Serviced Apartments Are Emerging As the Institutional Alternative to Short-Term Rentals

Published April 16, 2026 | By HNR News Staff Reporter

Investment Activity Signals Structural Shift

New research from Savills indicates that the European serviced apartment sector recorded approximately €1.2 billion in transaction volume in 2025, accounting for around 5 percent of total hospitality investment.

While still a relatively small share of overall investment, the volume reflects growing institutional interest in a segment undergoing structural repositioning within the broader accommodation landscape.

Undersupplied but Expanding

Across 26 major European gateway cities, serviced apartments currently account for approximately 8 percent of the total accommodation stock, according to Savills. However, the segment accounts for 12 percent of the development pipeline, indicating a growing share of future supply.

This gap between existing inventory and pipeline suggests that investors are targeting an underrepresented segment with potential for expansion.

Stronger Demand Fundamentals

Operational performance data point to sustained demand for longer-stay formats. In 2025, serviced apartments achieved average occupancy levels of 79 percent and an average daily rate of €136, according to CoStar.

Since 2019, demand for the segment has grown at a compound annual rate of 5.9 percent, compared with 1.0 percent for the broader hotel sector, reflecting shifting traveler preferences toward longer stays and more flexible accommodation options.

Regulation Reshaping Supply

Regulatory changes across European markets are also influencing the sector’s growth.

Measures aimed at controlling short-term rentals—including night caps, licensing requirements, and stricter enforcement—are reducing the availability of informal accommodation supply in several cities.

In Amsterdam, short-term rental guest nights declined by approximately 44 percent between 2019 and 2024, with further reductions expected as additional restrictions take effect. Similar regulatory tightening is underway in markets such as Edinburgh and Paris.

Rather than reducing travel demand, these changes appear to be redirecting it toward regulated accommodation formats, including serviced apartments.

Institutionalization and Scale

The sector is also undergoing a process of consolidation and professionalization.

Operators that historically focused on single markets are increasingly expanding across borders, supported by institutional capital and scalable operating models.

This trend reflects the sector’s fragmented nature, where many markets remain dominated by smaller, local operators, creating opportunities for platform growth and consolidation.

Implications for the Hospitality Sector

The growth of serviced apartments highlights a broader shift in accommodation preferences and investment strategies.

For hotel operators, the rise of longer-stay formats may influence product development, particularly as demand for flexibility and extended stays continues to increase.

For investors, the segment offers a combination of demand growth and structural tailwinds, including regulatory changes that are reshaping the competitive landscape.

Outlook

The continued expansion of serviced apartments suggests that the boundary between traditional hotels and alternative accommodation is becoming increasingly blurred.

As regulatory frameworks evolve and traveler behavior shifts, the sector is likely to play a larger role in shaping accommodation supply across European markets.