Emerging

accommodation
segments 2015
Edited by Sue McKenney

www.hotelalternatives.net

Contents
Introduction

Hotel alternatives
Serviced accommodation
Capsule / pod hotels
Hostels
Student accommodation
Temporary accommodation

3
19
25
32
35

Second home ownership

Vacation ownership / timeshare
Short-term rental market

39
45

Care giving
Senior living
Hospital accommodation

50
55

Alternative holiday accommodation

providers
Holiday parks / caravan parks / camping
Cruise industry

56
61

Demand
Digitally driven demand
The shared economy
The Millennials
Baby Boomers
Bleisure guest
The future

66
67
71
74
76
77

Introduction
This report investigates the range of alternative accommodation sources to hotels that are
increasingly competing for the same guests, real estate and investment funds.
It takes a look at sectors from second-home ownership to capsule hotels, hostels and
serviced apartments, and websites such as Airbnb and Housetrip.
Reading this report will enable hospitality professionals and investors to make informed
decisions based on a fact that might at first appear surprising that while these sectors
initially seem very different, they actually share many factors in common.
First is their ability to provide a serviced place to stay for the guest: many compete with one
another for the same guests. Another factor is that many are competing for the same real
estate opportunities and some compete against each other for investment funds.
The report also demonstrates how specific guest demand is being better catered for by more
focused products, such as hostels for the traveller market and serviced apartments for families.
For ease of reference this eclectic range of sectors has been grouped under several headings:
Hotel Alternatives: These include serviced apartments, capsule hotels, hostels, student
accommodation and temporary accommodation.
Second Home Ownership: The spectrum of holiday home ownership ranges from
timeshare resorts to fractional ownership, and private residence clubs which provide longer
accommodation periods of several weeks of ownership, and condo-hotels, which allow the
owner more usage and a share of the rental revenue. It also includes the growing market
sector of urban short-term private rental.
Care Giving: Senior living and Hospital accommodation come under this heading.
Alternative holiday accommodation providers: Cruises, as an alternative to resort hotels.
These can be either at sea or river cruises. Holiday parks, such as Center Parcs, an alternative
to hotels for a family week-end away. Caravans parks similar to holiday parks but with
more basic facilities, aimed at family market. Camping is often provided together with
caravan parks and as an add-on to holiday parks as well. The report also looks at the concept
of glamping.
A key threat to the hotel industry from these alternative providers is principally in the area
of investment as each of these sectors, while many are still in their infancy at present, can
potentially draw investment funds from the hotel industry, as each becomes an established
asset class in its own right.

Emerging accommodation segments 2015 1

Competitive analysis of alternative accommodation providers

Holiday parks

Senior living

Capsule
hotels

Caravan parks

Timeshare
Hospital
accommodation
Hotel

Camping

Student
accommodation

Temporary
accommodation

Serviced
accommodation

Hostels

Cruises

Private rental
Guests

Both

Real estate

It becomes apparent when looking at the various sectors, that they overlap one another, as the chart below illustrates.
Illustrating the overlaps between the different alternative accommodation providers

Holiday parks
Caravan parks
Capsule
hotels

Camping
Temporary
accommodation

Timeshare

Hotel
Serviced
accommodation:

Hospital
accommodation

Hostels

Senior living

Private rental
Student
accommodation

Guests
Source: McKenney Research

2 Emerging accommodation segments 2015

Branded residences
Corporate housing
Aparthotels

Both

Real estate

Hotel alternatives: serviced accommodation

Serviced apartments are a hybrid of two different asset classes:
the residential apartment sector and the hotel market. Their
aim is to fill the gap between a short hotel stay and longer-term
rental accommodation.
The concept is well established in the US and Asia Pacific,
and, despite still being a relatively unfamiliar concept to both
investors and customers in Europe, the industry is growing and
is now becoming an acceptable accommodation option.
One of the keys to its success is being able to generate a higher
gross operating profit and net operating income than the
average hotel. This is achieved through lower guest turnover
because the length of stay is longer than that of regular hotels
and lower operational costs are achieved by providing fewer
and less frequent services1.
While there is no official definition, the term serviced
apartment encompasses the three sub-categories: aparthotels,
branded residences and corporate housing.

2.1 Categories of serviced apartments

Aparthotels/Extended Stay hotels
These extended stay hotels are mainly studios, one bedroom
or two bedroom apartments usually found in urban locations,
ranging in standard from budget to deluxe. All are fully
furnished and include:
En suite bathrooms
Fitted kitchen or kitchenette
Lounge/dining area sometimes including a sofa bed
or pull-down bed
Working area, desk, office chair, internet access and direct
telephone line
The hotel services usually available from extended stay
hotelsinclude:
Reception desks some manned 24hrs, others on
limitedhours.
Daily or weekly cleaning and laundry service.
There are typically no restaurants, bars or lounge areas,
although the level of services is generally higher than those
hybrid aparthotels, which are usually a leisure- or resort-based
product, and also come in standards of accommodations and
range of services from budget to deluxe2.

Key players
Regardless of being considered a relatively new sector, there has
been significant movement in Europe in the aparthotel sector
over the past ten years. Multiple new, large international brands
have entered the market, such as Residence Inn by Marriott
(2011) and Staybridge (2012); there have also been a number
of re-brandings, such as Suitehotel to Suite Novotel.
For the purpose of this report the focus will be on the key
players in Europe.
Hotel brands
Adagio
A joint venture with Accor and Pierre & Vacances.
It acquired 100% of Frances second largest operator, Cita, in
2011 and is now the largest player in France.
At mid-2014, the brand had 100 aparthotels with 10,600
apartments in ten countries.
Aparthotels Adagio, offers modern, spacious apartments with
a fully equipped kitchen, as well as hotel services in urban
locations for extended stays, based on tiered pricing from
fourth night onwards.
First established in 2007, the brand provides two product
ranges: Adagio; contemporary midscale aparthotels in
Europes leading cities, and Adagio Access; economy range,
functional aparthotels, which are only located in France.
Adagio is on track to have 150 aparthotels open globally
by the end of 2016, and has been making particular headway
in Latin America, the Middle East and Russia. In tight markets
such as London, it has been up against tough competition
forsites.
Staybridge Suites
IHGs extended stay brand.
199 hotels (21,800 rooms) with 88 projects under
development3. In Europe, the brand has five hotels
(784 rooms) with three hotels in the pipeline.
(Figures as of June 30, 2014)
Brand was established in 1998.
IHG was the first major hotel company to launch an extended
stay brand in the UK. In 2012, the first property in London
opened in Europes largest shopping centre, Westfield
Stratford City, ahead of the London 2012 Olympic Games.
Hotel amenities include: three suite types (studio, onebedroom and two-bedroom/two-bath) with fully equipped
kitchens and a highly functional work area separate from
living areas. Staybridge Suites hotels offer free Wireless
Anywhere, a complimentary daily hot breakfast, The Social
evening reception three days a week, a 24-hour business
centre, fitness room and laundry room, all of which are
complimentary for guests.

