is a low-cost option as your primary address.Global Nomads may go somewhere for three or six months,find a Co-living development,move in the next day and the bills are inclusive.An excellent example is the successful and long established brand and operation,Selina,although one could argue that their product currently appeals primarily to a leisure customer.Originally built as a Citadines aparthotel,the new Wembley ARK has been converted into a Co-living product offering stays of one,two and three nights.This demonstrates the ease of converting an aparthotel to Co-living,and the overlap between the two formats depends on the markets the developer is targeting.Are the lines becoming blurred?The industry believes they are,but I dont think the end-user is bothered whether something is termed a serviced apartment,an aparthotel or Co-living,at the end of the day,its somewhere to stay.Investor perspective on Serviced ApartmentsBen Davis is co-founder of Saxbury and is an operational real estate expert with over 18-years experience of the serviced apartment and aparthotel industry.The private rental system in the UK has never been geared up for short term stays because applicants are required to sign up to a 12-month tenancy agreement,whereas people who are relocating and corporates generally require greater flexibility.Thats how the serviced apartment sector found its calling.Save for a tiny number of permitted serviced apartments(use class C1),the industry has flourished with operators leasing up blocks of residential properties(use class C3)to offer on a bills-and-service-included basis for shorter periods,whilst remaining strictly in the shadows of planning regulations.Blurred linesBy George Sell and Ben DavisGSAIR 20234041“Theres a new guest demographic out there called Global Nomads;people who have jobs where they dont need to be located in one particular place.”Credit:limehomeCredit:AppartCityNow,the notion that its justifiable to lock away multiple units under one lease agreement,effectively removing these properties from long-term housing,feels out of touch with public sentiment and is driving operators to focus on long term stays in a bid to remain compliant with local planning restrictions.Build to Rent(BTR)Historically,institutional capital has flocked to the safe havens of commercial property;offices,logistics,and student accommodation(PBSA),but appetites for alternative operational real estate within the living sector have really opened up with BTR,Aparthotels and Serviced Apartments increasingly gaining traction with institutional investors.With BTR,investors forward-fund a large-scale housing development and have an in-house management company in place to deal exclusively in long-term lets.Whether staying for a week or a year,tenants now have more choices available to them,so institutional landlords are demonstrating value by offering more amenities and services.Serviced apartments havent always been considered institutional grade assets,but we are beginning to detect a blurring of the lines between traditional BTR and serviced apartments.This is partly born out of renters demanding flexibility,but is also driven by owners seeking higher net returns by blending extended stays alongside long-term rentals.This is where professional serviced apartment operators can add value because they already have the necessary skill set to handle labour intensive short term lets,revenue management and customer service,which are the cornerstones of any successful short term rental business.Institutional investors are indeed ploughing capital into every part of the living sector,today BTR with the sharpest yield is at number one,similarly Aparthotels which provide long-term index linked leases are viewed as highly attractive investments.Co-livingCo-living is an asset class that sits at the intersection of BTR and PBSA.In recent years,Co-living has gained a great deal of momentum with developers.Its bills inclusive,community-focused rental model has proved popular with those seeking design-led,self-contained living quarters plus on-site amenities,events,and opportunities for residents to network thrown in,all for less than the cost of a private apartment.Currently,there are a handful of Co-living properties in London like The Collective and The Ark,but we expect GSAIR 20234221.https:/www.savills.co.uk/insight-and-opinion/savills-news/329164-0/savills-projects-rapid-growth-of-uk-co-living-sector-to-see-540m-of-deals-in-h1-2022-the-firm-says 