Serviced accommodation is a popular alternative to hotels and private rentals.
For guests, they provide efficiency and ease.
And for owners, they can provide good returns.
Read on to discover what they are and how they function.
What is serviced accommodation?
Serviced accommodation is short-term rental property that comes with amenities, typically including:
- Cleaning services
- Utilities (water, electricity, & gas)
- Furniture
- Utentils
- Soft furnishings (bedding, towels, etc.)
- Concierge services.
Serviced accommodation is more common in major cities and tourist destinations. Tourists or business travellers often choose it.
Its amenities mean it’s usually more expensive than renting non-serviced accommodation but cheaper than hotels.
In many cases, serviced accommodation is part of a block of flats. This enables owners to efficiently service multiple properties together.
(Serviced accommodation in a detached house is rare. The only exception might be retirement flats.)
How common is serviced accommodation?
A report by Bonard found that there are more than 56,700 serviced apartments in the UK.
Almost half of these are in London. And business travellers account for 45% of guests.
Another study found that serviced accommodation in the UK has an average occupancy rate of 80%.
Serviced accommodation booking has become increasingly popular in recent years, thanks to platforms like Airbnb and Booking.com.
Costs of staying in serviced accommodation
For guests, serviced accommodation is generally less expensive for users than hotels, especially when their stay is over 7 days.
But the exact price depends on several things, including:
- The exact amenities involved
- Location
- The length of stay.
National view
The average price of a hotel in England is £100.87 per night.
Many experts estimate that serviced accommodation is around 20% less expensive. This makes the national average roughly £80.70.
London
Meanwhile, in London, the average hotel cost is £158 per night.
Based on this, the average serviced accommodation there is roughly £126.40.
Long-term serviced accommodation
In most cases, serviced accommodation is provided on a short-term basis. But long-term options do exist.
One of the most common examples is retirement villages. Plenty of these are serviced for the people living there.
Usually, the owner is tied to the initial permission. This means that they can’t change the building’s purpose.
Why some landlords prefer serviced accommodation
Higher nightly rates
Landlords can charge more per night for a property that is serviced compared to one that isn’t.
The guest pays extra for the amenities, location and room service. This increases the owner’s per-night revenue, provided they maintain a high occupancy rate.
Diverse property portfolio
Landlords with numerous properties often strive to create diversity in their portfolios.
This means investing in multiple rental methods, which can be useful if one part of the market crashes or booms.
Avoiding long-term arrangements
When you rent out a property on a long-term basis, it creates other challenges.
For example, if you have have a problem tenant, you may have to deal with them for months on end. And, depending on the tenancy type, you may be unable to raise the rent for long periods.
Serviced accommodation’s short-term nature helps you avoid these issues.
Can you buy a flat in serviced accommodation?
Yes, it is possible to buy a flat in serviced accommodation.
However, this is usually only possible if other properties in the block are also available for sale.
Most landlords get a commercial mortgage when building these premises.
They’ll also have to sign contracts explaining what they’ll use it for. So, legal agreements may prevent changes to their purpose midway through.