1HVS, Here to Stay An Overview of the European Serviced Apartment Sector,

July 2013
2 The Global Serviced Apartments Industry Report 2013/14, 4th Edition

3http://www.ihgplc.com/files/pdf/factsheets/factsheet_staybridge.pdf

Emerging accommodation segments 2015 3

Hotel alternatives: serviced accommodation continued

Key players
Oakwood
Founded in 1960, Oakwood pioneered the temporary housing
industry and remains the worlds leading provider of furnished
and serviced corporate apartments and residences.
Has over 25,000 locations throughout North America, Latin
America, Europe, the Middle East and Africa, and the Asia
Pacific region.
BridgeStreet Hospitality
BridgeStreet was renamed in 2014 to BridgeStreet Hospitality
to help clarify the serviced apartment sector to the industry.
The launch enabled the company to introduce its brands
including six distinct serviced apartment experiences ranging
from six- to two-star products.
Marriott Executive Apartments
Has apartments in five European locations Belgium, Czech
Republic, Hungary and the UK and also one in Kazakhstan.
Marriott also owned the ExecuStay brand which it sold to
Oakwood in 2012.
Challenges
In the corporate housing sector, particularly in the US, driven
by the economic and US housing crisis, demand for apartments
has increased dramatically whilst new supply has dried up due
to the construction industry coming to a virtual standstill.
Securing inventory has become more challenging, with
operators charging premiums of 10%+ on short-term leases.
Some properties have declined to work with corporate housing
providers or accept short-term leases.
There has been continued pressure on rental rates within
EMEA, Asia Pacific and the Americas, with destinations such
as London, Beijing, Shanghai, New York and Washington D.C.
seeing substantial rises in the rents being quoted.
Availability is particularly limited in the BRIC markets such as
Delhi, Mumbai, and Bangalore and across Brazil for apartments
with more than two bedrooms/bathrooms. Meanwhile, new
build that is taking place lies in popular urban destinations
where demand is driving up prices. Seasonality and major
events such as the Olympic Games also affect corporate housing
in terms of pricing and availability.

2.2 Benefits of serviced apartments

over hotels
For business users in particular, serviced apartments offer
tangible, quantifiable benefits over traditional hotels. These are
as follows:
Cost for stays of a week or more, serviced apartments can be
significantly cheaper than hotels because their costs are lower
and extras such as room service, hotel restaurants and bars do
not apply in the serviced apartment model. Many corporates
will measure these savings as total cost of stay including car
parking, Wi-Fi, food, beverage etc.
Environment a secure, home-like environment whilst away on
business, especially for long periods, makes the traveller more
relaxed and, potentially, more productive. This can been seen as
part of a corporates statutory Duty of Care to their employees.
Cooking although hotel rooms are often equipped with
microwaves and coffee makers, apartments are usually
equipped with fully functioning kitchens, enabling the traveller
to cook or entertain and the company to control food budgets.
Personalised serviced apartments allow guests to customise
the service they require, e.g., laundry, cleaning and so on.

2.3 Supply
Global supply
The serviced apartment sector has expanded significantly over
the last 30 years, although the rate of that expansion has
varied from region to region, city to city and from year to year.
However, the impact of the recession and difficulties faced by
developers when raising finance have seen the overall supply of
extended stay apartments decline over 2013/14.
In 2011, research for The Global Serviced Apartments Industry
Report put the number of extended stay apartment units
globally at 599,187 in 8,362 locations, increasing inventory
by 34% and locations served by 17.5% over 2010 levels.
In 2013/14, the updated report estimated that there were
655,911 units in 8,802 locations, suggesting that supply has
increased by 9.4%, however the picture in individual regions, or
even destinations, inevitably varies.
The report goes on to note that the rate of growth is not
reflected among the inventory of the fifteen top global
suppliers, whose supply increased by just 1.7%, suggesting that
the overall increase in supply is due to independent apartment
operators joining the market10.

10 The Global Serviced Apartments Industry Report 2013/14

Emerging accommodation segments 2015 9

Hotel alternatives: serviced accommodation continued

Global supply of serviced apartments

Region

Africa
Of which

Asia Pacific
Of which

Australasia
Of which

Leading operators

Protea Hotels
Southern Sun Resorts
Courtyard Apartments (South Africa)
Other
Executive Apartments & Hotels
Somerset (Ascott Ltd)
Other serviced residences (Ascott Ltd)
Oakwood
Citadines (Ascott Ltd)
Fraser Suites
Mantra Group
Other
Quest Serviced Apartments
Oaks Apartments
Mercure Australia

Central & South America

Mercure
Othon Suites (Brazil)
LOI Suites (Argentina/Brazil)
Temporary Apartments Buenos Aires
Dazzler Suites Buenos Aires
Europe
Maeva (Pierre et Vacances)
Adagio & Adagio Access
Pierre et Vacances
Citadines
Park & Suites
Middle East
Damac Properties
Arjaan Hotel Apartments by Rotana
Bavaria Executive Suites Dubai
Movenpick Hotels & Resorts
Marriott Executive Apartments
US & Canada
Residence Inn (Marriott)
Extended Stay Apartments
Candlewood Suites (IHG)
Homewood Suites (Hilton)
Town Place Suites (Marriott)
Source: The Apartment Service