22.https:/centrick.co.uk/news/expert-opinion-the-future-of-btr-in-the-uk/#:text=According to research, there are,could reach 380,000 by 2032.23.https:/ have the simplest tastes.I am always satisfied with the best.”Oscar Wildeto see many more developments being built across the country over the next few years.Co-living properties often have minimal length of stay restrictions,meaning rooms can also be let during peak seasons for short periods with housekeeping bundled into the rental price.Could this fledgling asset class one day eclipse serviced apartments entirely?Illusion or reality?As lines continue to blur,it seems that Co-living is here to stay.The sector is estimated to have a potential core target market of 725,000 residents,including almost 160,000 in London alone.Considering that there are currently 24,000 operational and pipeline units,the scale of the opportunity is significant.Co-living could be the right product at the right time;79%of renters in the two largest operational Co-living schemes,The Collective Old Oak and The Collective Canary Wharf are aged 18 to 35.21Meanwhile,there are almost 200,000 individual BTR units either completed,close to completion,or in planning with estimates suggesting that completed BTR homes could reach 380,000 by 2032.22 Independent operators currently account for over 40%of UK serviced apartment supply,so we are likely to see more one-off or unique properties targeting niche markets especially in London.However,as of June 2022,serviced apartment operators with a unit count in excess of 400 units,represent some 45%of the total UK supply.23 At its core,institutional capital demands long-term safe income;presently there are a few different ways to get that,and thats whats accelerating a blurring of lines.The conclusion is that theres room for each of these formats,providing they remain relevant,are marketed effectively,and provide investors and developers with the required returns.GSAIR 202344Credit:Charles Hope45“Independent operators currently account for over 40%of UK serviced apartment supply”As Fig.21 shows,serviced apartment operators face a number of challenges in the coming year;whether it be tackling rising energy costs or increased competition,investment in automation,focusing on the guest experience,or growing their presence in key cities and markets.PipelineJust over a third(37.27%)of operators regard development and expansion as a major challenge.This may explain why,despite the war in Ukraine,Eastern Europe remains a major target for serviced apartment operators.As Fig.22 shows,whilst London,Berlin,and Moscow all score highly in terms of where operators are planning to increase their inventory,the table is topped by the Republic of Abkhazia,on the eastern coast of the Black Sea in north west Georgia.300 units are planned there due to the state securing increased Russian investment in the Abkhazian economy to fund infrastructure improvements to increase the supply of electricity from Russia to Abkhazia.24Selecting a new locationThe criteria currently applied by operators when selecting a new location remain broadly the same as they were in 2022,as Fig.23-26 show.69%of operators,when asked to rate the importance of a variety of factors,rated local corporate demand as very important,and 53%rated cost of property acquisition as very important.In contrast,only 22%of operator respondents cited competitor presence as very important,and alarmingly,as many as 16%of respondents didnt rate planning permission as important when sourcing.Fig.21 Top 3 challenges facing operators in 2023Challenge%of Operators1Global economic crisis 80.91%2International volatility41.82ompetition41.82$.http:/government.ru/en/news/47863/Pipeline,planning and guest experienceBy Mark HarrisContributing EditorGSAIR 202346Fig.22 In which locations are you planning to open in the next 1218 months and how many units are you planning?LocationsNumber of units1Abkhazia3002Berlin 2743Moscow238Fig.23 -Selecting a location:importance of local corporate demand to operators(1 is very important)Fig.24 -Selecting a location:importance of property acquisition cost to operators(1 is very important)47Fig.25 -Selecting a location:importance of competitor presence to operators(1 is very important)Fig.26 -Selecting a location:importance of planning permission to operators(1 is very important)Guest experienceSustainability,smart energy consumption,authentic local experiences,digitalisation,and wellness continue to top industry polls in terms