The demographic shift towards urbanisation has had profound implications around the world as city populations globally have soared, in turn influencing demand for urban hotels, serviced apartments, and alternative living options.
At the same time, changes in city infrastructure, travel patterns, and economic activity are leading hospitality developers and investors to look at more contemporary options to attract corporate travellers, combined with co-working spaces and flexible office solutions, including converting offices to hotels.
Indeed, traditional hotel models are being complemented by serviced apartments, boutique hotels, and short-term rental platforms such as Airbnb, plus hybrid offers catering to a growing demographic of digital nomads, expatriates and long-term visitors seeking cost-effective, flexible accommodation. Urbanisation is also leading to a preference for sustainable, tech-driven, and experience-based accommodation from younger travellers. As a result, smart hotels that incorporate AI-backed concierge services, automated check-ins, and eco-friendly initiatives are becoming increasingly popular.
And Europe's leading hospitality brands are responding rapidly, investing in formats designed to appeal to lifestyle-oriented travellers and workers. In February, InterContinental Hotels Group (IHG) acquired urban lifestyle brand The Ruby for €110.5 million. A brand that currently operates 20 hotels – comprising 3,483 rooms – across Europe, with nine in Germany, three in London, three in Vienna, two in Switzerland and one each in Italy, Ireland and the Netherlands, has ten more hotels in the pipeline due to open before the end of 2027 in locations including Edinburgh, Marseille, Rome and Stockholm.
IHG says that it wants to expand Ruby’s lean luxury concept globally, including in the US by the end of this year, with a target to grow to more than 120 hotels over the next ten years and more than 250 over 20 years.
“The urban micro space is a franchise-friendly model with attractive owner economics, and we see excellent opportunities to not only expand Ruby’s strong European base but also rapidly take this exciting brand to the Americas and across Asia, as we have successfully done with previous brand acquisitions,” Elie Maalouf, Chief Executive Officer, IHG Hotels & Resorts, says of the deal.
Hybrid living, work and leisure
Meanwhile, CitizenM will open its fifth London hotel and 38th hotel in total this summer as part of the transformation at Olympia, currently undergoing a £1.3 billion mixed-use regeneration led by Yoo Capital and Deutsche Finance International. The 146-room hotel will comprise three guestroom floors, plus a living area open to the public. Also set to open in summer 2025, CitizenM Dublin St Patrick’s will be the hotel group’s first location in Ireland, and will comprise 245 rooms across nine-storeys and will also host co-working spaces, a living room and a CanteenM dining offer.
The rising demand for extended-stay accommodation has also led to increased investment in modern incarnations of serviced apartments. Companies such as Staycity and Adagio Aparthotels are expanding their presence in key European cities, with Staycity Group recently securing a £77 million loan from OakNorth to support its expansion plans.
The aparthotel business – which currently operates 6,000 keys across 36 aparthotels in France, Germany, Ireland, Italy and the UK – plans to use the funds to support its ambition to expand to 18,000 keys by 2029.
As part of its plans, Staycity recently announced the acquisition of a 74.9 per cent stake in Munich-based Felix Group, which has properties in Leipzig, Dresden as well as another site under construction in Vienna. This year it will open Wilde’s in Amsterdam, Cambridge, Lisbon, Porto and Vienna, with further London locations as well as a site in Bordeaux and another in Oxford under development.
Similarly, European aparthotel company Adagio is continuing to widen its network in Europe and is venturing into Luxembourg, opening a new aparthotel there in 2027, representing its 17th market. The hotel will be located in the Cloche d’Or business district within the Botanica – Your Office Resort development, being developed in partnership with CODIC. Adagio’s aparthotel will include 121 apartments designed with the company’s Smart House concept, offering a combined sleeping area and fully equipped kitchen. Guests will have access to a fitness centre, self-service laundry and a common area featuring a library of objects, a store and a kids’ corner.
Founded in 2007 in France as a joint venture between multi-brand hotel giant Accor and Pierre & Vacances Centre Parcs, Adagio has expanded its portfolio to 129 sites and 14,733 apartments across 16 countries. Located in urban areas, the aparthotels are available under three brands — Adagio Original (in the centre of large cities), Adagio Access (in regional capitals or the outskirts of large cities) and Adagio Premium (premium aparthotels).
Describing the move as an important step for the business, Arthur Jaeger, Adagio Chief Development & Real Estate Officer, says: “We are convinced that this new offer dedicated to medium and long stays will satisfy business and leisure demand by offering our future customers an innovative and environmentally friendly product.”
Co-working drives demand
Indeed, increasingly the boundaries between living, working and hospitality are being blurred. One example is the recent partnership between Outsite and Zoku to provide a home-office hybrid accommodation offer, introducing over 500 new rooms across Europe and expanding Outsite into Amsterdam, Copenhagen, Paris, and Vienna. Combining Zoku’s living and working spaces with Outsite’s global community of remote workers, the alliance aims to create joint opportunities for digital nomads and business travellers.
“Harnessing Outsite’s expansive community with Zoku’s innovative hybrid living and working solutions, both companies have proved to revolutionise how people live and work across Europe,” says Hans Meyer, Co-Founder and Managing Director at Amsterdam-based Zoku, which pioneered the home-office hybrid concept and Zoku Loft after making its Amsterdam debut in 2016 and combines living and working with hotel-style amenities.
“Serviced apartments and aparthotels are expected to perform strongly in 2025, particularly in key gateway cities, driven by their appeal to travellers seeking extended stays and flexibility,” says Richard Dawes, UK & Pan European Director Hotel Capital Markets, Savills. “London is set to become Europe’s largest serviced apartment market by 2028, with supply projected to increase by 21 per cent.”
Indeed, niche-focused businesses and new formats have caught the eye of the major hospitality investors and more consolidation is likely as global brands spot the opportunity to tap into a younger, mobile customer with a desire to live and work among like-minded people, often for extended periods.