10 Emerging accommodation segments 2015

Locations

Apartments

76
19
4
6
6
5
419
33
63
17
19
14
1,104
130
556
120
38
40
65
25
15
5
4
3
1,212
177
90
80
39
45
289
37
22
1
3
5
5,637
733
363
300
241
258

4,634
1,520
610
451
396
305
49,480
5,892
5,205
2,700
2,324
2,324
57,220
13,600
13,457
6,786
4,432
4,173
6,115
2,607
2,434
332
160
144
85,263
13,193
9,337
9,059
5,102
4,040
40,364
7,817
4,481
2,100
903
680
412,835
90,475
41,000
28,972
26,484
25,765

Hotel alternatives: capsule / pod hotels

3.1 Concept

Within capsule/pod hotels, there are two main variations:

The capsule/pod hotel is increasing in popularity. Originating in

Asia, notably in and around international airports, transit hotels
are micro rooms or nightly rental pods that provide minimally
sized accommodation, with most offerings typically under 200
square feet. For the purpose of the report, the terms capsule,
pod and transit are used interchangeably.

Urban pod hotels: these are located in urban cities and

provide a cheaper alternative to traditional hotels by trading a
smaller space for a lower price. Many of these pod hotels only
provide the minimal amenities and communal bathrooms in
tight spaces to cut down on costs such as labour.

In recent years, the concept of transit hotels has expanded

outside of Asia to other major international cities in Europe
and Americas, with recent pod hotels opening in London
and New York. Transit hotels offer guests cheaper rates while
simultaneously allowing owners to minimise costs by limiting
the amenities offered.
Limited room size, unique luxury design, and high-tech gadget
features characterize all pod hotels, whether located in an
airport or urban setting.These luxury qualities are accomplished
by sacrificing space for price.Pod hotels can be an excellent
alternative in locations where traditional hotels cannot be built,
such as in airports and in the heart of major urban cities, where
land available for development is limited and expensive, and
high density projects are permitted.
Tokyo was famously the launch location for the first capsule
hotel, which in 1979 provided small sleeping spaces measuring
just 2x1x1.25 metres, too small to stand up in, and stacked one
on top of another.
The biggest difference is the smaller room found in pod hotels
compared to traditional hotel rooms.Brands offer several
classes or rooms, usually classified by the size of the room and
the size of the bed.
While the capsule phenomenon itself has not gained much
traction outside Japan, others have taken up the compact
challenge, though generally they all offer a room guests can
stand up in. Operator Yotel has made a virtue of its small rooms.
At its airport locations, they are called cabins and likened to
something that might be found on a cruise liner, measuring just
7 or 10 square metres for singles or doubles, respectively.
Yotel still calls the rooms in its Manhattan hotel cabins, albeit
they are a little larger at 17 square metres each. Upcoming
European brand citizenM has squeezed its room footprint
down to 14 square metres, and Marriotts new Moxy is built
around a 17-square-metre room; while Whitbreads Hub rooms,
developed for urban sites in the UK, absorb just under 12
square metres of floor space.

These pod hotels attract younger travellers who do not want

to sacrifice design for price, as well as middle-aged travellers
on a tighter budget.Because of their environment/
surroundings, these properties focus on accessibility and
proximity to increase convenience.
An ideal development location would be close to lively city
centres that contain business, nightlife, restaurants, and
entertainment.Additionally, these locations should be well
connected by public transportation and be close enough
in proximity to main points of interest that are within
walkingdistance.
Airport pod hotels: are located right next to the airport and
are aimed at travellers who need a place to take a quick nap
or shower before connecting to their next flight, so are often
rented by the hour.
Some of these airport pod hotels, such as Yotel, were actually
inspired by first-class flights on regular airplanes. Although
there are differences between countries, amenities, and
services offered, it is clear that the pod hotel is a trend that
is gainingpopularity.
Properties at airport locations target travellers dealing with
the inconveniences of modern air travel, thus the features are
created to make their stay more comfortable while dealing with
travel hassle.Yotels airport hotel pods can be booked in 4-hour
blocks, allowing travellers with semi-short layovers to grab a
quick nap in a comfortable, yet convenient, environment.
Offering 4-hour blocks allows Yotel to turn more beds within
a 24-hour period.These room rates are offered at a lower
rate than overnight rates. Because these hotels are directly
connected or in close proximity to the airport terminals,
travellers can use an automated check-in system within the
terminals for convenience. Airport pod hotels usually have a
small food outlet and may contain a bar.
citizenM, Amsterdam Airport, has a 24-hour food outlet
called canteenM.Airport pod hotels are characterized by their
convenience to the exact location of arrival and departure by air
for their guests.

With limited space, pod hotels offer luxury accommodations

at lower prices, such as power rain showers, internal windows,
and luxury bed linens and bathroom fittings.Additionally,
a majority of pod hotel designers have a futuristic style and
offer multiple innovative, technologically advanced amenities
features not found in a traditional hotel such as free Wi-Fi and
automated self check-in29.

29http://www.4hoteliers.com/features/article/7859
Emerging accommodation segments 2015 19

Hotel alternatives: capsule / pod hotels continued

3.3 Key players

The main companies operating in the capsule/pod sector of the hotels industry are as follows:
Leading Capsule hotels companies (2014)
Company

Hotels

Rooms

citizenM

1,446

easyHotel

15

na

Hub (Whitbread)
Nitenite
Qbic
Yotel

1
1
2
4

163
104
253
802

ZHotels

499

Locations

London, Glasgow, Rotterdam, Amsterdam (two), New York, Paris.