of guests expectations from serviced apartments.Our survey shows that related initiatives being implemented by operators are far from consistent.At a basic level,operators are adopting WhatsApp as a customer communications tool,or are providing QR code access.Enhancements that some would regard as basic,include snack baskets and paying more attention to guests questions.Others are more strategic,but still suggest a fundamental lack of understanding of what serviced apartment users regard as a key requirement.Into this category fall better quality controls,welcome packs and upgraded toiletries.In terms of the benefits operators expect to reap from these improvements to the guest experience,there is little consensus.They range from managing guest expectations,and enabling better interaction with other guests,to reducing complaints.The inevitable conclusion is that many operators simply dont know what they hope to achieve as a result.The question also arises as to whether operators are truly focused on improving the guest experience and,if not,what impact that will have on attracting and retaining business or leisure customers.GSAIR 202348The rise of the tech-savvy traveller is very much on serviced apartment operators radar when considering how to enhance and evolve their services and products.61%of operators agree or strongly agree that the digital nomads preferred experience will become the norm over the next 12 to 18 months.A new breed of operator has entered the short stay space.They offer a tech enabled service with an emphasis on a low touch experience,coupled with a high spec physical product.These organisations are lean,efficient,agile,and above all else,scalable.One such operator is Munich based limehome,whose Co-Founder&Managing Director,Dr Josef Vollmayr says:“After countless hotel stays as a consultant at McKinsey,I realised that it must be possible to replicate what we see elsewhere,in the hospitality industry.To digitise interactions,reduce manual processes and hence operating costs,and generate higher revenues whilst providing a seamless,more convenient customer experience.”PMS just the startAs Fig.27 shows,74%of serviced apartment operators have invested in Property Management Systems(PMS)because they are regarded as essential for the efficient running of a serviced apartment operation.However,to remain competitive and deliver the seamless guest experience which travellers demand,operators do recognise the need to go further.Our survey suggests that self-service check in has been adopted by almost 50%of operators,whilst 31%now offer mobile applications as part of their service and 27%offer digital access control systems.This shows that automation is continuing to be introduced throughout the customer journey.As Fig.28 shows,the benefits of these,and other technologies are varied and extensive.The benefits most cited by operators are an improved guest experience(30%),improvements in process efficiency(23%),and cost efficiency(10%).Niko Kartsikko,Co-founder and CEO of techenabled short stay operator,Bob W.explains his companys strategy.“We have great services that are easily accessible through our apps.We have a check in thats so seamless that you dont need a front desk.We have amazingly empathetic customer service,which is chat based,and we bring all of that with one on site FTE per property.”Empathy vs DigitisationRachel Angell,COO of luxury stay provider,Domus Stay believes that for some strata of the market,the value of the purchase dictates that trust and a personalised,curated experience trumps the benefits of digitisation.“The ultra-high net worth traveller wants things to be as seamless,as easy and as convenient as possible.But I also think that what theyre looking for is recognition and an understanding of who they are.”Artificial Intelligence and machine learning are enabling automated empathy.95%of Bob W.s outbound communications are automated with each guest receiving a message 50 minutes after check-in to ask if they are satisfied with their apartment.Your last check in ensures returning guests are remembered,so dont need to check in more than once until their ID expires.Algorithms match features of their previous stays with those of available room types to offer guests apartments and to upgrade them where occupancy could be improved by doing so.Other uses of AILimehomes proprietary tech enables a significant advantage in the management of their yield by scanning the rates in the market,coupled with their