Between 15 and 17 April, more than 2,500 senior representatives from across the hospitality industry will head to Berlin for the International Hospitality Investment Forum (IHIF) EMEA 2024.
This year’s speakers include: the CEOs of IHG, Hilton and Accor as well as senior representatives from Starwood Capital, TUI Group, KSL Capital Partners, and more.
Not only will you hear from leading hotel investment executives, but the multiple networking opportunities mean you’ll be able to capitalise on the return to dealmaking we are seeing this year.
The following interview is part of a series aimed at bringing you a flavour of the conversations you can expect on stage, highlighting some of the big-picture trends and themes ahead of the event.
There aren't many hospitality subsectors that did as well as serviced apartments during the pandemic. Occupancies held up thanks to their popularity with essential workers and even after lockdowns lifted, consumers and corporate travellers continued to enjoy their flexibility, especially when it came to longer-term stays.
Ahead of IHIF we caught up with Lauren Okada, managing director in Brookfield's Real Estate Group. Okada will be speaking on a panel entitled ‘Reassessing Serviced Apartments Opportunities in a Rebalanced Risk Landscape ’ (Tuesday 16 April, 15:15 Adjacent Spaces Track).
Hospitality Investor: What do you think is behind the rise in popularity of serviced apartments with investors?
Lauren Okada: The aparthotel and serviced apartments segments have been extremely resilient during and since the pandemic, with a number of the trends in the sector accelerating over the past few years. What we are seeing is that individuals are now focused on experiences and aparthotels are able to offer something different to traditional hotels.
Aparthotels and serviced apartments provide self-contained, safe and secure accommodation, and can be extremely flexible with the length of stay to meet the customer’s demands. It is this hybrid model that suits the modern-day traveller and allows them to tailor the experience to their requirements.
Over the last few years, we have seen a lot of capital invested in the sector due to the higher margins available to investors versus traditional hotels. This is in part due to the lower costs associated with running a serviced apartment, such as lower ongoing costs related to staff or other services you find in a hotel. We also find that individuals are staying for longer periods of time, which helps to support higher occupancy levels throughout the year and creates a level of consistency to the business’s income.
Hospitality Investor: Do you see serviced apartments as primarily a budget-sector play or could they move upmarket?
Lauren Okada: It can be both, depending on the type of apartment and experience you are looking for.
A good example of this is our aparthotel and serviced apartment platform, edyn, which operates two brands - Locke and Cove. Locke, the design-led aparthotel brand, provides all the convenience of self-catering hotel studios / apartments, with certain hotel amenities such as a restaurant, coffee shop, meeting rooms and a gym. Meanwhile, our Cove apartments provide carefully designed, self-contained serviced apartments for extended stays, with more limited services.
The advantage of this sector versus a traditional hotel is the flexibility we are able to provide our guests. Whilst you do not have access to some services you typically find in a hotel, such as room service or daily housekeeping, it does allow us to invest more in the quality of the room and the experience of our guests, whether they are staying for one night or one month.
Hospitality Investor: What are the risks of investing in serviced apartments vs hotels?
Lauren Okada: The location of these apartments is a major factor that needs to be carefully considered. With a focus on experiences and being able to cater to different types of guests, being close to transport hubs and amenities are very important.
As an investor you also need to consider the types of services you want to provide in your building, given this will attract different types of individuals. For example, guests travelling for work may prefer to have access to a co-working space or a kitchen, whereas leisure travellers may be less focused on these types of services.
Hospitality Investor: With so much retail and office real estate based in city centres, do serviced apartments lend themselves to adaptive reuse?
Lauren Okada: Where the demand for retail or office space is reduced, there is an opportunity to convert these buildings into aparthotels / serviced apartments. They typically already have the benefit of a great location, which is conducive to building the sense of community that we like to focus on. Select offices could be converted to meet the significant demand in the market for high-quality serviced apartments. However, the costs and work associated with redesigning these buildings can be significant, and would require planning permission to convert to hotel use, which must be taken into consideration.
Hospitality Investor: The theme of this year’s event is “Making the Markets” emphasising the need to take control of any given situation, rather than simply riding the wave. Have you got an example that you could share either in your own business or the wider market?
Lauren Okada: At Brookfield, we have many decades as both owners and operators of different real estate asset classes around the world. This provides us with significant expertise, but also data, in terms of what works and how to get the best out of an asset. We take a hands-on approach that seeks to build value, through operational improvements.
A good example is edyn, our European aparthotel platform. Brookfield acquired what was known then known as SACO in 2018, which had a portfolio of eight assets. We have since rebranded the business to edyn and transformed the company into a pan-European leader in the extended stay sector, as well as moved the model to fully owned properties from leased assets.
Throughout our ownership, we have worked closely with the company’s management team to help them build a vertically integrated, institutional platform. We have invested significantly in developing high quality real estate across Europe and created unique brands, such as Locke and Cove that provide unique offerings to guests. We continue to see high demand across Europe for our aparthotels and serviced apartments, with opportunities for further growth.
If you still haven’t registered for IHIF EMEA yet, you can do so here. You can also view the latest programme, here.