Three hotels under development in London & one in New York
Netherlands, Switzerland, Germany, Hungary, UK, Bulgaria,
UAE and South Africa
London
Birmingham
Amsterdam, London
London Gatwick, Heathrow, Amsterdam, New York;
Singapore under development
London (three), Glasgow & Liverpool

Source: McKenney Research

citizenM
The operating company is owned by four owners, of which
CEO Michael Levie is one. The real estate is financed by Dutch
pension fund APG and KRC Capital, a private equity firm
backed by Rattan Chadha.
Founded in Amsterdam in 2009, citizenM is doing to hotels
what IKEA did for furniture: using prefabrication to lower costs,
using a process called industrial, flexible and demountable.
Every room in a citizenM hotel is pre-assembled in a factory
owned by the brand in Holland. Designed by the Amsterdam
architecture office Concrete, the rooms arrive on site nearly
complete. Each hotel is made up of hundreds of identical rooms
that have been stacked to create the finished building.
The company has seven hotels open in London, Glasgow,
Rotterdam, Amsterdam, Paris and New York.
citizenM hotels development strategy focuses on building near
international airports attracting over 15 million passengers a
year and on building properties in cities with over 500,000
inhabitants.
Current hotels under development include three more
properties in London (Tower Hill, St. Pauls, Shoreditch)
and New York (Bowery). In addition to the Asia roll out,
the company has plans to expand in major cities like Milan,
Barcelona and Istanbul.

easyHotel
Introduced by Stelios Haji-Ioannou of the easy Group, easyHotel
is his first entry into the budget hotel sector. Offering budget
accommodation in city centre locations around the world
including UK, Netherlands, Germany, Bulgaria, Hungary, South
Africa and UAE. Guests can only book an easyHotel on its
website and rooms are priced on the basis of the earlier the
room is booked, the less is paid and periods of high demand
cost more than less popular periods.
The company was incorporated in 2004 and opened its first
hotel in 2005.
EasyGroup Holdings Ltd (the investment vehicle of EasyHotel
founder Sir Stelios Haji-Ioannou and his family) is the largest
shareholder with 55.7% of the equity and 49% of the votes (as
of June 2014). It is listed on the Alternative Investment Market
of the London Stock Exchange.
EasyHotel owns two properties (London and Glasgow) and
franchises all other hotels to third party owners and operators33.
Hub
In July 2013, Whitbread, the UKs largest hotel group,
announced the launch of its new hotel concept, hub by
Premier Inn. The new concept will target major UK city centres
such as London and Edinburgh, with the first hub by Premier
Inn opened on St. Martins Lane in London in autumn 2014.

citizenM announced a partnership with the Artyzen Hospitality

Group, the hotel management subsidiary of Shun Tak Holdings
Limited that will allow it to expand into and throughout Asia.
The partnership will see flagship citizenM hotels established
in major gateway Asian cities such as Hong Kong, Taipei,
Shanghai, Beijing, Singapore and Jakarta32.

hub by Premier Inn is a new generation of compact, city centre

hotel with contemporary room design and connectivity that will
offer good value for money and appeal to customers who value
price, location and design over space. At 11.4 square metres
a hub room is compact, and due to its design all the space is
optimised with a desk that folds into the bed, luggage storage
under the bed, an en suite bathroom with power shower, free
Wi-Fi and a 40-inch smart screen TV.

32http://www.hospitalitynet.org/news/4063603.html

33https://en.wikipedia.org/wiki/EasyHotel
Emerging accommodation segments 2015 21

Hotel alternatives: hostels

4.1 Concept
In the early 20th century, hostels emerged as a budget-friendly
alternative to the traditional hotel, offering inexpensive
accommodation to young travellers at the expense of
decreased amenities.
However, modern hostels no longer solely attract the budgetconscious traveller. They also appeal to those seeking an
interactive, socially driven accommodation experience by
offering amenities such as extensive public space, group events,
vibrant design and high-tech capabilities.
Hostels can be defined as a type of budget accommodation
where typically guests rent a bed in a dormitory and share
facilities, although there are more emerging that offer
individual accommodation. However, since hostels are shared
accommodation, there is less privacy for guests, which may be
one reason why they are particularly favoured by teenagers and
young adults rather than older travellers.
Hostels also appeal to the younger generation because they
offer value for money, as well as a range of accommodation
options, from dormitories of up to 20 beds, to single and
double rooms with en suite bathrooms. Another major
attraction offered by hostels is the opportunity for social
encounters with like-minded travellers from around the world.
Hostels encourage social interaction between guests and
most provide common areas for them to mingle and socialise.
Many also stage events or offer local tours to enhance their
attractiveness to the nomadic bands of young adults who
constitute their core customer base. Hostels are also generally
located closer to city centres than comparably priced hotels,
tend to have a more casual atmosphere than hotels and often
promote adventure travel.

The European hostel sector has undergone significant changes

and segmentation over the last couple of decades. The hostel
sector is growing across Europe, as a new generation of
travellers are prepared to share accommodation, in return
for a great urban location. Many hostel offerings are now
far from the basic youth hostel, providing a degree of luxury
that elevates the accommodation into competition with
good budget hotels. The generation that makes up the many
hostels clientele are prepared to share rooms with friends,
affording them greater disposable income to spend on having
agoodtime.

4.2 Supply
Traditionally present in Europe and Asia, hostels are today
gaining traction in other regions among both travellers and
institutional investors.
With regards to Europe, the hostel market is well developed
in countries such as Germany, but in the UK, it is thought
to beunder-served.
The market in Europe typically consists of owner-operated
backpacker businesses, strong regional companies often with
operational links to university accommodation like Starboard
Hotels Smart City brand, national charitable organisations,
like the Youth Hostels Association (YHA), and large branded
operators developed from existing scale businesses including
Generator and St Christopher.
Further consolidation of this sector means that branded supply
is set to expand, similar to that seen in the hotel sector.
London and Paris offer the greatest opportunities for
expansion based on current supply in relation to their youth
touristmarkets.

The leading major European hostel operators by number of beds (2013)

Operator

A&O
Meininger
Generator
St Christophers Inns
Wombats
Equity Point
Plus Hostels
Hip Hop Hostels, Paris
The Student Hotel
Euro Hostels, UK
Youth Hostel Association
Evolution
Hoax
SmartCity

Hostels

Beds (approx.)