own occupancy,both on a real time and forecast basis.Giles Horwitch-Smith CEO of PMS provider,res:harmonics says,“Machine learning can identify trends such as increased maintenance issues or predict revenues over the next month and even further ahead,freeing property managers up to focus on delivering an enhanced customer experience.”Hospitality techBy Sacha SandharHead of Insights,AriosiGSAIR 202350Fig.27 -Automation included in operational deliveryFig.28 -Key benefits of the implemented automation 51Improving the guest experienceThe advantages brought about by automation are streamlining the work of the hospitality manager,but the most interesting development might yet be that it actually enhances the level of hospitality operators can offer their guests.Hanish Vithal,CITO at SilverDoor believes that corporates,travellers,and assignees have realised that digitalisation is more efficient and brings more customer benefit.“Many customers are now talking to us about APIs and seeking collaborative solutions to integrate their platforms effectively.This allows SilverDoor to become an exclusive serviced apartment content provider on their platforms,while enabling travellers to book serviced apartment accommodation instantly,seamlessly,and with more control.”“Through the digitalisation transformation,customers are gearing toward highly connected content which saves time and money in the booking process and promotes safer and more sustainable choices.Coupled with Artificial Intelligence(AI)long term,this technology will further support this paradigm shift via increased revenue opportunities and cost savings its what the modern travel programme requires.”Looking goodThe evidence suggests that,although the era of digital transformation is only just getting started,the medium and long term outlook is good.Global spending on digital transformation is expected to reach$6.8 trillion by the end of 2023.Moreover,87%of business leaders think companies with digital-first strategies are reportedly 64%more likely to achieve their business goals than competitors.25 Thats some ROI.Quality,space and comfort/Safety and compliance Exceptional customer services/Over 40 locations to choose from London&the South East,Madrid and Lisbon.Were here to Telephone: 44(0)208 944 3662 or email SERVICED APARTMENTS FOR BUSINESS FOR OVER 25 YEARS Bringing a Human Touch to the Digital WorldFOCUS ON SUSTAINABILITYAccommodation your business can depend onGSAIR 20235225.https:/www.hospitalitynet.org/opinion/4114516.htmlCredit:Wilde Aparthotels by Staycity53“The evidence suggests that,although the era of digital transformation is only just getting started,the medium and long term outlook is good.”Operator sentiments for the immediate future are positive.As Fig.29 shows,optimism centres upon all performance areas,ADR,occupancy,average length of stay and RevPAR.Operators had the highest level of optimism in relation to increased levels of ADR.Looking to the future,Fig.30 shows that 71.3%of operators predict that more corporates will switch from hotels to serviced apartments.60.55lieve digital nomads want a low-touch,high-tech experience,whilst just under half(49.54%)predict that sustainability will revolutionise the way we do business.New opportunitiesSo,what does the next 18 months hold for the sector in terms of demand and supply?George Sell from Serviced Apartment News believes more new hotels will have dedicated serviced apartment floors so they can service corporates short and long term stay markets.“I also think well see more branded aparthotels seeking to compete with Locke and Wilde.Were also seeing more extended stay hotel brands launched in the U.S.and Im surprised that more of those havent made it over to Europe to challenge the likes of Staybridge.”Niko Karstikko of Bob W.sees new opportunities ahead.“Theres a massive void in the market of something between the fragmented amateur hosted apartments and properties versus the hotel product.We are filling this void with a superior product and were on a mission to create a five-star experience for every guest,at scale.”Anyone looking to start a new extended stay business cant simply start with a huge property,says Josef Vollmayr of limehome.