Cheval has signed two properties in Scotland, which will be rebranded as Cheval Residences from 1 July.
The agreement with the Chris Stewart Group illustrated the ongoing expansion of the serviced apartment sector during the pandemic.
The Edinburgh Grand and Old Town Chambers added a further 100 new apartments to Cheval’s existing portfolio of 512 apartments across its eight London Residences.
The deal was 12 months in the making, sealing a partnership between Cheval and CSG that was expected to cultivate further investment opportunities for both organisations in the future.
His Excellency Mohammed Al Shaibani, chairman, Cheval Collection said: “In December 2018 we announced our vision for the Cheval Collection to expand beyond London and to manage both third party assets and invest in new properties both in the UK and overseas. We are delighted that we have now secured the perfect partner for our UK expansion. The CSG portfolio in Edinburgh perfectly matches our vision and follows announcements of our plans to expand in Frankfurt and Dubai in the future.”
Chris Stewart, CEO, Chris Stewart Group added: “We are recognised as innovative developers and operators of complex listed buildings and we found that passion for exceptional quality products and service reflected in our Cheval Collection partners. This agreement for The Edinburgh Grand and Old Town Chambers provides access to premium sales channels that were previously closed to us as independent operators and realises another step forward for our growth strategy. We are confident that the combination of our expertise for property design and development combined with Cheval’s quality brand and sales reach will open up many further opportunities.”
The virus outbreak has proved the serviced apartment model, according to Paul Caseiras, partner, PDC Advisors.
The sector was now ripe for consolidation, as investors looked to its resilience as mainstream hotels were closed under lockdowns around Europe.
Caseiras told us: “Serviced apartments have done very well and will continue to do even better, this crisis has helped to prove the model. People will want privacy and isolation.”
Steven Smit, CIDO, Yays, agreed, adding: “It’s a good industry and if you look at what’s happening now you can see that it’s more resilient than hotels. Serviced apartments have been fighting for their place in the market for a number of years from an investment perspective, as hotels moved closer to the mainstream. The trend has been sped up because of COVID-19, the model itself has become more attractive. People could see serviced apartments as a lot more appealing because often there are no public spaces. People might book longer and stay longer.
Looking to M&A in the sector, Caseiras added: “There will be smaller providers that will fall away. Now is a great time to acquire assets whether it be a hotel or a lease. There are many different operators in this area, it’s very fragmented. It will continue to grow but there will be consolidation.”
Investors have already started to turn to the longer-stay offerings, first with Airbnb announcing a pivot to long-term on the occasion of seeing $1bn in private equity support, then with Blackstone and Starwood Capital buying into Extended Stay America.
The serviced apartment sector was, Caseiras said, evolving. He said: “Serviced apartments are not just about business travel any more, it’s about you and me, it’s about living. We don’t live the same way that we used to - you don’t buy a house and live in it for 25 years - you might move somewhere for a couple of years because you have an opportunity or you want to try the culture. There has been a fundamental change in how we’re living.
“A lot of serviced apartments are very corporate, but now there are more places that are well designed, well thought out.”
Smit added: “It’s an interesting category, the model is a hybrid between residential and hotels. What we are trying to do at Yays is not just a hotel room with a kitchen in it and we think that it should feel like a home.”
The company’s most-recent deal saw it sign a long-term lease agreement for 53 serviced apartments at the Koninginnegracht in The Hague. The former office building, near Malieveld, will be renovated and converted into a Yays aparthotel and was due to open in the fourth-quarter of this year.
Insight: Last week’s In Sync event heard Peter Heule, CEO at Short Stay Group & Yays describe “a bright future for serviced apartments” with length of stay increasing further, as the corporate traveller sought to cut down travel time by getting a contract done in one hit, rather than a series of smaller jaunts.
He also drew attention to what hospitality was about: “it’s about experiencing a city. The real estate is a way to showcase the hospitality”.
Hospitality is about experience and about a home from home when you’re away; a base from which to explore. Hotels have lost their way on this over the years, but the serviced apartment sector, kick-started by Airbnb, has served to remind them that it’s not about identical rooms and a kettle with some plastic-wrapped biscuits. Over the years our homes have also become better than hotels - often better TVs, certainly better WiFi.
Serviced apartments, particularly at the higher levels, are a reminder that hospitality is not about telling you when to eat - or what to eat - but creating a home that’s better.