“The occupancy in serviced apartments is 29.6 per cent higher than that of hotels, and is 33.5 per cent cheaper on average than a hotel room.”
Disruption is the buzzword. Everyone remembers the Uber wave that threw the taxi business upside down. Fewer are aware of online accommodation listings, the biggest being Airbnb, that are changing the way people look for accommodation as they travel the world. A quick search on the Airbnb site for Kenya throws up hundreds of listings.
According to Knight Frank’s 2018 global city report, Airbnb is benefiting from the growing popularity among the young market segment who are becoming versatile online, even when looking for accommodation.
The Global City report has placed Airbnb as a top option for the increasing number of a new generation of younger employees who are said to be more flexible in business and leisure travel. This in return is also encouraging the companies to deploy them around the world through the Airbnb model for shorter periods.
“We are seeing a huge rise in businesses travel and employees who are technically asking for Airbnb to help them easily incorporate Airbnb into their travel policies all over the world,” Says James McClure, one of Airbnb’s Managers.
“For the serviced apartment market, it underlines the growing importance of branding and the uniform quality of services and booking systems. For example, the quality of serviced apartments in Kenya matches that of a hotel, but it’s been done relatively informally to date,” McClure says.
Going formal McClure says that all along, the next level for the short term lease options has been going professional, which is like getting online platforms like Airbnb with better branding and offers.
Cytonn’s report on hotel and hospitality industry performance has, also for the last two years, indicated that serviced apartments especially in Nairobi have outperformed hotels. They recorded an average occupancy of 90 per cent in the past with revenue per available room hitting Sh12,700. The occupancy rates in 2016 declined by 2.7 per cent.
“The occupancy in serviced apartments is 29.6 per cent higher than that of hotels, and is 33.5 per cent cheaper on average than a hotel room,” the report noted.
Market trends have indicated that short-term rentals, like serviced and furnished apartments, are offering higher returns thus they are doing well in the market. According to the Hass Index for the fourth quarter of 2017, which was released in January 2018, indications are that apartments, where short-term’s serviced apartments lie, had a rental yield of 6.01 per cent, a higher yield compared to other long-term rental investments in spite of a long electioneering period.
But, are developers adopting these new trends in the market?
By David Mwitari.
This article was originally published on The Standard Digital. Click here to read the whole story.