Aimrok’s Mark Copson explains the attraction of the aparthotel model from a developer’s perspective.
The Gresham in Leicester, a project taking shape in a former department store, is one of the city’s most iconic, Grade II listed buildings. Developer Aimrok is currently remodelling the building a 128-unit, upper-mid scale to upscale aparthotel complete with four commercial units and 12,000 square feet of coworking space and conference rooms. The Gresham is due to open this autumn and has a predicted GDV in excess of £25million.
For Aimrok, the decision to move down the aparthotel route rather than a traditional hotel was a simple one.
In demand
Historically, the concept of aparthotels has been generally much better understood in other markets such as the US. In the UK there has been quite a negative perception of them as something that is slightly tired or of secondary quality. But over the past six to ten years and certainly with the influx of Airbnb, these perceptions continue to change and we see aparthotels really making a run for market share – even more so during the pandemic.
As a hybrid concept between a traditional hotel and serviced apartment accommodation, the aparthotel is rapidly becoming more attractive as it offers greater flexibility, value for money particularly on longer stays, and guests can control their own surroundings.
One of The Gresham’s key anticipated audiences will be business users who might need short to medium-term lets; maybe contractors who are required to be away from home for an extensive period of time. They need flexibility and a quality, comfortable environment that is more financially beneficial than renting an apartment or staying in a hotel.
Evidence shows that aparthotels are now trading strongly against traditional hotels. People want to be more self-contained and like the independence to manage their own time and not have to abide by opening hours or availability of hospitality and services being nearby. Aparthotels offer a home-from-home environment – like renting an apartment that is complete with amenities and facilities and offers the flexibility to stay in whilst away.
The pandemic has accelerated this shift in mentality. With many restaurants and hospitality outlets temporarily closing, it has almost forced those people who for whatever reason, need to be away from home, to ‘stay in’. Aparthotels have really come into their own over the last year and STR* data indicates that over the course of the pandemic, aparthotel occupancy rates have been considerably higher than hotels – which completely reinforces our original strategy.
It’s all about people having their own space. And I think this mind-set is definitely here to stay in the long term. Post-Coronavirus, if they’re of a good quality, I believe aparthotels will continue to perform well.
Deserving of the highest quality
We are very excited about our plans for The Gresham – it is a stunning and iconic Grade II listed building. Old buildings need to be cared for and looked after and Aimrok was in a prime position to take on its restoration and bring it back to its former glory.
We were adamant that the quality should be top notch, with the finest attention to detail throughout. We are aiming for an exterior that would not look out of place in London’s Bond Street, with an interior design that is warm, comfortable and welcoming.
The Gresham will not just be an ordinary aparthotel, it will be very special and the price point will be set accordingly. It’s a beautiful building and the development needed to be of the highest quality to match.
Experience outweighs risk
Some may perceive The Gresham to be a risk – possibly due to the numbers being invested; at £17million, this is a sizeable investment. But whilst we appreciate that some market factors may currently have increased the risks temporarily, Aimrok has 83 years of combined experience in this industry that covers the whole development spectrum, including previous aparthotels and other projects of this size and scale. The development was never seen as a quick turn but rather a longer project over a number of years.
It’s also about doing your research, understanding the area and target market, getting the maths right and making sure your budget is set accordingly. In this case, we needed to make sure we allowed for the fact that this is an old building and there’s always likely to be something unexpected that crops up!
We also spent a lot of time looking in depth at the market in Leicester and how it is changing and developing, and we believe The Gresham will not only positively supplement this growth, but it will corner a new market in Leicester and showcase how aparthotels of this quality will continue to bridge the gap as we enter the ‘new market norm’.
Everything about it from the location, the building, the market conditions, the proactivity of the local authority and of course the quality of the development, combine the perfect ingredients to make The Gresham not just a stand-out facility, but something a little bit different, eye-catching and edgy.
We don’t consider developing an aparthotel a risk. The Gresham was an informed, strategic decision that makes complete sense.
