SERVICED APARTMENTSPRICE SURVEY

ANNUAL UK AND IRELAND PRICE SURVEYBenchmarking RatesSector Commentary

37 locations153 operators3000+ apartments

We are delighted to present the 2006 Serviced Apartment Price Survey and Sector review.

Commissioned by Go Native and conducted during April and May 2006 by the independentmarket and business research company, FreshMinds, this is the first UK-wide BenchmarkPrice Survey for the Serviced Apartment sector.

These results will form the basis for an Annual Price Index showing changes in prices for 1 and 2 bedroom apartments across 37 locations - from Aberdeen to Plymouth and all majorpoints in-between.

We hope that this comprehensive analysis of London and Regional rates will assist you asyou plan your accommodation strategy and policies as well as providing you with anintroduction to the differing ways in which temporary housing can be sourced and managed.

Guy NixonManaging Director

2006 UK and Ireland Serviced ApartmentPrice Survey

CONTENTSPage

• Defining Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

• Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

• Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

• Sector Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

• A Travel Industry Commentary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

• UK Prices - 1 Bed Apartments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

• UK Prices - 2 Bed Apartments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

• Pricing Trends & Sector Commentaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Leased Apartments are identical to Serviced Apartments interms of quality, comfort and service. They are leased toorder in the long term rental market and service provisionwill be managed by a property management company.Leased Apartments are available on less flexible termsthan Serviced Apartments, typically for a minimum periodof 3-6 months.

Given the growing popularity of this approach as a way ofreducing costs and addressing limited supply of ServicedApartments in key UK business destinations, LeasedApartments have been included in the 2006 Price Survey.

What are Leased Apartments?

For the purposes of this report and in line with industrystandards, Serviced Apartments are defined as being:

“Fully-furnished, self-contained units where residents areprovided with their own fully-equipped living, sleeping,cooking, laundry and bathing facilities. Prices are fullyinclusive of utilities, management and at least a weeklycleaning, linen and towel change service. The apartmentswill be part of a managed block typically with an on-siteporter/concierge service.”

We have specifically excluded Apart-Hotels from thissurvey on the basis that they are, as their name suggests, ahybrid falling somewhere between a hotel and a servicedapartment. Commonly, they are not fully equipped units,requiring residents to utilise hotel style laundry and roomservices and therefore not comparable to ServicedApartments.

What are Serviced Apartments?

To gain an understanding of the UK market for ServicedApartments, FreshMinds supplemented a review ofexisting data, research and published reports on themarket with insights gleaned from conversations withindustry experts.

To ascertain the average weekly cost of 1 and 2 bedServiced Apartments across 37 areas throughout the UKand Ireland, FreshMinds contacted an average of fourServiced Apartment providers per area. Leased Apartmentprices quoted are an average across Go Native’s portfolioin each area. All pricing data was collected during a threeweek time frame starting April 10th 2006.

All prices quoted are for standard four star apartments (in the absence of a formal rating system we have ratedapartments based on the quality of facilities and theirlocation), within a mile of the stated town’s centre. Pricesare inclusive of an assumed 10% commission rate (as isstandard throughout the industry), but exclusive of valueadded tax. This is the basis on which clients are usuallyquoted prices.

Methodology

2 – 3

SERVICED APARTMENTS

• The UK Serviced Apartment market is in its infancy - no nationwide supply chains exist, nor is there a GDS equivalent booking system

• Apartment quality, minimum terms, amenities and inclusive services vary significantlybetween Serviced Apartment operators

• A Serviced Apartment benchmark standard does not currently exist though the nascentAssociation of Serviced Apartment Providers (ASAP) is developing the framework for anationally recognised standard

• There is a limited North - South divide. Pricing outside the Capital shows increasingconvergence

• The tourist market competes with the business community for Serviced Apartments in key tourist destinations creating seasonal pricing spikes

