If you are one of the many hotels that were affected by the pandemic, you are probably all too familiar with the challenges in providing ‘COVID-safe’ accommodation. You’re probably exasperated with the changing restrictions, endless regulations, and expensive cleaning protocols.
Even though lockdown is coming to end, there is still a lot of uncertainty with the hospitality and tourism industry and how it will recover. However, one thing is for certain, international restrictions are not going to completely ease any time soon and neither will people’s desire to travel!
Whilst the pandemic still poses a threat, it is likely that we will see a repeat of last year, with many holidaymakers seeking out self-contained units – i.e. self-catering apartments, cottages, lodges and caravans. In fact, we are already seeing evidence of this already, in Visit Britain’s ‘March 2021 COVID-19 Consumer Tracker’. When visitors were asked what type of accommodation they will be booking this year, ‘commercial rentals’ (self-contained units) was the most popular choice.
Could an Aparthotel be the answer?
Consumer expectations have changed since the pandemic hit. Visitors are looking for clean and COVID-safe accommodation that provides adequate social distancing. Location is another common theme, with many visitors seeking holidays near the beach or countryside, away from the crowds.
Hotels are at slight disadvantage in this area, as most are located in the cities and are typical high-density accommodation. Nonetheless, there are growth opportunities for hotels that can adapt to these changing consumer expectations, especially within the business tourism market.
As more people convert to remote working and move away from the cities, business tourism is likely to grow. Whilst many companies have become reliant on virtual meetings, it has its limitations, and we may see an increase in remote workers attending the occasional face to face meeting. The full extent of these changes in working habits is yet to be seen, but it has the potential to be very lucrative for hotels, most notably for those that can offer serviced apartments.
Serviced apartments and aparthotels were already rapidly growing in popularity even before the pandemic hit. Yet the serviced apartment sector only represents 3% of the total hospitality accommodation market (Lambert Smith Hampton).
It is estimated that over 6,000 new units are scheduled to open by 2021 making it one of the fastest growing segments. However, this would still only represent a small percentage of the market when compared to the 9,900+ conventional hotel businesses in the UK.
Demand for serviced apartments is only going to increase especially given travel restrictions are unlikely to ease until Autumn. In fact, Deloitte reported that serviced apartments overtook hotels in becoming the most attractive asset for investors in Europe.
However, before you invest in converting your property to an Aparthotel, there are a couple of things you need to consider.
Luxury facilities
Every aparthotel is different, but they usually boast great options for kitchen use, with a stove, an oven, a full set of crockery and cookware. They also possess an abundant range of entertainment options such as flat screen TVs and may even have multiple rooms. Aparthotels offer something much more spacious and homely than the usual B&B or hotel.
When comes to converting a standard room into an apartment, you will need consider the types of guests you will be attracting and what space requirements they need. A single room might not be too bad for one person, but for a couple or a small family, the lack of privacy or space can cause a lot of stress. This is particularly important if you want to attract long-stay bookers.
A great number of aparthotels do little or no work to turn a standard room into an apartment, except what is required by various government guidelines. They throw in a fridge, a mini stove and a microwave and that’s it.
Make sure you have the capacity to increase the space of your apartments and that your offer is right for the audience you are trying to attract. Whilst you might lose bed space, in repositioning yourself as an aparthotel, you might find opportunities to attract more lucrative guests such as business travellers or long-stay bookers.
Location, location, location
Many hotels are built in high-traffic areas and cities that attract a lot of tourists. You need to be sure that the location is somewhere people want to stay for long periods not just short breaks.
A bustling downtown area is somewhere people want to work, play, live and stay, however an apartment near an airport wouldn’t be nearly as appealing. And whilst a hotel near a concert venue or a busy nightlife might be great for short-stay visitors, it might not be ideal for attracting guests looking for a 1- or 2-week holiday.
Key considerations
The actual process of converting a hotel into an aparthotel is more similar to an adaptive reuse project, than an apartment renovation. Before you can even begin your conversion project, you will need to understand the structural capabilities of the building and planning requirements.
It is likely that you will need to increase the space available in each room which will involve taking down partitions and reconfiguring the rooms. Whilst you shouldn’t need planning approval for a ‘change of use’, if you are making external alterations or drastic changes to the building, you will most likely need permission from the council.
Of course, not all hotels are the same, especially if you are dealing with a vintage or listed hotel. You may have additional obstacles to overcome when trying to get planning permission, so make sure you do proper research before moving forward with your project.
Existing amenities
Does your hotel have a linen room, or commercial kitchen? Whilst these features aren’t necessary in an aparthotel, they are not easy to adapt. You may need to get a little creative with these spaces so they don’t become unprofitable square footage.
There are many solutions to adapting these types of space, such as converting the areas into entertainment rooms such as a mini cinema, bar, dining area or indoor bowling alleys. Alternatively, you could look at providing a gym, spa facilities or a games room. Not only are these amenities appealing to your guests, but they can also bring in extra revenue from non-guests.
One company that has applied this business model brilliantly is Your Apartment. As the largest independent serviced apartment and short-term lets provider in Bristol, they have mastered the art of converting properties into profitable serviced apartments.
They are expanding quickly and have apartments located across the City of Bristol, which has been partially driven by the accelerated growth of the sector. Their recent project in Clifton Village is a perfect example of how lucrative an aparthotel can be.
Having converted an existing student dwelling into 34, design-led studio apartments, Your Apartment managed to secure an occupancy rate of 65% during January to March 2021 and in April 79%. At an average rate of £90 per night. The project is anticipated to fully breakeven mid-2022 even in current trading conditions.
Part of the reason why Your Apartment – Clifton Village has been such a success is its location, and its hotel-like amenities. Whilst each studio is classified as a self-catering apartment, guests also have access to laundry facilities, a coworking space, and there is full contactless check-in and check-out processes.
Each studio has been equipped with an end-to-end tech driven experience, allowing guests to access their apartments through a smartphone app provided by Dorma Kaba. Not only does each apartment have their own en-suite and kitchenette with premium appliances, but some of the large studios have a sofa bed allowing them to sleep up to 4 guests.
The design and layout provides residents with a home from home experience, unlike a typical city hotel.
“The increasing demand in serviced apartments has accelerated in the last 12 – 24 months. We are seeing more opportunities for hotels to move over to this type of business model particular in the city centers.
Since COVID-19, visitor behaviour has change significantly. Even though restrictions are ending, visitors are still really cautious about catching COVID-19 and self-contained units like serviced apartments provide safe, isolated spaces without the person-to-person interaction typical found at B&Bs and Hotels.
Converting an existing property into serviced apartments is no easy task and you need an experienced team behind you to ensure your project is a success!”
