By Liudmila Davydiuk (MultiHousingNews.com Article) — Furnished apartments (also known as corporate housing) is a young, growing industry and has been a leading segment of the hospitality market for the past 20 years. The revenue generated by the industry approached $2.95 billion in the U.S. in 2015, increasing by 7 percent compared to 2014. In 2016, the industry beat its revenue peak, with revenue for the U.S. estimated at $3.2 billion, a 10.2 percent increase compared to 2015. For the fourth consecutive year, the supply of U.S. furnished apartment units increased. Average Daily Rate (ADR) rose 6.3 percent in 2016, which is almost double growth in overall hotel ADR.
The furnished apartments industry provides completely furnished temporary accommodations. It is intended to be utilized for longer-term stays of 30 days or more; however, for the past two years the segment is changing its direction, and there are more providers willing to work with their clients on shorter terms to provide better flexibility.
Who’s using furnished apartments?
For six consecutive years, Corporate Relocation was the most common reason to use Furnished Apartments in the U.S., while Project/Training was the second most cited use for Furnished Apartments in 2016.
According to The Corporate Housing Providers Association (CHPA), “Corporate Housing is fundamentally different from other types of short-term rentals. This well-organized industry provides a valuable service to businesses, employees and others in need of temporary housing, while having a sizable economic impact on the communities where it operates. It is essential that policymakers and officials understand the industry’s importance and are cognizant of its particular characteristics and value when creating and implementing short-term rental policies.”
While relocation, training and projects are the most dominant driver for furnished apartments accommodations, according to CHPA’s 2017 industry report, the next largest category is interns. In addition, there are an increased number of travelers who are on military assignments, training trips, temporary assignments, or fellowships and internships, who often receive allowances and are able to book their accommodations directly with providers.
Furnished apartments development expectations
Success in the rental industry really starts with understanding available data and trends. The industry accumulated $3.2 billion in revenue from 2016, an increase of 10.2 percent since 2015. The inventory of U.S. furnished apartments is estimated at 66,863 units with an occupancy rate of 87.2 percent. Now travelers are finding that short term rentals are available with a wider diversity of spaces, locations, amenities (like fully furnished kitchens, washers and dryers) and more affordable rates to select from.
The demand for furnished apartments has steadily increased as residential apartment constructions introduce new units to the market. Overall occupancy in the U.S. Furnished Apartments industry decreased to 87.2 percent in 2016. However, taking into consideration economic recessions and the fact that occupancy fell below 88 percent for the first time since 1999 yet the demand for furnished apartments is at its highest since 2008, it seems the industry is trending upward in terms of its financial outlook.
Liudmila Davydiuk is the director of business development for Churchill Living, a provider of furnished apartments across the U.S. and the largest in the Northeast. Churchill Living has more than 30 years of experience customizing and implementing programs for many Fortune 500 companies, smaller companies and individuals.