Specialist market

The result was that apartments were, until relatively recently, regarded as a specialist market with different systems, standards, rate structures, payment processes and stringent cancellation policies. Although commonplace in the private rental market, payment in advance is not a familiar concept in most forms of business accommodation, however there were - and are - synergies with the meetings and conference market.

This, combined with procurement departments increasingly taking hold of previously fragmented spend may explain why more and more companies are using apartments. Now, more and more buyers are beginning to understand how apartments work.

Business travel buyers' principal needs were for one or two night stays, perhaps extending to a week, but many apartments in the 80's and 90's required a minimum stay of up to 3 months. So even if a corporate could find an apartment product, there was no information about what to expect, and booking them was even more difficult still.

Corporates received little education or encouragement from their TMC's or HBA's either. Intermediaries were reluctant to buy into the concept because apartment booking processes did not conform to the traditional hotel model. Instead, most decided to concentrate on what they knew instead.

2nd coming of the serviced apartment

So what changed? Despite the apartment product being in short supply until relatively recently, the 90's saw increased competition at agency level. High occupancy in hotels began to drive consumers to look elsewhere for alternatives, helping extended stay hotels to become the fastest-growing sector of the US lodging industry.

At the same time, demand for corporate housing also took off in the UK, as greater mobility became a more important facet of British workforces. Working away from home on assignment has become commonplace since the late 90's.

The building boom of the last 10 years has seen developers look to the corporate market to fill otherwise empty apartments, resulting in more supply to the market, especially within the corporate housing sector. This period also saw developers join together to create property investment clubs, offering to manage apartments on behalf of their owners. When it was cheaper to buy, rentals were cheaper, but increased supply demands new and broader distribution channels.

Additional impetus for the proliferation of players has been from travel management companies and hotel booking agencies wanting to offer cheaper accommodation alternatives to their corporate clients despite the hurdles of integrating the very different booking processes of apartments with traditional hotels into a total travel management service.