• Serviced Apartments offer increasingly flexible terms with over 50% of those surveyedoffering 1 night minimum stays

• Prices of Serviced Apartments are comparable to hotel rates for short-term stays andincreasingly cost effective as the length of stay increases

LEASED APARTMENTS

• Leased Apartments are identical in terms of quality, size and amenity to ServicedApartments but are available for minimum periods of 3-6 months depending on locationand local market conditions

• Serviced in exactly the same way as a Serviced Apartment, Leased Apartments are anoption for corporates with a definite housing requirement of 3-6 months plus

• Leased Apartments are sourced from the long term rental market which, with continuedgrowth in UK-wide city centre developments, enjoys far greater supply across the UKthan Serviced Apartments

• The traditional 6 month minimum term of long term leases is being eroded as Landlordscompete to attract blue chip corporate tenants. 3 month terms are increasingly available in a growing number of locations across the UK

• Savings of over 40% are achievable for the growing number of medium-long termassignments for which Leased Apartments are a viable option

• Pricing of Leased Apartments outside the capital shows growing convergence

Executive Summary

Aside from sustained international and domestic economicgrowth and corresponding growth in business travel overthe last 5 years, a number of other factors are also drivingthe growth in demand for Serviced Apartments:

GROWTH OF PROJECT BASED ASSIGNMENTS

As companies increasingly avoid permanent relocations for reasons of cost and employee welfare, there has beencorresponding growth in short-medium term assignmentsfor which Serviced and Leased Apartments are an idealhousing option.

OFF SHORING

As consulting, technology and outsourcing companiescontinue to develop their offshore capabilities in India,Asia, South America and Eastern Europe, growingnumbers of offshore personnel are entering the UK ontemporary working visas for whom Serviced and LeasedApartments offer a cost effective housing solution.

CSR

As Corporate Social Responsibility becomes moreimportant in determining corporate travel policy, Servicedand Leased Apartments are being increasingly offered as a housing option to employees on medium to long termassignments.

COST CONTROL

Against average Hotel costs for the corporate sector of£99 per night, Serviced Apartments offer average savingsof 37% for those employees on assignments of one weekor longer.

Sector Growth - what’s driving it?

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THE PRICE AND FLEXIBILITY COMPROMISE

Although Serviced Apartments have been around in thetravel industry consciousness since the late 1980’s, thesector has always suffered from Cinderella Syndrome.Their appeal over traditional hotels has never been indoubt, yet those advantages have now been convertedinto serious market share.

The problem is not one of awareness. Most buyers knowwhat Serviced Apartments are and how they operate.Many have quantified the benefits of apartments -serviced or leased - over hotels. But few have migrated a significant proportion of their accommodation spendaway from hotels.

PRICING

The seemingly unstoppable spread of the procurementfunction works in the sector’s favour. The price benefits,confirmed by the 2006 Go Native Serviced ApartmentPrice Benchmark Survey are undeniable, especially whentaken in the context of average hotel rates.

Although in London the price differential between hotelsand Serviced Apartments for stays up to 3 months is notthat great, outside the capital the gap is much wider.

In Manchester, a Serviced Apartment is 15% cheaper pernight than the average four star hotel rate, whilst yourcorporate hotel spend could go twice as far by leasing anapartment in the city. If one considers that most businesstravellers staying away from home for long periods stay inbudget hotels, Serviced Apartments become an evenmore attractive option.

PRODUCT KNOWLEDGE

There are, however, a number of challenges facing thesector. Improving the product knowledge of buyers,agents and - crucially - travellers is paramount. Most hotel chains have ensured that most interested partiesknow what to expect from them, where they are locatedand how to book them. The same is not yet true ofServiced Apartments.

Most corporate hotel programmes begin life as an RFP(Request For Proposal), compiled by a Travel Manager or Procurement Specialist based on the number of roomnights and cost incurred by the organisation in thepreceding 12 months. For Serviced Apartments to beincluded in RFP’s, buyers need to be educated that - with some exceptions - the sector has excellent coverage across the UK.

