Aparthotels and Extended Stay Properties: the Next Big Opportunity in Hospitality
Luxury Aparthotels and Extended Stay Properties: the next big opportunity in Hospitality by Ferox Consultants LLC
The hospitality industry has entered a new era, and aparthotels have been revived to be the forefront of that transformation. Combining the comforts of residential living with the services and flexibility of traditional hotels, aparthotels and extended-stay properties already hold a significant space in the hospitality market. The transformation and opportunity lies in the service level and location of this twist to an otherwise established hospitality sector. With luxury and upper-upscale classifications emerging as hybrid accommodation models, these properties are redefining guest expectations and creating lucrative investment opportunities, particularly in regions like the Southeast US.
This blog dives into why upper-upscale and luxury aparthotels and extended-stay properties are a game-changer: exploring their models, investment potential, and key strategies for successful development.
Understanding the Aparthotel Model
An aparthotel, or apartment hotel, is a blend of residential-style living and hotel services. Guests can enjoy the privacy and space of a self-contained apartment paired with the amenities and perks of traditional hotels. Here’s what makes this model so appealing:
Residential-Style Units
Spacious accommodations fitted with amenities like full kitchens, living areas, and laundry facilities. These are ideal for extended stays and family travelers.
Service Flexibility
Aparthotels cater to all types of guests, from business travelers needing short stays to tourists looking for a home base for weeks at a time. Optional housekeeping, concierge services, and communal areas add to the appeal.
Target Audience
Perfect for corporate travelers, relocated families, digital nomads, and even tourists seeking a more homely lodging experience. Aparthotels are addressing a growing preference for lodging options that deliver comfort, convenience, and customization.
Why Aparthotels Make Sense for the Southeast Market
The Southeast US market presents a fertile ground for aparthotel and extended-stay investments, thanks to several factors:
1. Strong Multifamily Fundamentals
The Southeast continues to experience robust growth in multifamily developments. Growing urban centers, steady job creation, and a rising demand for flexible living arrangements have heightened the region’s attractiveness to developers. This strong multifamily foundation aligns well with the aparthotel model, which bridges the gap between long-term residential housing and hotels.
2. Tourism Growth and Regional Appeal
Cities like Atlanta, Nashville, and Miami are not just tourism hot spots but also business hubs. Increased regional tourism and corporate activity create consistent demand for extended-stay and hybrid hospitality solutions. Aparthotels seamlessly serve both leisure and business tourists with flexibility and comfort.
3. Diversified Revenue Streams
Aparthotels are uniquely positioned to maintain occupancy rates even in less busy seasons by attracting a mix of short-term and long-term guests. In contrast to traditional hotels, this flexibility drives a more stable revenue structure.
Aparthotel Performance Metrics to Watch
For prospective investors and developers, performance metrics are key to evaluating success and potential. Aparthotels have shown consistent strength across several indicators:
1. Revenue Per Available Room (RevPAR)
Hybrid strategies, such as offering a mix of long-stay and short-stay options, boost RevPAR. Aparthotels have the capability to generate consistent earnings, often exceeding conventional hotel benchmarks.
2. Occupancy Rates
With flexibility in guest stays, aparthotels often achieve higher average occupancy rates than standard hotels. For example, the ability to accept longer bookings minimizes downtime between guests.
3. Operational Efficiency
By reducing the frequency of housekeeping and other daily services for long-term guests, aparthotels lower operating costs without compromising guest satisfaction.
Development Tips for Aparthotels
Successfully developing and operating an aparthotel or extended-stay property requires careful planning and execution. Here are the top strategies to ensure success:
1. Know Your Zoning Regulations
Understanding local zoning laws is critical. Some areas may not allow extended-stay lodging in certain zones, so work closely with local governments to align your development plans with regulations.
2. Choose the Right Brand Affiliation
Decide whether to partner with a well-known hotel brand or establish your unique identity. Both approaches have benefits, but aligning with a recognized brand may provide instant credibility and access to established loyalty programs. Determining a brand early will help avoid costly changes to development plans or post-development brand PIPs.
3. Integrate with the Community
Modern travelers appreciate accommodations that reflect the local culture and vibe. Incorporating elements like regional design aesthetics, partnerships with local businesses, and community-focused marketing can set your property apart.
4. Tailor Amenities Strategically
While guests value the flexibility to cook their own meals or do laundry, community spaces like fitness centers, co-working areas, or a rooftop café add to the guest appeal. Design these spaces thoughtfully to promote both functionality and guest engagement. Consider the natural amenities of the surrounding buildings and businesses and whether or not there is a way to integrate their offerings into your guest services. Market specific demand should also be researched prior to determining what amenities guests will value the most.
Capitalizing on the Growing Demand for Extended Stays
The demand for aparthotels is growing rapidly, driven by shifts in guest preferences and the appeal of a hybrid model that caters to both business and leisure travelers. With their unique blend of residential comfort and hotel-grade services, these properties represent a lucrative investment opportunity.
For developers focused on the Southeast luxury market, aparthotels provide a winning combination of sustainable revenue, high occupancy, and flexibility. Think beyond traditional hospitality and consider integrating this hybrid model into your portfolio.
Where to Begin
If you’re ready to explore the potential of aparthotels, consider starting with a feasibility analysis to evaluate your market and target audience properly. Make use of analytics, partner with consultants experienced in extended-stay development, and align your project with regional opportunities and regulatory frameworks.
The Southeast US is a growing hub for innovation in hospitality, and aparthotels are perfectly positioned to lead the charge.