“You need to find flexible ways into the market,and this typically comes from the apartment space where youre able to operate smaller assets.Thats where most of the innovation is now happening and also most of the financing and funding goes to.”Barrier to financeThe tech-based providers may have created a new barrier to entry.In October 2022 it was reported that flexible living startup Flow,had secured$350 million from Andreessen Horowitz;online rental marketplace,Zumper raised$30 million,whilst short term rental platform Landing secured$75 million fresh equity funding and another$50 million in debt.26 The margins these businesses are demonstrating are setting investors expectations from all new entrants seeking finance,which may prove too high for some.EvolutionTom Meertens,COO International at National Corporate Housing predicts that the supply/demand squeeze will slowly ease,compared to now,especially in key economic capitals like Singapore,Dublin,London,and Sydney.He attributes this to conflicting predictions in the global mobility market.“51%say assignments and relocations business will increase,but 49%say both will either stay the same or decrease.Much will depend on whether we see financial disruption and whether inflation can be controlled.”Future outlookBy Mark HarrisContributing EditorGSAIR 20235426.https:/ -Focus of operator optimism(weighted average,out of 10)Fig.30 -Operator predictions for the next 12-18 months55Credit:Staycity AparthotelsGSAIR 202356Credit:limehomeCredit:Domus StayOasis Steve Frey says the serviced apartment sectors customer base will evolve to embrace both transient business travel and more leisure business.As a consequence,operators will look to technology to provide efficiency-related savings.“If youre taking bookings for shorter periods,youre making the same profit percentage,but with fewer nights the actual amount companies make is less but the work that goes into that booking is unchanged.For that to be economically viable you have to be able to reduce your costs on a booking level and the only way to really do that is through technology.”Frey believes that operators who either create or leverage the available technology will emerge as the principal source of supply.From smaller,local serviced apartment providers to larger companies that can operate as agencies or suppliers.“I think the distinction between being the source of supply and being the source of demand will become clearer.The ones that have created the technology efficiencies required to deliver at the most cost-effective levels for the customer,will become the source of demand.”57Essential takeaways1Serviced apartment usage has grown for the 10th consecutive GSAIR report.Growth is across business travel,mobility,and leisure guests,although the volume of bleisure trips is modest compared to industry predictions.2Corporates are demanding more added value from their suppliers but are reluctant to pay for these enhancements.Intermediaries and suppliers are being squeezed as customers needs become more complex and more expensive.There is a limit to how far partners are able to go.3The need for speed in every way of working,with everything at virtual pace seems unsustainable.Traditional operators could be vulnerable and only strong financially backed providers will be able to keep their heads above water.4Europe remains the epicentre of serviced apartment demand,although growth is also concentrated in the established markets of London and Singapore.5When deciding between serviced apartments and hotels,corporates are balancing cost concerns such as total cost of stay and value for money,against traveller wellbeing.6Sustainability is driving the sourcing of serviced apartments,but two-thirds of corporates and operators have not yet calculated their GHG emissions or set carbon reduction targets.7Despite,or maybe because of the rise of digital nomads and the work-from-anywhere culture,what travellers and assignees need from a serviced apartment are largely unchanged,i.e.,connectivity,cooking facilities and in-house services.8The appeal of serviced apartments to travel and global mobility managers remain traveller safety,guest experience and policy compliance.9The growing maturity of the serviced apartment sector is evidenced by content being made available in self-booking tools;the importance of policy compliance in accommodation choices;growth of interest in,and the adoption of Home Stay and Co-living products.GSAIR 20235810Alternative accommodation models are growing market share amongst business travellers.Home Stay products are now in use by over half of corporates,whilst corporate interest in Co-living is growing.11The majority of corporate travel and relocation policies now permit use of both Home Stay and Co-living,although