A couple of months ago, I did an extensive blog on marketing strategies for serviced apartments which was well received by the readers. In fact, some of them suggested that I should write something to address the profitability from serviced apartment business. And here we are.
In this blog, I’ve covered all the aspects pertaining to serviced apartments with some tips that can help in improving your booking flow.
What is a Serviced Apartment?
Serviced apartment is a residential flat, equipped with services and amenities that cater to guests for long and short stays.
They are fully furnished with all amenities that are required in a home, such as a bed, TV, cooking essentials, fridge, AC, and so on. Apart from that, there are other services that give serviced apartments a luxurious touch like housekeeping on call, Wi-Fi connectivity, and other additional facilities available in society/complex (swimming pool or gym).
Often termed as serviced condos and extended stays, this hospitality segment is one of the profit-making businesses these days. Let me tell you how.
Why Should You Invest in Serviced Apartments?
First, let’s take a look at the market statistics. As per the Global Serviced Apartment Industry Report (GSAIR), 2020-21 edition, by The Apartment Service Worldwide,
- In the past two years, the serviced apartments industry has seen a growth of 24% in terms of business and capacity.
- In 2020-21, there were 12,54,743 serviced apartments available for the guests across 15,464 locations.
- The top 15 brands, including chains like Marriott, Accor, IHG, and Hilton, constitute an inventory of 6,85,303 serviced apartments at 7,817 locations.
These figures prove that the extended stays industry is booming on a rapid scale. Moreover, the current scenario of work from home has paved the way for apartment owners to re-market their property with a new approach.
In fact, I have a real-life scenario to explain why serviced apartment business is worth investing in. Back in my hometown, one of my friends had a vacant apartment, which was generally used by us for hanging out.
One fine day, he came up to me with a business plan, which was to rent out his flat to the local tenants. But, I had a better idea. I suggested to him why not convert his flat into a serviced apartment?
Furthermore, I explained to him how it works along with the tangible profit. He was quite intrigued and quickly initiated the setup process.
While researching for this blog, I called him up to get some insights. And this is what he said:
“There has been an influx in bookings for long stays, especially during the rainy season. In fact, I’ve got a couple of clients from nearby cities that have booked stays for a month due to their work from home policy. Even the profit earned is quite higher in comparison to regular flat rental business.”
So, you see that serviced apartments are faring well in terms of generating revenue and are in demand as well.
How to Make Money from Your Serviced Apartment Business?
Now the tips I’m sharing here can work if you have even a single apartment. Moreover, if you are planning to invest in a flat and convert into a serviced apartment, these points will be quite useful.
1. Utilise space properly
It’s important to have an understanding of space. Generally, the extended stays are either studio apartments, 1 BHK, or 2 BHK. This space determines how many guests you can accommodate in your apartment and work on the furnishing part accordingly .
Suppose you have an unfurnished studio apartment that is spacious for a maximum of 2 guests. After initial calculations, you come to a conclusion that it can be furnished with certain items, such as a bed, fridge, TV, wardrobe, and so on.
Once you are done, you plan on putting an extra bed to accommodate one more person for maximising the revenue. I would say it’s an arduous task considering the short amount of space you’ve in hand.
Even if you adjust it somehow, the place will look congested and there won’t be enough aisle space to move. Moreover, the room will lack air circulation, making it feel claustrophobic.
That’s why it’s vital for you to have a clear understanding about your apartment’s carpet area. It would help you in gauging the space usage and making further changes.
2. Invest in important amenities
It goes without saying that serviced apartments have to be fully furnished. But, it doesn’t mean that you need to cover every inch of space with all the amenities and furniture available in the market. Let me give you a better insight on it.
There are 2 categories in the amenities that you should have in your serviced apartment:
- Necessary amenities
- Luxury amenities
Talking about necessary amenities, it includes the basic furniture and some vital services that are found in every home. Here are some of the mandatory ones:
- Bed (king/queen size)
- Table and chair/recliner/couch
- Kitchenette facility (cooking equipment, utensils, and dishwasher)
- Centralised/Window AC
- Hot and cold water (24*7)
- Free Wi-Fi access
- Housekeeping services
- TV with dish connection
- 24*7 security
On the other hand, the luxury services and amenities are optional; since it depends on your budget and guests’ demands. These are some of them offered by top brands,
- Bean bags instead of regular chair
- Laundry facilities
- Smart lighting
- Voice control gadgets (Alexa)
- Gaming consoles (X-box, PlayStation, etc.)
- Access to premium facilities (Swimming pool, gym, spa, etc.)
- Hardwood/Carpet flooring
- Parking facility
- Resident mobile app
By opting for these or any other premium facilities, you can give your guests a sense of luxury living and have an edge over your competitors.
3. Hire staff to maintain the property
Just like other hospitality establishments, serviced apartments also require regular maintenance in terms of housekeeping and repair works. For that, you need to have dedicated staff deployed at your property.
