Corporate Housing: The Growth in Demand in the USA
Corporate Housing: The Growth in Demand in the USA22nd October 2020
In many ways, the term ‘corporate housing’ is interchangeable with ‘serviced apartment’. Minor differences aside, corporate housing offers the same fully furnished temporary accommodation setting as a serviced apartment, but is more commonly associated with longer term rented accommodation in the USA and Canada. As the benefits of this form of accommodation continue to be expounded upon, its popularity continues to increase – particularly amongst business travellers in North America. The growth in demand for corporate accommodation in the USA, much like the demand for serviced apartments in the EMEA and APAC regions, reflects a movement away from traditional hotel contracts, towards the more flexible terms provided by furnished apartments.
Growth in Demand
The Corporate Housing Providers Association (CHPA) brings together providers and professionals to deliver a unified industry service with a similar level of standardisation and accreditation to that of hotels. The formulation of this industry association not only helps garner trust with clients, it also allows for a more accurate and detailed understanding of the industry’s fiscal performance across the continent. As per the CHPA 2018 industry report, in 2017 the average rate of corporate housing rose 7.1% in the USA - demonstrative of the demand increase for bookings across the sector. Similarly, the number of occupied units increased by 18.6% from 2012 to 2017, as did the overall revenue, which reached $3.62 billion. Indeed, from 2014 to 2018, the sector experienced a 12% combined annual growth rate.
Aside from the obvious corporate demand for business travellers and relocating employees, corporate housing also appeals to renters looking for an all-in-one payment accommodation option. With a variety of potential tenants, including individuals displaced by natural disasters and accommodated through their insurance provider, homeowners remodelling existing properties and students living abroad, the investment potential in the sector is booming.
With that being said, accommodating corporate clients presents a tangible benefit to those entering the furnished apartment market. Dealing directly with corporations or accommodation agents reduces the amount of litigation should problems arise. Furthermore, payment is usually timely and is, in most cases, guaranteed. Corporate tenants, reflecting their professional positions, take care of the properties in which they are staying and are less likely to cause property damage. In exchange, accommodation aimed at corporate clients should be well-equipped and finished with luxurious touches – in turn meaning a higher rate can be applied which, in areas of demand, will maintain a high occupancy (and still be more competitive than hotel equivalents).
As the market continues to evolve, in light of COVID and the changing travel landscape, serviced accommodation is becoming a more attractive option. The additional security, privacy and self-sufficiency this form of accommodation affords tenants further eclipses the comparatively exposed and limited accommodation provided by hotels. With homeworking becoming a more viable option (with 75% of Americans working from home saying they would prefer to continue doing so half of the time) the all-inclusive living area provided by corporate housing provides ideal temporary work spaces for those on the move. Post recovery, it is probable that furnished apartments will therefore outpace hotel uptake with regards corporate bookings.
The key factor behind the growth in demand for corporate housing is the attractiveness of its offering to guests. There are many advantages to furnished accommodation, but the key areas can be summarised as:
Flexibility – Once restricted to long-term stays of at least 30 days, providers are now much more flexible with the terms. Allowing for short-term stays, visitors, and even pet-friendly options, corporate housing now offers a range of flexible options for guests in a wide range of locations.
Value – A cost-effective alternative for corporate guests relocating for fixed term periods, furnished accommodation avoids expensive relocation packages whilst still providing a readily available – and fully equipped – homely space for assignees.
Privacy – Situated in removed residential or city centre environments, serviced accommodation provides a quiet and peaceful atmosphere in a location best suited to the guest. Unlike a busy and impersonal hotel experience, guests in corporate apartments are able to relax and unwind undisturbed, or work in peace.
Comfort – Providing plentiful space and a combination of essentials and homely touches and luxuries, furnished apartments are designed to enhance the guest experience. Whether for productivity or relaxation, corporate housing is geared towards providing a home-from-home experience.
Eager to learn more about the serviced accommodation sector in the USA? Read about the benefits of corporate housing over hotels, or SilverDoor’s continuing success in the Americas market.