DISTRIBUTION

Distribution is key in 21st century business travel. Over halfof all business accommodation bookings in the UK arenow handled by Travel Management Companies (TMCs)and Hotel Booking Agencies (HBAs). This means thatapartments must not just be bookable on-line but viaGDS, and be compatible with self booking tools.

CULTURE & CSR

The old adage that ‘one size does not fit all’ was coinedby the business travel industry. Company culture is theleast scientific - yet most pronounced - influence oncorporate travel policy. Reducing travel and transactioncosts remain top of the procurement agenda, but thereare other factors in the mix too.

Corporate Social Responsibility (CSR) and traveller securityare now permanent fixtures on the corporate agenda, andServiced and Leased Apartments can win big here. Apart-ments answer corporates’ duty of care to their employeesfar more effectively than hotels ever can. However thebuyer has to be convinced.

So when will Serviced Apartments finally step out of theshadows and into the mainstream of the corporate accomm-odation market? This survey is a major step forward indemonstrating that using apartments can make expenditureon long term stays and corporate re-location go much,much further. Now the other boxes need ticking too.

Mark HarrisDirector, The Travel Intelligence Network

4 – 5

A Travel Industry Commentary

UK and Ireland prices 1 bed apartments

SERVICED LEASEDREGION 1-4 weeks 4-12 weeks >12 weeks >12 weeks % saving*Aberdeen £632 £632 £632 £347 45%

Basingstoke £631 £631 £610 £327 46%

Belfast £504 £471 £442 £303 31%

Birmingham £571 £523 £499 £336 33%

Bracknell £554 £541 £522 £313 40%

Brighton £541 £499 £462 £335 28%

Bristol £611 £590 £574 £314 45%

Cambridge £705 £655 £655 £346 47%

Cardiff £488 £434 £432 £336 22%

Derby £732 £490 £480 £325 32%

Dublin £460 £407 £391 £368 6%

Edinburgh £610 £586 £586 £360 38%

Exeter £591 £537 £531 £292 45%

Gatwick and Crawley n/a n/a n/a £340 n/a

Glasgow £586 £567 £567 £328 42%

Guildford £740 £694 £641 £353 45%

Leeds £487 £418 £393 £324 18%

Liverpool £545 £491 £491 £319 35%

Manchester £636 £622 £585 £351 40%

Milton Keynes £411 £401 £401 £302 25%

Newcastle £501 £454 £454 £333 27%

Norwich £462 £418 £393 £331 16%

Oxford £598 £586 £540 £347 36%

Plymouth £259 n/a n/a £321 n/a

Reading £622 £606 £567 £369 35%

Sheffield £386 £354 £340 £326 4%

Slough £601 £590 £571 £361 37%

Southampton £646 £619 £568 £325 43%

Swindon n/a £523 £471 £315 33%

Telford n/a n/a n/a £311 n/a

Woking n/a n/a n/a £385 n/a

Averages £560 £531 £511 £334 35%

SERVICED LEASEDAREA 1-4 weeks 4-12 weeks >12 weeks >12 weeks % saving*London Canary Wharf £878 £782 £751 £503 33%

London City £969 £878 £854 £520 39%

London North £875 £840 £728 £503 31%

London West £958 £919 £919 £583 37%

London South £829 £700 £676 £500 26%

London West End £1,320 £1,223 £1,130 £551 51%

Averages £971 £890 £843 £527 38%

6 – 7

*Saving is the % saving achieved by utilising a Leased Apartment in lieu of a Serviced Apartment where therequirement is for >12 weeks.

