75% of extended stay accommodation operators looking to increase their rates due to rising energy costs

Based on recent research with its accommodation partners across their global supply chain, Situ the serviced accommodation agency has released a white paper* on the impact of rising energy costs within the extended stay accommodation sector.

Published on Tuesday, January 24th, 2023 by Jo Redman

Based on recent research with its accommodation partners across their global supply chain, Situ the serviced accommodation agency has released a white paper* on the impact of rising energy costs within the extended stay accommodation sector.

75% of all respondents stated that they will be looking to increase rates, with the estimated rise being between 10% and 25%. Rate increases are the preferred method for 70% v the possibility to an “energy surcharge”.

In terms of mitigating costs, 77% of all respondents said they would be putting awareness programmes in place to encourage guests to be mindful and efficient with their energy usage. Ideas ranged from friendly reminders at check-in to signage within the accommodation.

When asked about creative and collaborative ways to tackle the challenge, suggestions included the collective negotiation of rates with energy providers and seeking support from the government in terms of VAT reductions, tax breaks and overall clarity on the way forward with energy caps for businesses of all sizes.

Phil Stapleton Managing Director of Situ says, “we felt it was essential that we conducted this research given the ongoing impact on our sector because of the energy crisis. We feel an urgent need to manage our clients’ expectations and continue to be transparent in terms of rates and charges, we will of course continue to negotiate the best rates possible for our clients.”

Although the urgent drive to reduce energy usage is being powered by monetary pressures rather than environmental concerns, operational change

is, of necessity, going to happen. The extended stay sector now has a valuable opportunity to introduce technologies to reduce and track energy usage and to engage in conversations about sustainable sources of energy – as well as align operational efficiencies with strategies around Environmental, Social, and Governance (ESG) programmes.

Situ welcomes the conversations the sector will be having together over the coming months. The industry has a unique chance to come together to make a change at this time, finding ways to address the current crisis while looking forward to a more stable and sustainable future.

Phil Stapleton goes on to say, “whilst it looks likely that we may well have to pass on increased accommodation costs to clients, we will not be passing on any increased costs as a direct result of operating our business. We will continue to seek ways to reduce our not only our spending on energy but our impact on the environment. An example of this is our planned investment in Solar Panels this year which will power Situ HQ in both its current footprint and soon-to-be-announced extensive expansion.”

The survey also revealed other impacts that accommodation operators are currently dealing with in addition to increasing energy costs. Top of the list was the lack of labour and resources by 50% of respondents; while 32% said that assisting staff with the cost of living was affecting their business. The value of the pound versus the dollar was stated as an issue by 25% of those who replied. ‘Other’ impacts were given by 40% of accommodation partners. These were as follows:

  • Cash flow
  • Inflation
  • Legislation (short-term lets)
  • Interest rates
  • Lack of inventory (due to law changes)
  • Lack of demand due to rate increase

The answers given show that the increased cost of energy is playing into some of these additional impacts and is being affected by them in turn. However, a raft of different problems apart from high energy prices do exist on the global stage and are creating a complex picture the world over.

*The survey was made up of eight questions. It was sent to over 500 accommodation partners globally in November 2022, which included both national and international partners who operate a range of types of buildings from aparthotels to residential buildings, as well as vacation lets.

In addition, a discussion with some forty delegates to the World Travel Market conducted by Seth Hanson, Situ’s Head of Global Supply Chain provided further insights of the situation worldwide.

About Situ

Since 2008, Situ has been helping companies and organisations find the perfect accommodation for people when they’re on the move. Project team, corporate traveller, relocation assignee, global nomad – the title doesn’t matter. They’re all individuals who need somewhere to call home – when they aren’t at home. And that’s what Situ does all day every day, working to make finding and booking serviced accommodation effortless.

Situ offers a single point of contact for booking quality serviced accommodation in over 120 countries across the world. Only the most trusted professional hospitality providers and operators can join the Situ network, and every listing must pass rigorous quality control first. Situ also offers the full reassurance that its core platforms, processes, and data are secure, robust, and accredited by external bodies such as ISO, IIP, and ISAAP. Crossing the T’s and dotting the I’s is as important to Situ as it is to their clients. Situ’s tech makes finding the accommodation you need effortless. Its platforms are intuitive, flexible, secure, and easily integrated to support automation and third-party partnerships. But best of all? The Situ teams. They’re the cherry on the cherry on the cake. The ones who go above and beyond but further for every client. So, whatever the Situ – whether it’s a one-off request or creating and managing a global multi-million-dollar corporate housing programme – they can sort it!