Corporate Housing Supply, Revenue Growth Soars
Corporate housing suppliers posted a record year in 2006, with a supply growth rate more than 20 times that of hotels, and similar growth is expected to continue throughout 2007, according to the recently released 2007 Corporate Housing Industry Report, a project by the Atlanta-based Highland Group and the Corporate Housing Providers Association.
Industry revenue grew by about 25 percent in 2006, from $1.99 billion to $2.5 billion, according to the report.
Inventory grew by about 13 percent from 2005 levels, reaching about 70,000 units available on average during 2006. As a comparison, U.S. hotel supply grew by only 0.6 percent in 2006, according to Smith Travel Research.
This year, the Corporate Housing Industry Report projects corporate housing inventory to grow by another 14 percent to nearly 80,000 units.
Those projections mean 2007 should be the year corporate housing inventory finally will grow larger than it was in 1999, after which the industry began to contract in size. An average of 76,421 units were available in 1999, which had dropped to 54,691 by 2002, the report indicated.
Corporate housing occupancy was 90 percent, about the same level it has been during the past few years, the report said. Of the 36 markets surveyed, occupancy ranged from a low of 86 percent in New York to a high of 98 percent in San Antonio, Texas.
Average daily rates for corporate housing increased by 9 percent to $109 in 2006, compared with a 7 percent increase in ADR for the lodging industry overall during the year.
Major markets, particularly New York, skew the average, however. Only eight other markets—northern New Jersey; Boston; Washington, D.C.; Los Angeles; Orange County,Calif.; San Francisco; San Diego and Dallas—are at or above that average rate, and the rest are below it.
High-speed Internet rapidly is becoming more prevalent in corporate housing, according to the report. Only 12 percent of corporate housing units offered no high-speed Internet access, compared with 40 percent in 2005. Of those that do offer high-speed Internet access, only a little more than one-quarter of them have extra fees that accompany the service.
Maid service, however, overwhelmingly continues to carry an additional charge in corporate housing, and it's becoming more expensive. Maid fees were up $3 to $5 in 2006 compared with 2005, with the service costing an average of $65 for single-bedroom units and $78 for two-bedroom units, according to the report.
Growth markets for 2007, in which operators are adding corporate housing units in new geographic parts of the markets' communities, include Dallas; Philadelphia; Raleigh/Durham, N.C., and Washington, D.C., the report indicated.
In addition, Austin, Texas; Boston; Cincinnati; Columbus, Ohio; Milwaukee; and Orlando and Tampa, Fla., are projected to be growth markets for corporate housing in 2007. In Dallas, however, operators report that companies increasingly are providing their own long-term housing.