I would suggest keeping a minimum of two housekeeping staff members that would be responsible for the upkeep of the property. Also, ensure that they are properly groomed, trained, and must adhere to the designed SOPs (Standard Operating Procedures).
When guests check-in at your property, don’t forget to inform them about the shift timings of housekeeping staff.
If you are deploying a 24*7 staff on your property share their contact information with guests. In this way, they can connect with the staff whenever they want to avail housekeeping services.
Word to wise: If you want to avail any kind of deep-cleaning services by professionals or need to repair something in the apartments, opt for home-service companies. But again, it’s not advisable to go with it on a regular basis considering its cost.
4. Bring technology to your aid
Technology has reshaped the working structure of the hospitality industry. In fact, there are several SaaS companies that provide various solutions for hospitality establishments.
Start by investing in a PMS. It will help in keeping a track of bookings, manage requisitions from a single dashboard, collecting and storing guest data, and so on.
Furthermore, you can integrate it with a channel manager. It’ll aid you in updating real-time inventory and pushing rates on all the online portals in a single go.
5. Divide and sell
No, it’s not something that I came up with after reading the freedom movement of India. When I say divide and sell, it means that rather than selling your apartment as a whole, you can sell it on a bedroom basis. Let me explain with an example.
For instance, you own a 2BHK serviced apartment. Now, you’ve listed the property on various booking portals with a tariff of Rs. 3500 per day. But in that way, your property can only be rented by groups and families. The other segments, like individual working professionals, couples, and solo travelers would be left out.
In order to cater to them as well, you need to adopt the divide and sell policy. It’s simple, just create a separate room category named as single room on all the online booking portals.
Once done, you can update the tariff as Rs. 2000 per room per day.
In this way, you can maximise your bookings as well as the overall revenue. However, keep in mind that the rates you update for individual rooms should be competent in comparison to that of the whole property.
6. Introduce packages and feasible tariffs
Another strategy to make your serviced apartment business profitable is having flexible tariffs. That’s one of the prime reasons why people opt for extended stays.
So, while you work on your tariffs, keep the concept of log stays in mind. Additionally, you can create packages for long stays, like one week or a month.
Also, try including meals like breakfast in the tariff. In fact, a report by Seven Rooms states that,
Around 65% of travelers opt for an accommodation facility offering free breakfast.
Hence, when you are creating a package, do focus on the meal component. And for that, you need to have partnerships with nearby restaurants. Moreover, this will come in handy if guests want to order food from outside or try local delicacies.
7. Have a flexible cancellation policy
Often guests tend to have changes in their travel plans, which leads to the cancellation of their existing reservations. However, the cancellation policies of accommodation facility providers are usually rigid. Which means, either they suffer a loss or the guest.
That’s why it is recommended to have flexible cancellation policies that would be in favour of guests as well as your serviced apartment business. For instance, you can charge a penalty of 25-50% fees if the guests cancel their bookings 3 days before their check-in date.
Flexible cancellation policies can help in boosting guests’ confidence that they can book the property without worrying about changes in plans and loss due to cancellation of reservation. This will result in improving your booking flow.
8. Have a robust marketing strategy
Marketing is one of the important aspects for any organisation to raise awareness about their product or services amongst their audience. In fact, there are a gazillion marketing strategies that you can use to promote your serviced apartment business.
However, it’s necessary to check which ones will work for you. Let’s take help of an example to understand it better.
Suppose you’ve a serviced studio apartment that is spacious for one or two guests. So, promoting it to families or larger groups is a futile step. That’s why, while devising marketing strategies, you need to be aware of your target audience.
Hence, if you are looking for ways to improve your serviced apartment’s business flow, you MUST have a robust marketing plan that should be able to capture the attention of your target audience.
9. Focus on guest satisfaction
Guest satisfaction is the essence of the hospitality industry. The primary goal is to give guests a comfortable and luxurious experience which is worth the amount of money invested.
So, whenever you have any guest at your property, ensure you deliver the highest level of services to them. Also, try to give a personal touch to their stay by giving them local experience based recommendations.
10. Keep a check on your online reputation
If you thought that reviews and reputation are a matter of concern only for hotels, you are wrong. Just like hotels, reviews play a vital role in the serviced apartment business.
As per a survey done by TripAdvisor,
87% of travelers prefer to check reviews before booking any kind of hospitality business.
So, if you haven’t started collecting reviews for your serviced apartment, you should consider doing it in the first place. Also, don’t forget to reply to all the feedback, be it positive or negative.
Serviced apartment business is one of the profitable segments in the hospitality industry. In fact, it’s a great way for builders and apartment owners to earn a better revenue from their vacant flats.
If you are one of them, this blog is for you. All you have to do is implement the steps I’ve mentioned and watch the results for yourself.
If there is any other topic you want me to cover, do let me know in the comments. Till then, happy hoteliering.