22
17
11
17
6
9
3
15
4
3
200
1
1
1

14,000
7,000
5,000
2,000
1,900
1,800
1,100
1,000
na
900
na
244
326
620

Owners

Winter & Kluge

Cox & King
Patron Capital
Beds & Bars Group
Dimitriewicz & Praschinger
Equity Point Group
Cardini Family
Thomas O Huertas
City Living
Andrew Salvesen
Charity
BridgePoint Ventures / Union Hanover
Patron Capital / Starboard Hotels
Patron Capital / Starboard Hotels

Source: HVS; McKenney Research

Emerging accommodation segments 2015 25

Hotel alternatives: student accommodation

5.1 Concept

5.3 Key players

Student accommodation is provided by:

Universities themselves in halls of residence

The universities in cities such as Oxford, Cambridge and
Durham are tourist attractions in themselves, and part of that
attraction can be sleeping in Oxford colleges or in the castle at
DurhamUniversity.

universities themselves, in halls of residence

operators that are in partnerships with the universities running
on-campus residences
private rentals
purpose-built student accommodation provided by the private
sector
This report is not looking at student demand for
accommodation during term time, but will focus upon the
renting of student accommodation to the general public, out
of term time. However, it is important to note that investment
in the purpose-built student accommodation (PBSA) sector is in
competition for hotels as an investment class.
The main changes to this market over recent years are the
advent of purpose-built student accommodation in university
cities, many of which are not university specific but aimed at
providing accommodation for all students. The other change is
the letting out of student accommodation halls of residence
and PBSA outside of term time.
Student accommodation is obviously located in cities and towns
with large student populations. Its guest profile is, as the name
suggests, students during term time, but during holiday periods
when students must usually vacate their rooms it is looking to
attract tourists and travelling students.

5.2 Supply
Research for this publication has shown that the letting of
out-of-term student accommodation (OOTSA) is quite a British
phenomenon as many of the European universities do not offer
this service.
Of the Russell Group Universities in the UK, only 25% did
not offer some form of OOTSA, and of 75% that did, the
majority offered their services via a third party website
(such as universityrooms.com).
In looking at the European market, McKenney Research looked
at the leading five universities in the UK, France, Italy, Spain and
Germany, in order to research OOTSA provision. Only the UK (all
five), France (one) and Italy (two) offer OOTSA, this highlighting
the fact that not only is it a very small niche market, but is also
quite a unique operation to the UK.

Some 20 out of the 31 Cambridge Colleges offer out-of-term

accommodation.
Durham University offers accommodation in a number of its
Colleges over Christmas, Easter and summer vacations.Whilst
the university has over 6,000 bedrooms it does not offer all of
these for business during vacations.During Easter vacation it
offers 370 en suites and 430 standard bedrooms (with shared
bathrooms). During summer, it offers approximately 600 en
suites and 1500 standards.
CRM Students
Owned by Corporate Residential Management. CRM
Students is the one of the UKs leading independent student
accommodation managers. It has the expertise in both student
care and property management required to successfully manage
its clients assets.
With 19,000 units, the company has been managing modern
purpose-built student accommodation blocks for over six years.
It now operates a range of quality sites located throughout
theUK.
It also offers summer lets in its student accommodation.
Campus Living Villages
Campus Living Villages (CLV) is a global student accommodation
provider with services in finance, design, development, project
management and operation of student housing. CLV is one
of the largest higher education student housing providers
in theworld.
Campus Living Villagesopened its first village at the University
of Sydney, Australia, in 2003. Since then, CLV has experienced
significant international growth. In 2005, CLV expanded into
New Zealand, signing its first lease with Massey University. This
was followed closely by the acquisition of the University of
Canterburys student accommodation in December that year,
including an agreement to develop further housing on the site.
In 2006, CLV acquired the US business, Century Campus
Housing Management LP, adding approximately 20,000 beds
to the portfolio.
Given the demand for student accommodation in the United
Kingdom, CLV entered its first agreement with the University
of Salford in 2008, followed by the University of Bedfordshire
in2010.

32 Emerging accommodation segments 2015

Hotel alternatives: temporary accommodation

6.1 Concept
The portable hotel is a self-contained accommodation product
that is easily transferable and prefabricated. This type of hotel
emerged in response to major demand generators and can be
seen throughout the world near airports, railways, hospitals,
offices and highly trafficked locations.
Given their relatively short set-up time and transportable nature,
portable hotels offer immediate, temporary accommodation in
areas lacking hotels, such as near remote TV and film shoots,
music festivals, sporting events, disaster and emergency relief
areas and military bases57.

6.2 Key players

Snoozebox
Snoozebox was the brainchild of Robert Breare, formerly of
Malmaison and Arcadian hotel chain. The product was launched
at the British Grand Prix in 2011, then the company listed on
AIM in 2012.
Snoozebox provides comfortable, secure accommodation which
is portable and does not require mains services such as power,
water and waste drainage.
Snoozeboxs products are based on ISO steel shipping
containers with 96 height. Rooms within a container are
typically fitted out to include an en suite wet room, a double
and a single bed, air conditioning, Wi-Fi, TV and a room safe.
Snoozebox has two principal markets:
Events, such as motor racing, horse racing, golf, tennis and
sailing; music festivals; county shows; and cultural events
Contracts: accommodation required for longer periods
of time, such as military deployments and civilian
constructionprojects
The company currently has 592 rooms in stock. They plan to
launch an additional 150 rooms for use from 2015 following
GBP10m fundraising in 2014.
A new substantially more efficient and flexible model Next
Generation Portable Hotel has been developed to cater for the
demand at short-term events. It was brought to market in late
2014. The first generation product will continue to be used to
cater for the demand for longer-term deployments.
Snoozebox sold more than 15,000 room nights for events and
over 17,000 room nights at its longer-term semi-permanent
hotels in 2013, its first full year of trading.
The projected build cost of the next generation rooms is
c.GBP40,000 per room, compared with an average capital cost
per freehold room at UK Premier Inn of c.GBP65,00058.

