From time to time I always think it is important to pause in our crazy life of corporate housing to better understand the big picture and how we fit into it.
I was recently helping market our new Managed Corporate Housing office: AvenueWest Phoenix and I know there is a big difference between the standard Serviced Corporate Apartments, Managed Corporate Housing and CHBO by Owner Corporate Housing but I was still really surprised at the positive reactions I had to the amazing rentals this office offers.
Length of Stay: A lot of times when I am trying to describe the difference between Serviced Corporate Apartment, Managed Corporate Housing and CHBO by Owner Corporate Housing I go to the numbers to try and make my point. In 2013 the average stay for a tenant in a Serviced Apartment was 84 nights*, average stay in a Managed Corporate Housing property was over 100 nights and 18% of CHBO by Owner tenants stay was over a year long.
Corporate Housing Industry Report: “Although the lodging industry is enjoying an expansionary period, for the second successive year residential apartment demand growth exceeding the change in supply lowered vacancy and made it difficult for corporate housing providers to get units with acceptable rental terms. Despite an increase in units owner by corporate housing providers, the supply of US corporate housing units declined in 2013 compared to 2012. The decline was not as deep as in 2012 compared to 2011 and an increase in units is widely anticipated in 2014.
US corporate housing occupancy fell slightly in 2013 as average rate increased in line with rate gains for the overall hotel industry. Similar to extended-stay hotels, a few markets had lower rates in 2013 compared to 2012 but most markets saw higher rates, with almost one third of MSAs (Metro State Areas) reporting double-digit rate increase.
Overall, rate growth almost offset the declines in unit numbers and occupancy. US corporate housing room revenues were $2.48 billion in 2013, less than a .05% decrease from 2012.”
By Owner Annual Report: Variances: 60% of respondents say they offered the same rental rates as they did in 2012. 33% reported they raised their rates in 2013, and only 8% of respondents lowered their rental rates. The latter is a big improvement compared to two years ago when 16% reported lowering their rates. The largest increase in rental rates was for studio rentals, indicating increase demand.
What we are seeing now is an increase in demand and an increase in unit count. But at an average of $136.53 rental rate per night the industry is at an all time high compared to the $84.70 per night rate we were experiencing in 1999.
If you want to learn more enter “Rate” into the search field at the top of this blog or read this post Best Rental Rate.
*Corporate Housing Annual Industry Report – The Highland Group.