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Regional Report - Australasia

Over the last twenty five years the serviced apartment sector has made significant inroads into the short, extended stay and residential-style lodgings..

This has led to an increase in purpose built apartment accommodation against a fall in the number of new hotels due to funding and land becoming harder to come by. Whereas hotels are purpose built, the Australian serviced apartment industry has been conceived from the development of private ownership and early investment.

Serviced apartments have been funded and bought for either leisure use, accommodation or for investment purposes. The Australian public effectively funded the development of the industry because hotels were less commercially attractive.

The industry growth is also the result of an increase in the number of corporate travellers choosing serviced apartments over hotels because of competitive pricing, high quality amenities and the option of short and long-term housing.

Between 2005 and 2008, the sector’s value grew from $1.5 billion to $2.2 billion, and growth has continued ever since. The serviced apartment sector now accounts for 25 per cent of the total market.

Demand for serviced apartments is predicted to grow in 2011. Occupancy rose by 5% in the first quarter of the year, whilst average room rates increased by 3%. However supply may struggle to match that demand. Quest Serviced Apartments’ chairman Paul Constantinou said “Over the past few years, we’ve witnessed a change in where business takes place, away from city centres to suburban business parks and regional areas.”

The importance of long-term assignments to the serviced apartments industry is growing in Australia too, as Constantinou confirms. “Over the past year, we’ve seen a shift in the perception of serviced apartments particularly from businesses and travel management companies which need to accommodate people working on projects, away from home for extended periods, in regional locations or near suburban business parks. This is why we now have a constant flow of properties opening in these high-demand suburban and regional areas.”