57 E&Y, Global Hospitality Insights: Top thoughts for 2014

58 Edison Investment Research, Snoozebox Holdings, August 2014
36 Emerging accommodation segments 2015

The Snoozebox product is also well suited for semipermanent or longer-term deployments, notably in workforce
accommodation and consumer hotels.
The company is looking to expand its business. New sectors
under development include the evolution of a cost-effective
portable hospital product in partnership with Compass Group,
and quality temporary accommodation to meet local authority
welfare requirements.
Although the UK remains the companys prime concern for the
time being, it is confident about international opportunities for
both short- and longer-term deployments. Enhanced capacity
would allow the company to serve Continental Europe, where
there is established interest in a similar portable lodging
circuit to that in the UK, e.g. motor racing, music festivals and
landmark events.
Suite Hut
Suite Huts are another form of on-site event accommodation
a custom-built log cabin with en suite bathroom that comes in
a flat-pack format. Used at music festivals, motor racing or for
private use. The company offers two products Suite Huts, of
which it has 50, and Sleep Huts (60).
Steve Smith set the business up in 2010 to supply the VIP
festival market with en suite luxury log cabins. He has steadily
reinvested in the company, building more units each year to
meet demand and now has over 100 units. The company
has been asked to build a further 100 units for the European
market in 201559.
Pod Pads
The quirky boutique camping alternative to the traditional tent.
The company has six different styles of accommodation to
suit personal requirements, catering for different sized parties,
budgets and expectations. All the pads are pre-pitched in a
bespoke area, which will have 24-hour security, decent toilets
and showers (festival dependent). The products include the
Octopad, Pod Pad, Lux Pad, BunkPad, BeauPad and Bellepad.
The company was founded by Roland Everson, Robbie Falconer
and Tim Leyshon (no longer involved). Originally designed
and developed for Glastonbury in 2005, the company now
offers its pod at music festivals and events throughout the
UK andEurope.
Scandic To Go
This is a mobile hotel product introduced by Scandic Hotels,
available at any location a guest desires. Scandic To Go
consists of two mobile hotel rooms, both 18 sq.m, with an
attached terrace. The rooms have two beds, a small seating area
and amenities such as TV, free Wi-Fi and air conditioning as well
as a fully equipped bathroom60.

59 Interview with Steve Smith, October 2014

60 www.hotelnewsresource.com/article79281. Retrieved 13/08/2014

Second home ownership:

vacation ownership / timeshare
7.1 Concept62
Timeshare was originally a European idea but has proved to be
a concept that developed faster in the US. In fact, predictions of
explosive growth for timeshare in Europe have not been borne
out, despite the fact there are 1.5 million timeshare owners in
Europe compared to 460,000 in 1990.
Timeshare can encompass a number of different concepts,
these include:
Classical timeshare schemes: the essence of which is that the
user purchases an interval typically in multiples of one week
in a holiday property with the right to use the unit each year,
typically for a fixed term of between 20 and 80 years. Such
weeks can be for fixed dates, floating dates or sometimes on
a split-week basis depending on the precise terms of the deal.
In addition, the owner pays an annual maintenance charge
and generally acquires no equity interest in the unit purchased
(although early versions of timeshare, especially in southern
Europe, were sold in perpetuity). Other than where a deeded
interest in property is sold, if the owner wishes to dispose of the
unit during the period of his or her lease, they can only sell the
time period for the residual number of years left on the original
lease period.
Fractional ownership: a concept also associated with the
acquisition of business jet aircrafts or boats under the
terms of which the purchaser acquires part-ownership of the
equity in a unit within a given property. Typically, the fractions
purchased are divided into larger proportions of a year than
with timeshare, often between 1/6th and 1/10th of a year. The
initial cost is therefore far greater than in the case of timeshare,
as are the regular maintenance fees, and the target market is
more affluent and often the quality of the property in which the
fraction is acquired is higher than the mass market timeshare.
Private Residence Clubs: this concept is akin to the fractional
ownership model and operates at its most exclusive end with
costs to match. In the US, hotel groups such as Ritz-Carlton and
St. Regis are active in this area. The investment, which is for a
fixed number of days usually somewhat fewer than traditional
fractional ownership (averaging 1/7th 1/8th fractions of a
year i.e. six to seven weeks in the US) operates in a manner
similar to membership of an exclusive club. These developments
again, as with fractional ownership tend to be smaller and
in ultra-attractive destinations. The target market is those with
high incomes and high liquidity. Sales and marketing costs are
quoted as representing about 30% of costs, compared with
50% for traditional timeshares.

62 PwC, Hospitality Directions Europe Edition, issue 12, September 2005

Points Clubs: whereby the purchaser acquires rights through

a points system to the use of holiday properties which are
priced according to season and location, and confer the right
to occupy properties in multiple destinations as a result. Initially,
points were awarded as a form of currency to holders of
an interval whether fixed, floating or split but a later US
model is now available in Europe from companies such as
Macdonald where points can be purchased directly without
the need to buy any interval, and can then be used either to
buy time in a companys timeshare units or hotels, or traded
through exchange companies for other resorts or indeed for an
increasingly wide range of travel services.
Condo hotels: A further variant on interval ownership is to
be found in the condo hotel model. In essence, this offers
an equity-based ownership of a unit typically a hotel room,
studio or a one- or two-bedroom apartment within a hotel
setting whereby the unit owner is entitled to a certain number
of days usage and also benefits from rental income when the
unit is let out to other guests. Typically, a condo hotel is set
at the upper end of the market, in the US is frequently under
the management of a recognised branded hotel company,
and offers a full range of common amenities such as food and
beverage outlets, fitness centres, swimming pool, spas etc.
A European example of the condo hotel model was to be found
in the UK under the name of GuestInvest. Launched in 2004
by Johnny Sandelson and initiated in London and subsequently
extended to a small range of provincial UK hotels, GuestInvest
invited investors to purchase a 999 year lease on a hotel room,
in return for which the purchaser receives 50% of the rooms
rental income, the right to use the room for 52 nights a year at
a flat rate of 20 per night, and full maintenance and cleaning
services as per normal hotel room practice. The lease could, of
course, be sold on and the investor theoretically benefits from
any rises in property values.
A high-profile advertising campaign and luxury London
boutique hotels attracted hundreds of investors to GuestInvest,
but the company went into administration in October 2008.
The business was a joint venture with Bank of Scotland and
was likely to have been hit hard by parent group HBOSs forced
rescue merger with Lloyds TSB63.
Vacation ownership is one of the most evolving and
profitable sectors in the hospitality market, holding vast
growth potential. This sector was once dominated by private
developers selling one-week fee intervals, but now includes
publicly-traded hospitality companies actively developing a
full range of offerings at different price points in resort and
urbandestinations.