half of travellers would not consider staying in Co-living products with shared services.12As yet,Build-to-rent is still in nascent stages of adoption in the relocation market.Thats because the distinction between BTR and standard long lets is not understood in large sections of the global mobility community.13The specific industries where Co-living is being considered by travellers and assignees,include engineering,professional services,tech,and video game development.14The growing maturity of serviced apartment distribution is highlighted by rich content being made available in self-booking tools,and by specialist serviced apartment agents being ranked as corporates preferred booking channel.1575%of serviced apartment operators are likely to pass on energy cost increases to customers via higher nightly rates.Under a third are planning to absorb energy cost increases,whilst just over a third are planning to achieve cost savings in other areas.16Corporates still regard insufficient supply to satisfactory standard in required locations as the biggest barrier to serviced apartments growing market share in the business travel and mobility markets.Operators say the global economic crisis,international volatility and local planning pose the biggest challenges limiting future expansion opportunities.17Operators remain optimistic about the future,with that optimism centred upon all performance areas,i.e.ADR,occupancy,average length of stay and RevPAR.59The following rates tables reflect the average rate for studios,1 bedroom and 2 bedroom apartments from 1st May 2022 to 30th April 2023.They have been arrived at using the booking data of SilverDoor during the above period.All currencies stated are local,unless otherwise indicated.Periodic rates have been calculated based on stays of 7,30 and 90 nights.Rates are inclusive of local taxes,except for UK where rates exclude VAT.Further detail and rate information will be discussed in future regional GSAIR publications.Key cities rates tablesEuropeRateRateRateStudio1 bed2 bedAmsterdam(EUR)Average nightly rate from(EUR)1757 nights(weekly rate)1,2221,3542,033One month(monthly rate)4,9975,8578,5953 month (3 month rate)14,00016,25324,545Brussels(EUR)Brussels(EUR)Average nightly rate from(EUR)1237 nights(weekly rate)8619731,484One month(monthly rate)2,7873,3585,6693 month (3 month rate)7,4889,08513,215Berlin(EUR)Average nightly rate from(EUR)1667 nights(weekly rate)1,1641,4102,502One month(monthly rate)4,6445,6987,1933 month (3 month rate)11,95713,51217,297Frankfurt(EUR)Average nightly rate from(EUR)1197 nights(weekly rate)8361,1062,288One month(monthly rate)2,8904,9198,6233 month (3 month rate)6,90210,63423,039Dublin(EUR)Average nightly rate from(EUR)1597 nights(weekly rate)1,1161,3891,649One month(monthly rate)5,6045,9427,2103 month (3 month rate)13,73515,76719,331GSAIR 202360EuropeRateRateRateStudio1 bed2 bedLisbon(EUR)Average nightly rate from(EUR)1757 nights(weekly rate)1,0061,1871,430One month(monthly rate)4,0834,6505,5613 month (3 month rate)10,33512,65616,800London(GBP)Average nightly rate from(GBP)1567 nights(weekly rate)1,0911,4392,433One month(monthly rate)4,5135,9099,0153 month (3 month rate)11,97815,74624,327Madrid(EUR)Average nightly rate from(EUR)1197 nights(weekly rate)8301,0551,279One month(monthly rate)3,2704,3005,1833 month (3 month rate)7,68811,55514,400Manchester(GBP)Average nightly rate from(GBP)827 nights(weekly rate)574696976One month(monthly rate)2,3422,9544,1073 month (3 month rate)6,3448,84311,414Paris(EUR)Average nightly rate from(EUR)1757 nights(weekly rate)1,2261,5032,358One month(monthly rate)3,8985,4599,2283 month (3 month rate)8,54016,07922,30961Taking“at your service”to a whole new level.Oasis has a way of spoiling everyone.Its simply not what youd expect from corporate housing and serviced apartments.Youll get spoiled by the value,consistency and commitment.Your employees will get spoiled by the personalized attention and genuine comforts of home.EXTRAORDINARY STAYS WITH YOU.STAYWITHOASIS.COMOASISCOLLECTIONS.COMMiddle East&AfricaRateRateRateStudio1 bed2 bedAbu Dhabi(AED)Average nightly rate from(AED)4107 nights(weekly rate)2,8723,8405,822One month(monthly rate)11,60013,23922,3933 month (3 month rate)29,14134,04160,338Cape Town(ZAR)Average nightly rate from(ZAR)1,5007 nights(weekly rate)10,50012,55123,417One month(monthly rate)30,00033,97987,2143 month (3 month rate)88,650135,131192,230Doha(QAR)Average nightly rate from(QAR)4097 nights(weekly rate)2,8664,3538,012One