UK and Ireland prices 2 bed apartments

SERVICED LEASEDREGION 1-4 weeks 4-12 weeks >12 weeks >12 weeks % saving* Aberdeen £784 £768 £768 £410 47%

Basingstoke £777 £747 £717 £442 38%

Belfast £663 £613 £586 £398 32%

Birmingham £749 £698 £671 £411 39%

Bracknell £724 £697 £663 £400 40%

Brighton £686 £615 £584 £445 24%

Bristol £866 £814 £804 £450 44%

Cambridge £841 £787 £787 £467 41%

Cardiff £710 £616 £612 £410 33%

Derby £847 £605 £499 £435 13%

Dublin £544 £533 £516 £506 2%

Edinburgh £920 £883 £883 £420 52%

Exeter £633 £578 £567 £392 31%

Gatwick and Crawley £633 £619 £570 £423 26%

Glasgow £816 £793 £793 £418 47%

Guildford £910 £862 £775 £498 36%

Leeds £591 £514 £485 £429 11%

Liverpool £714 £660 £660 £397 40%

Manchester £847 £805 £772 £455 41%

Milton Keynes £576 £553 £553 £439 21%

Newcastle £649 £600 £600 £409 32%

Norwich £572 £517 £486 £405 17%

Oxford £761 £745 £686 £472 31%

Plymouth £415 n/a n/a £440 n/a

Reading £769 £761 £714 £473 34%

Sheffield £526 £471 £452 £410 9%

Slough £873 £835 £794 £514 35%

Southampton £936 £876 £813 £462 43%

Swindon n/a £638 £574 £415 28%

Telford n/a n/a n/a £429 n/a

Woking n/a n/a n/a £467 n/a

Averages £726 £686 £657 £437 33%

SERVICED LEASEDAREA 1-4 weeks 4-12 weeks >12 weeks >12 weeks % saving*London Canary Wharf £1,064 £949 £909 £653 28%

London City £1,276 £1,177 £1,166 £687 41%

London North £1,195 £1,148 £1,052 £649 38%

London West £1,311 £1,255 £1,255 £769 39%

London South £1,100 £944 £887 £637 28%

London West End £2,134 £2,082 £1,827 £741 59%

Averages £1,347 £1,259 £1,183 £689 42%

SERVICED APARTMENT COMMENTARY

LIMITED SUPPLY

In 9 locations this survey found only 1 or 2 ServicedApartment operators and limited competition as aconsequence. However, there are signs of growing supplyin key business destinations, in particular, London, Leeds,Newcastle, Manchester and Reading.

NO GROWTH IN OVERALL MARKET SHARE

In London, Serviced Apartments account for less than 3.5%of total room supply across the Capital. Whilst supply isexpected to grow, any increase in overall market share islikely to be offset by the growth in hotel room numbers.

PRICE SPIKES IN TOURIST CENTRES

Prices for Serviced Apartments in locations such as Oxford,London and Edinburgh harden as business travellerscompete with the tourist market. The result of thiscompetition is seasonal spikes in rates during periods ofhigh tourist activity.

GROWING FLEXIBILITY - AT A PRICE

Achieving high occupancy levels is key to the success ofServiced Apartment operators which becomes increasinglychallenging as greater flexibility is offered. As 1 week plusminimum terms are being eroded, premium rates are beingcharged for the shorter term stays bringing Serviced Apart-ment pricing in line with equivalent standard hotel rates.

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8 – 9

Pricing Trends & Sector Commentaries

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LEASED APARTMENT COMMENTARY

GROWTH IN SUPPLY

Sourced as they are from the long term rental market,there is rarely any tightness in supply of LeasedApartments. Apartments represent 20% of the UK propertymarket of which a further 20% are available in the rentalmarket. Continued growth in the buy-to-let market and incity centre developments has added significantly to thesupply over the last 5 years.

EXTENSIVE UK COVERAGE

Whilst the supply of Serviced Apartments is currentlylimited in a number of locations across the UK, LeasedApartments are available in all locations. The quality ofsupply of rental properties does however impact thequality of supply of Leased Apartments having thegreatest impact in areas of low investment.