63http://www.thisismoney.co.uk/money/mortgageshome/article-1642853/Buy-tolet-hotel-firm-GuestInvest-crashes.html
Emerging accommodation segments 2015 39

Care giving: senior living

9.1 Concept

9.2 Supply

There are several types of senior living. These are:

The size, ownership and residents of elderly care homes have

changed during the past 30 years.

Retirement housing: defined as accommodation where older

people have their own dwellings and front door but share
communal areas, such as lounges and restaurants, with facilities
and staff on hand to provide round-the-clock support.
Assisted Living: A name used by some private sector providers
as an alternative to very sheltered housing; also for a US model
of hotel-style care facility for older people who can no longer
live on their own at home but dont need 24-hour complex
medical supervision.
Care homes: A residential setting where a number of older
people live, usually in single rooms, and have access to onsite care services. Since April 2002, all senior living homes in
England, Scotland and Wales are known as care homes, but
are registered to provide different levels of care:
A home registered simply as a care home providing personal
care will indeed provide personal care only help with
washing, dressing and administering medication.
A home registered as a care home providing nursing care
will provide the same personal care but also have a qualified
nurse on duty 24-hours a day to carry out nursing tasks. These
homes are for people who are physically or mentally frail or
people who need regular attention from a nurse.
Some homes, registered either for personal care or nursing
care, can be registered for a specific care need, for example
dementia or terminal illness.
The reason this sector is included in the report, is that the
development of these types of living accommodation are in
competition with hotels, both in terms of investment finance
and development opportunities. Also the investment by US
REITs in this sector in the UK could eventually transform care
for the elderly here, as US-style retirement villages and five-starhotel type accommodation grow in popularity.

Around 430,000 elderly and disabled people live in long-term

residential care in the UK, but only one in 10 are now in
council or NHS-run institutions.
Voluntary and not-for-profit companies account for 57%
of the independent sector compared with only 5% in 1989,
according to the latest figures from market analysts
Laing & Buisson.
The newer, purpose-built homes are much bigger, and
residential care is increasingly focused on people with complex
conditions such as advanced dementia or Parkinsons.

9.3 Key players

Retirement homes
The only hotel chain to operate in this area was Marriott, but
the company sold Marriott Senior Living to Sunrise Assisted
Living in 2002.
McCarthy & Stone
The largest developer of privately owned retirement property
in the UK. Over the past 30 years the company has built over
45,000 apartments nationwide. The company provides 70%
of the UKs owner occupied retirement and Assisted Living
accommodation.
In 2006, the Company was de-listed from the Stock Exchange
and taken private by a consortium led by Halifax Bank of
Scotland. Through the creation of five regional offices,
supported by its Head Office in Bournemouth, the company
now has a presence nationwide.
As the needs of the UKs homeowners changed, McCarthy
& Stone began to develop new services for retirement that
complement and build on their core property development
activity. These include:
Management and support services: McCarthy & Stone
Management Services takes care of estate maintenance and
provides support to homeowners across its new developments.
Since 2010, in all its new Assisted Living developments it now
provides a range of flexible care and support services in partnership
with Somerset Care Group, a not-for-profit care operation.
Churchill Retirement
Churchill Retirement Living is a UK-based, privately owned,
family run company, founded in 1994 by Spencer and Clinton
McCarthy. The company originally started out building stone
and thatched cottages in and around Hampshire, Dorset and
Wiltshire under the name of Emlor Homes.
In 2000, the company decided to change direction to focus
exclusively on the development of purpose-built retirement
developments and after the success of its first development,
Avon Lodge in Southbourne, it decided to sell all its existing open
market sites and to concentrate solely on the retirement market.

50 Emerging accommodation segments 2015

Alternative holiday accommodation providers:

holiday parks / caravan parks / camping
11.1 Concept

11.2 Supply

Holiday parks refer to parks or villages that are made up of

purpose-built chalets/lodges. However, many holiday parks
diversify their product offering to also include apartments, static
caravans, pre-pitched tents and pitches for touring caravans and
camping tents.

Some major groups are involved in the holiday park segment,

however a majority of parks are family owned and managed.

Camping and caravanning refers to holidays that use tents,

trailer tents, touring caravans, caravan holiday homes
(statics), park homes and motorhomes as accommodation.
Holidaymakers may own or rent their equipment, and can travel
to their destination carrying their tent or towing their caravan
or trailer tent. Alternatively, they can stay in caravan holiday
homes or tents that are already in place at the camping or
caravanningpark.
As there is so much overlap, for the purpose of this report, holiday
parks, camping and caravanning will be discussed together.

The main campsite operators are Eurocamp, Key Camp and

Canvas Holidays. Originally established to provide pre-pitched
tents in Europe, now their product offering not only includes
tents but also chalets and static caravans.
However, holiday parks/villages (with just chalets) and holiday
parks offering a full range of accommodation options are
moredeveloped.

11.3 Key players

The table below highlights how many of the leading operators
no longer focus upon one area, but in order to retain customers
and meet the needs of the new customers, have invested in and
diversified their accommodation product.

Leading holiday park players and types of accommodation provided

Chalets /
Lodges

Houses /
Bungalows

Static caravans

Apartments

Haven

Eurocamp

Center Parcs
Butlins
Pontins
Bunn Leisure
John Fowler Holidays

Y
Y
Y

Y
Y

Y
Y

Y
Y

Landal Green Parks

Park Resorts
Park Holidays
PV Village Club
SunParks
Villages Nature
Parkdean
Canvas Holidays
Siblu

Y
Y

Y
Y

Y
Y

Source: McKenney Research

56 Emerging accommodation segments 2015

Y
Y
Y

Touring
caravans and
tents

Y
Y

Y
Y

Y
Y

Pre-pitched
camping

Rentals and
ownership

Safari tents;
yurts;
geo domes
Tents; tree
houses

Safari tents;
pods
Safari tents

Y
Y

Alternative holiday accommodation providers:

cruise industry
12.1 Concept

12.2 Supply

The cruise industry has enjoyed dynamic growth over a period

of 30 years, driven initially by demand from North America and
more recently by growing demand from Europe and the rest of
the world.