month(monthly rate)10,55015,41316,8083 month (3 month rate)26,83641,54255,022Dubai(AED)Average nightly rate from(AED)6007 nights(weekly rate)4,1984,7187,660One month(monthly rate)14,93018,90926,7523 month (3 month rate)38,70251,60972,56063Short stays that are anything but ordinaryWe open the doors to London homes with design kudos.Think Notting Hill townhouses in the heart of the action and Mayfair apartments with architectural pedigree.Whatever the reason for a stay,our dedicated guest services team will make it one to remember.Get in touch to find out more020 8168 8880/USA/CanadaRateRateRateStudio1 bed2 bedNew York(USD)Average nightly rate from(USD)3197 nights(weekly rate)2,2322,9004,029One month(monthly rate)8,33711,24515,9723 month (3 month rate)21,64330,73543,176Toronto(CAD)Average nightly rate from(CAD)1577 nights(weekly rate)1,0961,3821,990One month(monthly rate)4,4564,9826,6963 month (3 month rate)13,60314,22417,304South AmericaRateRateRateStudio1 bed2 bedBuenos Aires(USD)Average nightly rate from(USD)76*7 nights(weekly rate)5328341,120One month(monthly rate)2,9283,0044,5003 month (3 month rate)6,7738,10411,021Rio de Janeiro(USD)Average nightly rate from(USD)110*7 nights(weekly rate)7701,0762,058One month(monthly rate)3,1504,7606,5623 month (3 month rate)8,55010,80011,836*typically transacted in USD65AsiaRateRateRateStudio1 bed2 bedBangalore(INR)Average nightly rate from(INR)9,5637 nights(weekly rate)66,93884,707119,893One month(monthly rate)306,613325,076532,9903 month (3 month rate)621,1421,042,4661,288,054Bangkok(THB)Average nightly rate from(THB)2,9837 nights(weekly rate)20,88127,44728,245One month(monthly rate)72,28180,127119,8583 month (3 month rate)186,531215,725298,342Hong Kong(HKD)Average nightly rate from(HKD)1,2217 nights(weekly rate)8,54612,60026,489One month(monthly rate)29,35538,38366,3093 month (3 month rate)77,999108,421172,213Mumbai(INR)Average nightly rate from(INR)7,5007 nights(weekly rate)52,500107,153107,695One month(monthly rate)256,797325,219494,8063 month (3 month rate)855,000918,0001,168,200Singapore(SGD)Average nightly rate from(SGD)2517 nights(weekly rate)1,7552,3243,637One month(monthly rate)6,5878,06511,1253 month (3 month rate)17,65222,05431,455Tokyo(JPY)Average nightly rate from(JPY)27,0767 nights(weekly rate)189,535449,266626,163One month(monthly rate)387,598409,397605,1663 month (3 month rate)1,084,3881,724,9852,813,805GSAIR 202366Australia&New ZealandRateRateRateStudio1 bed2 bedAuckland(NZD)Average nightly rate from(NZD)2607 nights(weekly rate)1,8201,8902,643One month(monthly rate)5,2966,99611,2493 month (3 month rate)16,20020,70025,280Melbourne(AUD)Average nightly rate from(AUD)1927 nights(weekly rate)1,3471,4712,202One month(monthly rate)5,3325,7957,2813 month (3 month rate)13,38414,10822,702Sydney(AUD)Average nightly rate from(AUD)2437 nights(weekly rate)1,7041,8992,652One month(monthly rate)6,8867,2539,6813 month (3 month rate)18,29720,42030,440Half Apartment,Half HotelBIRMINGHAM BORDEAUX DUBLIN EDINBURGH FRANKFURT HEIDELBERGLIVERPOOL LONDON MANCHESTER MARSEILLE PARIS VENICE67Directory listingsCheck-in-Londoncheck-in- 44(0)20 3189 1269Check-in-London is an award-winning serviced apartment specialist with extensive local knowledge and over 14 years of experience providing cost-effective,safe and professionally-managed accommodation for corporate clients and relocating employees.CheckinLondonF 358 20 198 3420Forenom is No.1 long-stay provider,and we offer 10 000 accommodation options across the Nordics and Germany.We make the stay easy,so our guest can feel at home.AppartC 33(0)1 81 90 90 90AppartCity,todays leading French urban aparthotel chain compromising of 100 establishments.From studios to 3-bedroom apartments,business and leisure guests can enjoy a fully equipped kitchen,an office area,Wi-Fi,on-site or nearby parking and numerous hotel services.Charles Hopecharleshope.co.uk 44(0)20 3983 6300Experience the epitome of urban luxury at Charles Hope Apartments.In the heart of the city,these upscale residences redefine stylish and comfortable living through spacious layouts and stunning views.Dao by D 44(0)20 3262 1026Dao by Dorsett comprises of 74 high quality serviced apartments overlooking Shepherds Bush Green,just a mere 5-minute walk away from Westfield London and the vibrant White City area.Adagioadagio- 44(0)20 7660 8830Discover Adagio.The city made easy in comfortable flats with services included.A 44(0)20 8168 8168An independent serviced apartment consultancy offering