Serviced apartments have risen to prominence over the last 10 - 15 years, as they offer an alternative to hotel rooms and holiday homes in more urban environments, where expats, holiday makers and business travelers, are looking for more space and comfort but with the convenience of being within a hotel complex, in prime locations.
As a result, more and more tenants and property owners are considering serviced apartments as a solution to there living and investment requirements, and as a result, have become a more popular asset class.
As a result, more and more tenants and property owners are considering serviced apartments as a solution to there living and investment requirements, and as a result, have become a more popular asset class.
1. So, what is a Serviced Residence?
A serviced residence is a fully furnished and self-sustainable apartment (or in some cases, townhouses and villas), which are managed within a hotel complex, designed to offer greater flexibility than a hotel room, offering more space, lower cost per person and greater privacy, whilst benefiting from being within a hotel environment, with access to all of the same facilities, amenities and services, such as, in room dining or housekeeping.
A serviced residence is a fully furnished and self-sustainable apartment (or in some cases, townhouses and villas), which are managed within a hotel complex, designed to offer greater flexibility than a hotel room, offering more space, lower cost per person and greater privacy, whilst benefiting from being within a hotel environment, with access to all of the same facilities, amenities and services, such as, in room dining or housekeeping.
2. Serviced residence VS a hotel room.
Compared to renting a hotel room for weeks or months at a time, a serviced residence is essentially a larger version of a hotel room, without feeling like you're in a hotel room. Serviced apartments normally have different access points, so you can avoid the hustle and bustle of the hotel, but enjoy the additional space, duration flexibility, and a lower cost per night, with the added benefit of extra storage, free WIFI and a fully functioning kitchen, so you don’t feel like you have to eat out every night of the week.
Compared to renting a hotel room for weeks or months at a time, a serviced residence is essentially a larger version of a hotel room, without feeling like you're in a hotel room. Serviced apartments normally have different access points, so you can avoid the hustle and bustle of the hotel, but enjoy the additional space, duration flexibility, and a lower cost per night, with the added benefit of extra storage, free WIFI and a fully functioning kitchen, so you don’t feel like you have to eat out every night of the week.
3. What's the cost benefit of choosing a Serviced residence over a Hotel room?
As an example; let say a family of 4 our checking into a hotel where the cost of a normal room is let’s say $200 per night, and the family needs to take two rooms, one for the parents and the other for the children, with a total nightly spend of $400. As an alternative, the family can book a 2 bedroom serviced apartment in the hotel for $250 per night (provided there is available apartments), which means a saving of $150 per night, plus extra space and privacy, with the ability to cook you’re own meals, should you wish to do so.
As an example; let say a family of 4 our checking into a hotel where the cost of a normal room is let’s say $200 per night, and the family needs to take two rooms, one for the parents and the other for the children, with a total nightly spend of $400. As an alternative, the family can book a 2 bedroom serviced apartment in the hotel for $250 per night (provided there is available apartments), which means a saving of $150 per night, plus extra space and privacy, with the ability to cook you’re own meals, should you wish to do so.
4. Serviced residences VS Residential apartments.
First off, because a serviced residence comes fully furnished, tenants don’t need to worry about the hassle of buying new furniture if they are new to a city or on a short term work contract. Because a serviced residence is within a hotel complex, they are located in more central locations, provide a higher level of luxury and comfort with additional amenities, services and facilities, whilst having the benefit of a maids and cleaning service several times a week, complete with fresh towels and linens!
There is less paperwork involved, so you don’t have to worry about setting up your internet connection or electricity bills, because these costs will be included in your nightly cost. Will you pay more for a serviced residence? Of course you will, but when you start to add up the additional costs that come with renting an apartment, part of the additional cost is the convenience, and you’ll find in the end, there won’t be much price difference, but you will save a ton of time, energy and effort, which can be focused on relaxation or your business!
First off, because a serviced residence comes fully furnished, tenants don’t need to worry about the hassle of buying new furniture if they are new to a city or on a short term work contract. Because a serviced residence is within a hotel complex, they are located in more central locations, provide a higher level of luxury and comfort with additional amenities, services and facilities, whilst having the benefit of a maids and cleaning service several times a week, complete with fresh towels and linens!