During 2013 there were 43 cruise lines domiciled in Europe,

operating 125 cruise ships with a capacity of around 145,000
lower berths. Another 73 vessels with a capacity of around
104,000 lower berths were deployed in Europe by 24 nonEuropean lines.

There are several different types of cruise, these are as follows:

Fly & Cruise: Popular with those who are short on time and
want to maximise their sunshine exposure; the Fly & Cruise
option allows people travel by air to their departure port, before
setting sail in sunny climes. A classic example of the Fly & Cruise
is the Caribbean cruise, which sees holidaymakers typically
flying into destinations such as Miami or Barbados before
commencing their tour of the Caribbean.
Cruise and stay: as the name suggests, a combination of
cruising and staying, adding a few days at the end of the cruise
to immerse oneself in a chosen destination.
River cruises: In statistical terms, the European river cruise
market now tops 80,000 passengers per year, with continued
growth of around 7% year-on-year. River Rhine cruises and
Danube river cruises remain the most popular itineraries, with
the Rhne in France rapidly establishing itself too. But there are
also increasing opportunities to enjoy the Douro in Portugal,
plus the Po in Italy and the many waterways of Britain and
Ireland by luxury hotel barge.
River cruising is popular amongst a variety of travellers,
including new-to-cruise who are looking for smaller, intimate
and non-ocean cruising experiences and those who traditionally
take ocean cruises who are searching for a new cruise
experience entirely, possible all-inclusive.
Others: include mini cruises, around the world cruises and
all-inclusive cruises.

The Mediterranean: in 2013 a total of 166 cruise ships

were active in the region with a capacity of 220,352 lower
berths. Collectively, these ships carried a potential 3.9 million
passengers on 2,619 cruises.
In 2013 North American operators deployed 56 ships in the
region, including some ships targeted at the European markets.
In comparison, Europe-domiciled lines operated 110 vessels.
Northern Europe: a total of 108 cruise ships were active in
Northern European waters. Collectively these carried a potential
of 1.6 million passengers on 1,249 cruises. The Northern
European market grew by around 5% in 2013, but was
expected to fall back slightly in 2014.
In 2013, North American mainstream operators deployed 31
ships, European operators deployed 62 vessels, with the balance
being made up of niche market ships visiting the Polar Regions.
The Baltic Sea is the largest segment on the Northern Europe
market, generating capacity of around 5.1 million passenger
nights in 2013, falling to just under 5 million in 2014.
The European cruise industry is to a large extent destination-led
and the Mediterranean and Northern European regions include
many attractive destinations.
Many of the leading ports are regarded as must see or
marquee destinations that destination planners will wish to
include in their itineraries.
Other ports, some of which are also marquee ports in their own
right, have advantages of strategic position, access to major
hub airports and suitable bed-stock, enabling them to feature
predominantly as home ports.

Emerging accommodation segments 2015 61

Alternative holiday accommodation providers: cruise industry continued

In the last decade, demand for cruising across the globe has
increased 77%, from 12 million to 21.3 million passengers.
Data from the Cruise Lines International Association (CLIA)
showed that worldwide, cruise industry expenditures generated
USD117bn in total economic contributions, supporting the
employment of 891,009 full-time equivalent employees. Nearly
45% of the industrys 2013 global output was generated in
Europe.
Key facts include:
21.3m cruise passengers embarked from ports around
theworld.
55% of global passengers sourced from North America
(11.8m), including 10.9m that reside in the US.
The average length of a cruise is seven days, with three
to four port calls.
An estimated 6.4m European residents booked cruises,
a 3.6% increase over 2012, representing 30% of all cruise
passengers worldwide.

The global cruise market by passengers (2003-2013)

12

RO

10

Passengers (m)

12.4 Demand

NA

6
4
2
0

2003

64 Emerging accommodation segments 2015

2010

2011

Europe

2012

2013

Rest of world

Source: CLIA

The key markets for cruise passengers in Europe are the UK and
Germany, accounting for 53% of total European passengers.
Both the German and French markets recorded strong growth
in the period 2011 to 2013, registering passenger growth of
22% and 18% respectively. Spain, however, was hit by the
Eurozone crisis and saw passenger numbers decline by 32%
over the same period.
Key European cruise markets (2013)
Other 17%
UK 27%
Spain 8%

The vast majority of these cruises visited ports in the

Mediterranean, the Baltic and other European regions,
generating 31.2m passenger visits at a total of around
250 European port cities, an increase of 8.7% on 2012.

Although North American cruise passenger numbers have

increased by 44%, the regions relative share of the total market
has declined from 70% in 2004 to 55% in 2013.

2009

North America

An estimated 6m passengers embarked on their cruises

from a European port, a 5.2% increase over 2012. Of these,
5m were European nationals and about 1m came from
outside Europe.

Over the ten years from 2003 to 2013 demand for cruising
worldwide has increased from 12m passengers to 21.3m
passengers, a growth of 77%. Over a similar period, global,
mainly land-based tourism has risen by around 57% to an
estimated 1,087bn tourists in 2013.

2008

France 8%

Italy 14%
Source: CLIA

Germany 26%

Demand: the future

Despite the growth in popularity among international
travellers, some alternative accommodation products
present key challenges for the traditional hotel user
andaccommodationinvestor.
From an investor standpoint, these products are often viewed
more as a temporary fad rather than a long-term investment,
although evidence shows this may be changing.
Historically, the quality and services provided have been
perceived as inconsistent by guests, especially in hostels
and serviced apartments. As a result, owners have found it
difficult to brand these segments and have turned to capital
investment in renovations or ground-up development to better
ensure consistency among properties.
Nonetheless, despite certain challenges, the alternative
accommodation sector offers great potential for development,
as the changing tastes of travellers, the limited accommodation
supply growth and heightened travel activity continue to drive
demand for alternatives to the traditional hotel102.

102 E&Y, Global Hospitality Insights: Top thoughts for 2014

Emerging accommodation segments 2015 77