bespoke,data-informed and specialist advice,support,insights,and training services to drive growth and productivity.GSAIR 202368res: 44(0)121 295 1310res:harmonics PMS and Guest Experience platform enables serviced living operators to create world-class short and long-stay reservations,operations and guest experiences,profitably and at scale.?R 44(0)20 8944 3662Experts in serviced apartment living for business travellers for over 25 years.Locations:London&home counties,Lisbon,Madrid.SilverD 44(0)20 8090 8090The worlds leading corporate accommodation agent,SilverDoor provides businesses across the globe with an unrivalled service and intuitive technology for an outstanding booking experience.Skyside I 352 621 747 621Skyside International Ltd.offers ultra-modern corporate apartments in Luxembourgs prime locations,prioritizing security,comfort,sustainability,and exceptional guest service.Staycity A 44(0)20 3744 7525As one of Europes leading Aparthotel operators,Staycity Aparthotels offer quality short and long-stay accommodation ideal for both business and leisure travellers.Wilde by Staycity A 44(0)20 3744 7525The design-led Wilde Aparthotels by Staycity brand,inspired by Irish playwright Oscar Wilde,offers premium accommodation centrally located in London,Manchester,Edinburgh and Berlin.O 44(0)20 3318 7275Oasis provides the most unique global inventory for temporary corporate accommodations and serviced apartments with extraordinary value and customer service.Our dedicated team of specialists make it their mission to provide every client an extraordinary stay.69Fig.1Reasons for corporates using serviced apartments in 2023.Fig.2Reasons for corporates using serviced apartments in 2022.Fig.3Reasons for agent clients using serviced apartments in 2023.Fig.4Reasons for agent clients using serviced apartments in 2022.Fig.5Average length of stay 2023 corporate predictions.Fig.6Corporate serviced apartment volumes by territory.Fig.7Top 5 destinations-2023 most booked by corporates.Fig.8Essential requirements in serviced apartments-corporates and agents.Fig.9Importance to corporates when deciding between a hotel and serviced apartment.Fig.10Barriers to greater use of serviced apartments by corporates.Fig.11Barriers to greater use of serviced apartments by agent clients.Fig.12Current corporate use of alternative accommodation formats.Fig.13How many of a companys travellers might consider Co-living accommodation?Fig.14Importance of sustainability to corporates and their travellers,and how is that driving serviced apartment sourcing?Fig.15Have you calculated your GHG emissions?Fig.16Increase in operators energy costs over the last 12 months.Fig.17Operators expected energy increase in cost over the next 12 months.Fig.18How corporates expect operators will manage higher energy costs.Fig.19How will operators react to higher energy costs-corporate expectation v operator reality.Fig.20How operators will mitigate higher energy costs.Fig.21Top 3 challenges facing operators in 2023.Fig.22In which locations are you planning to open in the next 12-18 months and how many units are you planning?Fig.23Selecting a location:importance of local corporate demand to operators.Fig.24Selecting a location:importance of property acquisition cost to operators.Fig.25Selecting a location:importance of competitor presence to operators.Fig.26Selecting a location:importance of planning permission to operators.Fig.27Automation included in operational delivery.Fig.28Key benefits of the implemented automation.Fig.29Focus of operator optimism.Fig.30Operator predictions for the next 12-18 months.Fig.31Key cities rates table.List of tablesGSAIR 20237071In an industry built on customer centricity,training is crucial to ensure your serviced apartment business provides a customer experience thats memorable-for all the right reasons!Contact Tracie Crombie,Head of Training,to start a conversation on how training will help your business. 44(0)20 8168 8168 Ariosi is an accredited member of ITOL,supporting the development and delivery of current content and learner experience.Attracting and retaining the best peopleImproved financial performanceImproved efficiency and productivityA competitive advantageStronger teams and better communicationFive reasons why training is one of the smartest business investments you can make.Your trusted guide to the serviced apartment sectorCreated with care,by industry experts,with real CELEBRATING 10TH EDITION
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