UNAFFECTED BY TOURIST DEMAND

Since the tourist market does not look to the long termrental market as a source of accommodation, there is nocompetitive effect on the pricing of Leased Apartments inthe key tourist destinations of Oxford, London andEdinburgh.

LONDON PRICING CONVERGENCE

Whilst the price of Serviced Apartments across Londonvaries significantly by location, there is far less variance inthe cost of Leased Apartments. A maximum variance of£454 was recorded for 1 bedroom Serviced Apartmentsagainst a variance of only £83 for Leased Apartments.

REGIONAL PRICING CONVERGENCE

This is mirrored in the Regions - with a difference of only £93across 1 bedroom Leased Apartment pricing in all locations.

Serviced apartmentsMean

Leased apartmentsMean

020 7221 2028 www.gonative.co.uk

DISCLAIMER – This price survey and market commentary has been prepared by Go Native and FreshMinds for general guidance only and does not constitute professional advice. No representation or warranty is given as to the accuracy or completeness of the informationcontained in this survey and commentary.

ABOUT GO NATIVE

Go Native is a UK wide accommodation services companyproviding a comprehensive range of temporary and long termhousing solutions including Serviced Apartment Reservations,Leased Apartment Procurement and Management, bespokeTenancy Management Services and Relocation Support Services.

Go Native maintains a comprehensive database of ServicedApartment operators throughout the UK.

Go Native has a 10 year track record of providing innovative and cost effective temporary and long term housing solutions to national and multi-national clients throughout the UK.

In 2006, Go Native won the Business Travel World award for “Best Travel Product”.

Go Native is a Carbon Neutral company.

ABOUT FRESHMINDS

FreshMinds is a research consultancy. The company has built ateam of Minds – a network of the sharpest analysts in Europe.Working with FreshMinds’ research managers, they helpcompanies analyse their customers, competitors and markets.

Clients include leading consultancies, financial service firms andmultinational blue chips.

The firm’s fresh approach to research has resulted in FreshMinds’Managing Director, Caroline Plumb, twice being included inManagement Today’s list of top female achievers, the UK’s ’35women under 35.’

FreshMinds also provides clients direct access to their Mind poolthrough their temporary and permanent recruitment services.

T: 020 7692 4508 E: info@freshminds.co.uk W: www.freshminds.co.uk

ABOUT TRAVEL INTELLIGENCE NETWORK

Travel Intelligence Network - TIN for short - is a specialistcommunications & business development company. Ourknowledge and expertise helps organisations to communicateeffectively with buyers, suppliers and consumers of travel,accommodation, meetings and associated services.

We write and publish customer magazines, newsletters and e-zines. We secure sponsorship for conferences, conventions and events; help companies to undertake research and workclosely with industry experts and writers to develop effective

trade PR campaigns. We help organisations develop databasesfor prospecting and qualifying leads. We also help organisationsto create, implement and manage effective travel managementprogrammes.

Our extensive network of industry contacts enables us to share professional knowledge & expertise, provide reliablerecommendations, and harness industry intelligence to developbespoke communications solutions that meet each client’sbusiness objectives.

Contact: Mark Harris mark.harris@the-tin.com Maggy Sainsbury maggy.sainsbury@the-tin.com

ABOUT ASAP

Founded in 2005 as a division of the Association of RelocationProfessionals (ARP), the Association of Serviced ApartmentProviders (ASAP) was born out of a desire amongst the majorplayers in the UK serviced apartment industry to see a regulatorybody formed to establish common standards and best practice.

The establishment of an independent quality grading system for the apartments themselves is at the top of ASAP’s agenda,with strenuous efforts being made in 2006 to establish objectiveassessment criteria with an independent and nationallyrecognised quality assessment body. The long term goal is for all ASAP members to have had 100% of their portfolios assessedand graded by the end of 2009.

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