SilverDoor's Market Update - September 2024

SilverDoor's Market Update is a comprehensive review of the global travel landscape using our own booking data, wider economic context, and our experts' experience and predictions to build a picture of serviced apartment trends worldwide. Reflecting on the past quarter and forecasting for the year ahead, the report advises corporates on rates, supply, demand and traveller preference to inform booking practices.

SilverDoor captures more than 127,000 datapoints from an average of 593,000 enquired room nights each quarter, the largest and most extensive sets of data available in the sector. This means we can provide the most accurate trend commentary and forecasting for those in the know across the business travel and mobility industry.

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|SilverDoor Snapshot

A softer summer in markets across the world has been a welcome booking climate for corporates with a keen eye on cost: better availability, more room for negotiation, and unseasonably competitive rates.

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|Summer 2024 in numbers

Negotiation is the word of the market at the moment, and the ADR decreases shown in our booking data compared to last quarter reflect a summer of budget pressure. A competitive market of strong supply in many key corporate booking locations has meant we’ve been more able to secure low rates for the price-sensitive demand than in previous summers, which goes some way to explain the typically unseasonal price drops in some places.

When it comes to lead times, on average it seems corporates in EMEA are planning further ahead than they were this time last year. EMEA leads times have extended 81% from 27 days (Apr-Aug 2023) to 49 days for the same period in 2024. This aligns with the theme of negotiation we’ve felt this summer, with bookers across the EMEA market allowing more time to search for options and demonstrate that they have explored every route to bring costs as low as possible.

• A different story in APAC where the average lead time has shortened by 4 days to 20, and the Americas where lead times have decreased by 5 days to 21.

In the Americas, we’ve seen a sharp QoQ decline in ALOS from 59 nights to 45 nights suggestive of the corporate appetite for shorter stays that we’ve seen at odds with the short-term rental legislation changes across the region.

YoY, we can see large differences in regional ALOS:

• In EMEA, ALOS has reduced to 31 nights – a 10-night decrease compared to the same period in 2023.
• In APAC on the other hand, ALOS has increased massively from 45 nights Apr-Aug 2023 to 76 nights for the same period this year.

|How has this summer differed to last year?

Overall, our account managers are reporting less of a summer rush than recent years. Rates have felt more stable and, whilst they’ve still been busy, key locations have had better availability. This has been driven by healthy investment into the expansion of corporate housing stock, meaning we’ve been able to meet and beat client rate caps and haven’t struggled to find apartments for summer bookings.

The market in Dublin particularly is much softer than previous years, with good availability and more affordable rates. There’s been some large property openings in Dublin in the past year which have widened the inventory and stabilised rates in the key tech hub. This is echoed in Singapore where plenty of new properties mean there’s more choice for corporates, better availability and more room for negotiation on rates.

September however is already set to be busier across Europe compared to this time last year, with group bookings on the rise as we move into graduate programme season. It may be a different story in the Americas, though, as internship bookings were big during summer but tail off into autumn.

It’s been challenging to meet rate caps in tertiary German locations where suitable stock is limited. Availability in the key business hubs like Berlin and Munich is always reliable, but enquiries are increasing in smaller towns and cities like Kassel and Bautzen. Construction, manufacturing and infrastructure are key industries attracting project work to the area, but the corporate accommodation market is lagging to fulfil the growing demand here. Our acquisition specialists and Partner Relationships teams are working with existing and new operators to widen our inventory in these areas.

We cited China’s eased VISA requirements in February’s report and, although the increase in demand they hoped for with these changes was slow, we’ve seen international moves into China picking up in recent months. The Hong Kong market in particular has been busier with rising demand and more bookings – compared to the same time last year, enquiries for Hong Kong were up 13.16% for Apr-Aug 2024.

|Where are bookers enquiring for the most?

