The serviced apartments business has blossomed in Nairobi over the past few years. Serviced apartments are fully furnished apartments that provide hotel-like facilities such as housekeeping, room service, fitness centres, and restaurants.

The contrast is that serviced apartments, unlike hotel rooms, operate just like apartment-style living thus lending preference to visitors seeking a homely environment, especially those who travel as families.

According to the Kenya National Bureau of Statistics, demand for serviced apartments has been on the rise, recording relatively high occupancy rates of above 70.0% in 2017, compared to hotels in Nairobi at 35.5%.

The statistics further reveal that while 43.2% of international visitors in 2017 stayed for less than 14-days, 56.8% of the international guests to Kenya in 2017, stayed for at least 15-days.

Investment firm Cytonn in their service apartments research say that the concept of has continued to gain popularity in the market, with the Nairobi Metropolitan Area having approximately 3,414 serviced apartments as at 2015, and an additional 1,174 set to be complete by 2020

The research says this has been driven by a number of reasons including high demand which has resulted in high occupancy rates at above 70.0%, lower operating expenses as compared to hotels, convertibility where serviced apartments can be easily converted to normal apartments and relatively longer tenancy compared to hotels.

In addition to the growth in supply, the demand for serviced apartments has continued to grow as evidenced by the 8.0% points increase in occupancy levels in 2018 to an average of 80.0%, from 72.0% in 2017.

The popularity of serviced apartments can also be attributed to their benefits over hotels mainly in the form of lager spaces and comparatively lower rates. For instance, a standard 3-star hotel in Nairobi charges on average KSh. 14,000 per night for a suite, while a studio serviced apartments charges on average KSh. 8,000 per night and a 1-bedroom apartment charges on average KSh. 11,000 per night.

In terms of distribution major notes for service apartments in Nairobi include Westlands and Kilimani with 36.0% and 28.0% of total supply. This preference comes from their proximity to the CBD and the diplomatic blue zones.

However, investors in the segment must take stock of the competition as established international outlets such as Movenpick residences, Park Inn, Kempinski and Radisson, as well as big local firms like Britam all have their eyes on the cake.