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What Is Serviced Accommodation?

Property Investment Basics

One of the most exciting new forms of property investment right now is serviced accommodation, and for good reason.

Serviced accommodation refers to fully-furnished properties that are rented out to guests while providing services you might expect from a hotel. For this reason, they’ve also been called ‘aparthotels’.

Unlike traditional buy-to-let properties where tenants will usually sign contracts for anywhere between 6-12 months at a time, serviced accommodations will see the guests decide how long they want to stay, usually for a much shorter amount of time.

More About Serviced Accommodation

Serviced accommodations often charge guests per night they stay, much like a hotel. Because of this, it is possible to make much higher returns through serviced accommodations than with regular buy-to-let properties.

Airbnb, the largest platform for serviced accommodations in the world, saw profits rise by 40% to $8.4bn in 2022, with projections estimating similar growth for the future.

You can find many different kinds of properties being used as serviced accommodation, such as houses, flats, cottages or even more unique properties such as lighthouses, as these are sure to attract guests who want a unique living experience.

More and more people are choosing to rent serviced accommodation rather than hotel rooms thanks to the added privacy they provide, as well as often having more space than hotels.

For investors, serviced accommodation offers a unique investment opportunity that can provide substantial returns compared to standard buy-to-let properties. The higher turnover of guests means that you won’t be stuck with unruly or disruptive guests for long, and you can adjust your rates depending on how much demand you expect to see throughout the year.

More unique and stylish properties tend to perform very well as serviced accommodations, as guests will want to stay there for the one-of-a-kind experience. This is also seen with inner-city properties, as guests will want easy access to city centres no matter if they are travelling for work or leisure.

Rice Works Liverpool is a prime serviced accommodation investment located in the hustle and bustle of Liverpool city centre, offering projected rental yields of up to 10-15%.

There are some things to consider if you’re looking at buying serviced accommodation as an investment. Some areas of the UK, such as London, have limits on how many days of the year landlords can rent out serviced accommodations without the correct planning permission, so unless you are buying a property that is confirmed to have this, you may find your returns being limited in the future.

Despite this, serviced accommodation is one of the more noteworthy and exciting investment strategies for buy-to-let property right now, thanks to the sky-high potential for returns, the rising demand from guests and the variety of properties that can be used for it.