• Amsterdam is popular primarily for relocation bookings – particularly within the banking industry. 
• London is consistently a top booked location, with plenty of demand from corporate clients. Summer in London has been softer than previous years, but graduate group bookings are already on the rise.
• Barcelona has had significant investment within the pharmaceutical industry in recent years and continues to be a busy corporate travel destination. 
• India continues to be of huge corporate interest in the fin-tech sectors – Bengauluru remains an important city for investment and inbound travel.
• Tokyo had a slight quiet stretch over summer, but demand is on the up again now. Availability is limited here, particularly for larger unit types.
• Riyadh is a key destination in the Middle East, with leading Saudi travel agent Almosafer reporting a 31% growth in non-hotel accommodation bookings compared to 2023.
• Edinburgh was incredibly busy in August during the Fringe Festival with some astronomical rates, but the city is already beginning to stabilise.

|What challenges are impacting travel programmes at the moment?

Gaps between expectation and budget

Hand in hand with cost pressures comes a misalignment between guest expectation of corporate accommodation and budget, and we’re seeing requests for VIP-standard apartments with unrealistic rate caps for this level of accommodation.

OUR ADVICE:

When you’re up against cost containment and strict budgets in your travel programme, something’s got to give. Whilst booking through an agent and coming to the table with larger booking volumes strengthens your negotiation power, if you’re booking into key corporate markets there’s only so low operators are prepared to go.

When feasible, give as much notice for your enquiries as possible. If you have your corporate itinerary planned a few months out, try to give as long a lead time as you can to give us more time to negotiate – slight movements in dates can be easily amended down the line if they’re not totally set in stone, but the longer we have to negotiate the better.

Be receptive to a strategic booking – we encourage bookers to be flexible on location in areas with good public transport links and we can always advise on suitable alternative locations within a given commute time. For London bookings: if your office is in Tottenham Court Road, consider accommodation in more affordable areas like Ealing or Acton where your commute will still only take less than 20 minutes.

 Longer deliberation and approval times delaying the booking process

With an increase in budget pressure also comes longer approval times for bookings. Whether that involves assignees booking over budget or stay extensions increasing spend requiring senior management sign off, SilverDoor account managers have reported a delay in approvals.

There’s also evidence of increased purchase times as customers are spending longer comparing options before proceeding with a booking, often resulting in units becoming unavailable when the booker comes to make a decision.

OUR ADVICE:

Policy and budget management should have a degree of fluidity where possible. We will only offer options over budget when we have exhausted every other possible option, so it’s important for travel and mobility managers to keep in mind that if we overspend in one area (nightly rate, in this case) we are often able to achieve savings elsewhere to compensate.

Consider how travel budgets are structured – it might not be as effective to segment spend caps within a trip project or relocation (for accommodation, food expenses, commute expenses, etc), but instead offer a lump sum budget. This way, approval wouldn’t be needed for going over budget on accommodation if the agent has managed to secure a complimentary airport shuttle to offset the overspend.

The short-term rental legislation roadblock hits Europe

Length of stay restrictions continue to impact bookings, but this time Barcelona is feeling the availability squeeze. With some operators, the minimum stay is 31/32 nights so our team in Iberia is reporting challenges sourcing short-stay options. Some providers have licenses that mean they’re able to offer shorter stays but this is a limited supply compared to the demand in the area.

The Barcelona rental market has been experiencing similar pressures to locations across the Americas, whereby it’s tougher for local residents to rent long term or buy permanent housing in their area as growing numbers of properties are leased out for short-term leisure and corporate stays.

Following suit to the likes of New York, Colorado and Toronto, Barcelona has tightened their short-term rental laws in a bid to balance the needs of both locals and visitors – while more support for long-term housing is good news for the relocation world, the rules have certainly made it more difficult to source short-term accommodation for transient trips or temporary housing before a permanent move.

