The Serviced Accommodation (SA) niche is emerging from a rough patch. At least, that is what SA operators want to believe. It is a bit early to call it, yet the trends are better than a year ago. Early assessments about COVID said it would be five years of virus evolution before society could co-exist with the virus, and we are in year three of the five-year process. Given that backdrop, let me share my views concerning Serviced Accommodation as a combined business or investment strategy from the sidelines. The viewpoint is strictly from the sidelines as I refuse to operate SA properties. I have invested passively in the past in SA, and I know I would not be a competent, hands-on operator.
Many SA businesses have been treading water, waiting to see how much demand will remain after the dust settles. Anecdotal evidence is that many SA landlords in city centres flipped into long term rentals. With travel restrictions reduced, some people will start to travel again.
Some SA operators shifted their primary focus to the business travellers who were exempt from travel restrictions during the lockdowns. This sub-niche tended to stay longer, put less strain on operations (more extended stays, less cleaning during the booking), and the higher probability of repeat business. Peak rental periods were during the working week, so there was a drop-off over weekends and during holiday periods - pricing strategies tied to Bank holiday’s needed change.
A client who focuses very much on the holiday traveller saw periods when all discretionary travel was banned, followed by spikes of staycation demand when people could get away. The company financials show a pretty solid year even though there were some rough patches.
A mental reset
Many people have had a re-think about what is important to them, how they can change the way they work and what it means to commute. Some people exited cities for bigger homes or more open space. Others have chosen to switch careers, and one major shift happened in the hospitality trade. The sector was hammered as venues closed. The working hours were never the best, so many employed in the industry reconsidered what they wanted out of life. SA operators have seen supplier and cleaning staff problems. The gloss has worn off the SA sector unless you are an operator who enjoys being in a high-touch service sector. BTL is very passive by comparison.