There is less paperwork involved, so you don’t have to worry about setting up your internet connection or electricity bills, because these costs will be included in your nightly cost. Will you pay more for a serviced residence? Of course you will, but when you start to add up the additional costs that come with renting an apartment, part of the additional cost is the convenience, and you’ll find in the end, there won’t be much price difference, but you will save a ton of time, energy and effort, which can be focused on relaxation or your business!
5. What’s it like to own a Serviced residence?
Serviced residences as an asset class (particularly for overseas investors) are becoming more and more popular. One of the big issues you’ll face when you own property abroad, is who’s going to manage it for you?! And do you trust them to do the right thing by you?
Who better to manage your property than a hotelier, giving you piece of mind, while hotel management (of course for a fee) look after the property while you’re away, which ensures that it’s kept clean and well looked after; and if you’re looking to generate an income at the same time? The hotel management can rent it for you!
Serviced residences as an asset class (particularly for overseas investors) are becoming more and more popular. One of the big issues you’ll face when you own property abroad, is who’s going to manage it for you?! And do you trust them to do the right thing by you?
Who better to manage your property than a hotelier, giving you piece of mind, while hotel management (of course for a fee) look after the property while you’re away, which ensures that it’s kept clean and well looked after; and if you’re looking to generate an income at the same time? The hotel management can rent it for you!
6. Is it expensive to both purchase and maintain a Serviced residence?
Well yes and no, this also depends on the type of individual you are and what you value the most?! Think about it, when you go on holiday, would you rather stay in a Motel/ Budget Hotel or a 5 star like the St Regis, W Hotel or Mandarin Oriental? Now the reason you're thinking the latter, is because everyone wants excellent service (but not everyone is prepared to pay for it). If you receive excellent service when you least expect it, it sticks in your mind, whether you’re at a restaurant, a coffee shop or at a clothes store! Everyone wants an exceptional level of service and experience when they spend money, but as the saying goes "you get what you pay for!"
A serviced residence (depending on the brand) will generally command a 60-80% markup on the price compared to a residential property in the same area. Why? Due to the quality of property, the facilities, the level of service and additionalservices available that make up the experience of being a part of that particular brand, and the knowledge of how that brand makes you feel (insert your favorite hotel brand here).
Well yes and no, this also depends on the type of individual you are and what you value the most?! Think about it, when you go on holiday, would you rather stay in a Motel/ Budget Hotel or a 5 star like the St Regis, W Hotel or Mandarin Oriental? Now the reason you're thinking the latter, is because everyone wants excellent service (but not everyone is prepared to pay for it). If you receive excellent service when you least expect it, it sticks in your mind, whether you’re at a restaurant, a coffee shop or at a clothes store! Everyone wants an exceptional level of service and experience when they spend money, but as the saying goes "you get what you pay for!"
A serviced residence (depending on the brand) will generally command a 60-80% markup on the price compared to a residential property in the same area. Why? Due to the quality of property, the facilities, the level of service and additionalservices available that make up the experience of being a part of that particular brand, and the knowledge of how that brand makes you feel (insert your favorite hotel brand here).
7. Cost of Services and maintenance fees?
This depends on the brand and the developer, and it also depends on the structure of the residences. If all of the services and utilities are included in the price, then the maintenance fees will be more expensive, but very often these services are paid for as and when you use them, which works out more cost effective in the long run!
As an owner, it’s in your best interest that the development be kept to a very high standard. A large part of the value of your property, is in the level of service and facilities available to you, along and the brand recognition. If the maintenance fees are too low, the residences can’t be kept in-line with the hotel standards. Once you calculate the yearly cost of those fees relative to the extra level of comfort, service and facilities, you’re getting, you’ll see it’s well worth it!
This depends on the brand and the developer, and it also depends on the structure of the residences. If all of the services and utilities are included in the price, then the maintenance fees will be more expensive, but very often these services are paid for as and when you use them, which works out more cost effective in the long run!