OUR ADVICE:

SilverDoor account managers are encouraging impacted clients to rejig their corporate travel calendar to incorporate longer trips where you can get three short trips’ worth of meetings done in one go. Not only does this improve sustainability with a reduction in the number of flights needed and fulfil the minimum stay requirements, longer trips also benefit from lower rates to further reduce travel spend.

We encourage a degree of flexibility with length of stay, but it’s also important for operators in the region to try and be flexible with cancellations.

 Limited permanent housing in Australia

The significant housing affordability crisis in Australia has been a challenge for some time, but this is continuing to impact mobility and relocation in the region. Assignees moving to major Australian cities are struggling to secure permanent housing, so require their temporary housing for longer while they wait.

The challenge sometimes is that bookings with optimistic lengths of stay are made, but limited availability leaves guests unable to extend when they haven’t been able to secure permanent residence before their booking ends.

OUR ADVICE:

Book for longer than you think you need and shorten the stay if necessary rather than trying to extend a shorter booking. Cancellation policies in Australia tend to be more flexible on the whole anyway and, in response to these challenges, operators in the area are understanding of booking amendments. Securing the availability is more important, and shortening bookings at a later date is not usually an issue.

|The impact of global elections on business travel, mobility and relocation

With the recent change in UK government, which sectors are likely to be particularly busy under Labour?

	Housebuilding and construction: Mandatory local authority housebuilding targets are back, strengthened by renewed powers to overrule planning objections to push through developments. There are clear intentions to prioritise brownfield, grey- and green-belts for development as well: a welcome boost for housebuilders, developers, professional services, and the entire property and construction supply chain.
	Defence: Labour is committed to spending 2.5% of GDP on defence ‘as soon as they can’, so we expect to see increased activity and investment amongst clients and the supply chain supporting the defence and aerospace manufacturing sectors.
	Clean, low carbon, renewable, and nuclear energy sectors: The government wants ‘clean energy by 2030’ and wants to make it easier for developments to go ahead that support ambitions to achieve a cheaper, more secure, zero-carbon electricity system. Production facilities for carbon capture, utilisation, and storage, hydrogen and battery storage are all also likely to see growth.
	Onshore wind will become easier to push through planning, as will electricity transmission systems that are needed to get this energy into our homes. Don’t expect any drastic departure from nuclear policy, as Labour has indicated new-build nuclear projects will press on.

What other regulatory changes have been seen recently?

Edinburgh has announced a 5% nightly visitor tax, or Transient Visitor Levy (TVL), aiming to raise funds to reinvest into improving the city. The levy for self-catered accommodation, hotels and bed-and-breakfasts is capped at stays of seven consecutive nights and the city council is currently engaging with residents to decide on a final taxation rate.

The levy amount will be finalised in early 2025 but won’t be rolled out until mid-2026. Edinburgh is the latest city to announce these sort of visitor taxes, joining other European locations like Manchester and Rome, so it remains to be seen how many more cities will follow.

Across the pond, Mexico’s new president, Claudia Sheinbaum, won the election in part due to her promises to tackle rising rent prices and introduce policies to support affordable housing. Sheinbaum was active in the short-term rental world during her term as Mexico City Mayor, initially being seen to support the economic benefit of digital nomad tourism but then working to regulate short-term rental platforms such as Airbnb.

The country’s real estate market could be in for more regulatory changes during her presidential career, which could have more consequences on the short-term rental market in terms of investor caution and profitability limitations. The outcome of the upcoming US presidential election will decide where the government will direct finances, which initiatives will be supported, and which other regulatory changes the industry could expect.

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Connect with us on LinkedIn to keep up to date with SilverDoor news, learn more industry insights and discuss market trends.

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|Events impacting supply, demand and pricing

Major annual and one-off events can increase rates and reduce availability. With bookings already being made for events throughout 2024, SilverDoor can advise on how to secure suitable accommodation at the best price.

If you would like specific topics or trends to be discussed in a future SilverDoor Market Update, get in touch with us at [email protected].