Demand outstrips supply
As Q1 2021 ended there was a surge of optimism that business could once again get moving and one of the beneficiaries of this travel increase was Serviced Accommodation. During 2020 some serviced accommodation operators ceased trading or switched to a long-term rental model, reducing capacity in the market to meet the growing demand in 2021. This resulted in significant rate increases in London for example, with single bedroom apartments up 10% over the same period in 2019, over 30% for two-bed properties and a substantial 40% for three-bedrooms.
Duty of Care
Employers with their eye on due diligence and vicarious liability, rightly believe that serviced accommodation offers a safer haven for corporate travellers to avoid Covid when compared to a hotel or AirBnB. All the branded operators put in strict Covid protocols, and with few communal areas and the ability to prepare their own food, travellers felt safer.
London Accommodation
Our most booked city for Serviced Accommodation is London and it was clear that some areas have seen a huge decline in capacity. Canary Wharf in particular saw some long-term operators shut their doors and the lack of supply impacted rates. Nightly rates for a 2-bed went from an average of £130 to nearer £175.
MYTAS accommodation
HCR’s MYTAS accommodation saw increased activity for stays over 6 months. The service is similar to serviced accommodation with a fixed-cost nightly rate, which includes every cost-element associated with renting a property. The service draws upon the private rented sector accommodation for a far greater supply. For some clients this provided the balance between a considerably lower nightly rate and a safe and exclusive accommodation environment for their employees.
Other Countries
In other areas where we have been booking accommodation we have seen the following:
- Dublin: rates have increased from approximately €125 per night to €160 per night despite an increase in supply during 2021
- New York: rates remain under pressure with very high demand. This demand is exacerbated for multi-bed properties and for longer stays
- Singapore: there is more supply due on the market early in 2022 (300 units) but despite increased demand in 2021 the rates have remained surprisingly stable
Within the next 6 months, Covid permitting, rates should start to stabilise and even come down as new supply comes on stream, and supply can meet demand. Investment in the key cities such as Singapore, London, New York, Frankfurt and Munich is on-going and we understand some of the bigger brands are still eying up opportunities in London & New York in particular.
Advice to HCR’s clients
- Be flexible in your requirements – 3-bedroom apartments are scarce when compared to 1-bed or studios, so perhaps if the family is old enough, booking 3 x one-beds might be easier.
- Make decisions swiftly. There simply isn’t the time to wait and options are going in hours not days.
- If you know you are likely to have a requirement for a particular city or area coming up then get advice on what’s likely to be available well in advance. Talk to your HCR Relocation Consultant and we can look at the market for you.
- If you can, book well in advance and make sure you know what the booking cancellation terms are. Serviced Accommodation operators have some onerous cancellation terms given the high demand typically means they will not have a void property, and they will not budge in negotiations. Apparently, these cancellation terms stop speculative bookings.
- For longer stays than 6-months or where you may have a series of employees rotating through a specific area, it may pay to consider MYTAS accommodation.
More Information
For more information on this subject or to discuss how MYTAS might be an alternative for longer stays, please email Adrian.Leach@hcr.co.uk