As an owner, it’s in your best interest that the development be kept to a very high standard. A large part of the value of your property, is in the level of service and facilities available to you, along and the brand recognition. If the maintenance fees are too low, the residences can’t be kept in-line with the hotel standards. Once you calculate the yearly cost of those fees relative to the extra level of comfort, service and facilities, you’re getting, you’ll see it’s well worth it!
8. How can I rent my serviced apartment?
The Hotel operator will generally manage all rentals in the development, whether it’s daily, weekly or monthly. This ensures the process is seamless throughout, ensuring it’s well managed for the owner and super simple for the tenant, as it’s the same as checking into Hotel (credit card please).
The Hotel operator will generally manage all rentals in the development, whether it’s daily, weekly or monthly. This ensures the process is seamless throughout, ensuring it’s well managed for the owner and super simple for the tenant, as it’s the same as checking into Hotel (credit card please).
9. Long term rental vs short term?
Whether you rent your property on a yearly basis or a daily basis (through the hotel pool), you should expect to receive attractive returns. Short-term, generally will offer higher returns but long-term offers greater security.
Due to the amount of marketing a hotel does every day, there will be different types of clients looking to stay at that hotel, so your property; 1. will always be attractive to a greater number of prospective tenants. 2. As I mentioned earlier in the article, a serviced residence offers more space and convenience for less, particularly if there is more than one person staying at a time, like my example in point 3.
If it’s a long-term rental, the amount you'll receive monthly or yearly, will be around 70 - 100% more than a similar size property in a residential complex in the same area, due to their always being a limited number of serviced residences within the hotel complex, which helps to keep rental prices at a premium. Whilst for long-term rentals there will be a contract involved, payments can be done via credit card, and terms and conditions are more flexible than a normal rental contract but subject to the hotel guidelines.
Whether you rent your property on a yearly basis or a daily basis (through the hotel pool), you should expect to receive attractive returns. Short-term, generally will offer higher returns but long-term offers greater security.
Due to the amount of marketing a hotel does every day, there will be different types of clients looking to stay at that hotel, so your property; 1. will always be attractive to a greater number of prospective tenants. 2. As I mentioned earlier in the article, a serviced residence offers more space and convenience for less, particularly if there is more than one person staying at a time, like my example in point 3.
If it’s a long-term rental, the amount you'll receive monthly or yearly, will be around 70 - 100% more than a similar size property in a residential complex in the same area, due to their always being a limited number of serviced residences within the hotel complex, which helps to keep rental prices at a premium. Whilst for long-term rentals there will be a contract involved, payments can be done via credit card, and terms and conditions are more flexible than a normal rental contract but subject to the hotel guidelines.
10. Loyalty program and reward points.
Much the same as being a member of a particular hotel loyalty program, you will get a certain number of points and rewards each time you stay or spend on the facilities and services within the hotels in that program, along with unique discounts and additional privileges as a member. A lot of Serviced residences, depending on the brand, will offer owners exclusive benefits and discounts in their hotel outlets, restaurants and coffee shops, as well as others within the group.
Much the same as being a member of a particular hotel loyalty program, you will get a certain number of points and rewards each time you stay or spend on the facilities and services within the hotels in that program, along with unique discounts and additional privileges as a member. A lot of Serviced residences, depending on the brand, will offer owners exclusive benefits and discounts in their hotel outlets, restaurants and coffee shops, as well as others within the group.
Summary
A serviced apartment lifestyle offers luxury living, convenience, comfort, and flexibility, which won’t necessarily be for everyone, largely due to two factors:
1. Budget restrictions
2. You're understanding of the concept and product!
Everyone loves to stay in a 5-star hotel, so imagine a larger version of that lifestyle! The question then becomes, is it for you?!
A serviced apartment lifestyle offers luxury living, convenience, comfort, and flexibility, which won’t necessarily be for everyone, largely due to two factors:
1. Budget restrictions
2. You're understanding of the concept and product!
Everyone loves to stay in a 5-star hotel, so imagine a larger version of that lifestyle! The question then becomes, is it for you?!