An explosion in demand for aparthotel accommodation is heralding a boom that has seen leading providers in the segment enjoying average occupancy rates far above those currently experienced by traditional hotels.
Driven by international travellers’ desire to combine the consistently high standards and services of a hotel with self-catering flexibility and comfortable work spaces, the aparthotel concept has taken off in South Africa, particularly in Cape Town, a highly sought-after destination for remote workers and travellers combining business with leisure.
Aparthotel providers at the forefront of the trend are experiencing occupancy rates of 80% and above across their property portfolios. “In November one of our aparthotels was at 96% occupancy, and for December we are sitting at an average occupancy rate of 85%,” said Rael Phillips, CEO of Totalstay, which operates a portfolio of aparthotels in Cape Town and Johannesburg.
Phillips recognises that pent-up demand has had a role to play in a boom that will see Cape Town possibly experiencing “the most bumper tourist season we’ve ever had”. But the group anticipates that demand for aparthotels will continue to drive growth into 2023 and beyond.
“Aparthotels have risen from being very taboo to being, more often than not, the preferred choice of most travellers. The trend towards remote working is likely to remain in place, with people looking for apartments to comfortably work from, co-working spaces and facilities that make their lives easier, while also being able to engage in tourist activities.” Phillips added that Totalstay had over 1 000 keys to unlock in its pipeline, starting with a new aparthotel opening in Lynnwood, Pretoria, in early 2023.
In line with its healthy growth trajectory, Totalstay also aims to increase its staff complement from 80 currently to 150 by Q2 next year.
Moving swiftly to meet market needs
Looking to jump on the bandwagon, large global hotel groups are scrambling to add apartment products to their offerings, but the process can be laborious. Phillips says specialised, smaller aparthotel companies such as Totalstay have the advantage of being able to shift quickly to meet the ever-changing demands of customers.
“We notice how the traveller preference changes and can be very dynamic in meeting them. So we are consistently adding more value to our properties, whether it be more co-working spaces, wellness facilities or niche offerings such as podcasting studios.”
Phillips said the group’s aparthotels were enjoying a healthy mix of local and international business.
“American, German, Dutch and French travellers are featuring strongly, along with a lot of people coming down from Johannesburg, KwaZulu Natal and other areas of the country. With international airlines doing better than ever before to open new routes into South Africa, we are definitely becoming more accessible than ever, which is a huge advantage.”
Oversupply a potential challenge
Competition in the aparthotels space is ramping up, and oversupply of accommodation could pose a challenge in the future, according to Phillips.
“The competition is healthy for us and forces us to innovate more. Oversupply is a major concern, however. We have more than 20 residential developments coming online in the next few months in Cape Town alone. So our challenge is to pick our battles and continue adhering to the criteria of the type of properties we take on,” said Phillips.
