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‘Aparthotels’ – A New Way To Stay?

Did you know the South African market has the highest concentration of apartment-style hotels, also known as ‘aparthotels’, in Africa?

Innovative ways of accommodating corporate and leisure travellers, such as ‘aparthotels’ or serviced apartment-style hotels, are quickly gaining momentum, especially in Cape Town.

Recent figures highlight that five-star-hotel occupancy in Cape Town, where many aparthotel operators are located, has increased by 4% over the last year, while the average daily rate (ADR, the average realised room rental per day) has grown by 2.6%.

The four-star sector’s occupancy, despite new hotel entrants, has also increased, by 1.6% and with a 2.2% increase in ADR.

Not only is this good news for travellers seeking a more flexible product but property buyers looking to invest in the hotel sector are coming out on top too.

“Cape Town’s tourism resilience and attractive rate of return are making property buyers move to other, non-traditional options of buying property, like buying an apartment in a hotel property and then leasing it back to the hotel and enjoying a good monthly return that mirrors the uptick of local tourism,” says Wayne Troughton, managing director of HTI Consulting, a development consultant for the hospitality sector across Africa and the Middle East.

Balcony views at the Romney

Redeveloping The Romney

A working example of this is Romney Park Luxury Apartments, previously a five-star all-suite hotel in Green Point which for six consecutive years won the AA’s Best All-Suite Hotel in South Africa award.

Following a multimillion-rand redevelopment in 2018, Romney Park now offers for sale fully furnished apartments to local and overseas buyers, which are leased back to an on-site hospitality management company, The Stay Collection, to operate as self-contained hotel apartments, along with all the bells and whistles of a five-star luxury hotel.

“Our owners of one-bedroom apartments have been seeing an average occupancy rate of 77.1% for the last 12 months, with an average monthly revenue of R34,026,” says Heino Reuling, director of The Stay Collection.

“For a two-bedroom apartment, the average occupancy rate has been 75.9% and the average monthly revenue R45,170. Our three-bedroom apartments have provided an average of 53.6% occupancy, with an average monthly revenue of R42,476.” All rand values include VAT.

In addition, says Troughton, “Aparthotels offer a more flexible product, whether staying on a short- or long-term basis, giving guests more space, and the opportunity to self-cater while also enjoying the food and beverage amenities on the property like a restaurant or room service. And prices aren’t vastly different when compared to traditional hotels, so it represents a greater value for spend.”

Romney Park traded as a five-star hotel for 21 years, during which time it built an enviable repeat-guest client base, especially among film and photographic crews wanting the space and luxuriousness of its rooms and premises, as well as the appeal and convenience of its Green Point location.

“Since our redevelopment, the repeat-guest client base has been a massive attraction for property owners buying our apartments, as it offers them some kind of guarantee that they will earn a return fairly quickly, and this mitigates risk to some extent,” says Reuling.

Inside aluxury apartment at the Romney

The Serviced Apartments Market

Serviced apartments in Africa represents less than 1% of all hotel rooms, whereas internationally the figure is closer to 10% of supply. South Africa’s highest concentration of serviced apartment-style hotel developments, with 1% of total rooms, is in Cape Town.

Several new aparthotel developments entered the Cape Town scene in recent years, including The Protea North Wharf, Capital Mirage, Onyx, Radisson Blu Hotel and Residences, and Harbour Bridge Hotel & Suites.

The Marriott Residence Inn, which forms part of the highly anticipated Harbour Arch development on the Foreshore, will start trading once the development is completed.

 

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