Because not all banks have yet grasped Limehome’s concept, life isn’t always easy for Munich-based Limehome. Co-CEO and co-founder Josef Vollmayr is therefore often involved in talks with banks, explaining the serviced apartment business model – an alternative to traditional hotels but without the conventional hotel operations. There’s no lobby or reception, but instead larger rooms with kitchens. Guests forego bars and restaurants, which allows for more efficient use of space. Hotels, by contrast, are more staff-intensive and therefore more costly.

„In the hotel segment, we’re seeing a lot of acquisitions but hardly any organic growth“, Vollmayr told Börsen-Zeitung at the recent Expo Real in Munich. Rising labour costs mean that many new projects are no longer viable.

„The lean, efficient, technology-driven apartment operators are therefore gaining ground", he explains. Limehome’s overall operating costs are low because many of its operations are centralised and automated. About one-third of its staff work in tech.

Limehome, however, only leases its properties. The landlords are project developers such as Swiss Life Asset Managers Deutschland, who also handle the financing.

For asset managers, serviced apartments have become an attractive asset class. „Serviced apartments are meeting with strong demand – we believe in the concept“, says Udo Girke, Head of Construction/Distribution at Swiss Life Asset Managers Deutschland. „From a project developer’s perspective, the planning and realisation of serviced apartments allow for a high degree of prefabrication, which ensures quality, cost, and schedule reliability.“

Swiss Life Asset Managers Deutschland develops such spaces not only for Limehome, but also for other operators. Since no additional areas such as hotel lobbies or restaurants need to be planned, overall costs are lower, and developers expect higher returns.

Even so, banks still charge higher interest rates for developing serviced apartment projects than for hotels. Many real estate lenders have yet to fully understand the concept, Vollmayr notes, saying that "if you simply apply hotel metrics, projects that are actually very sustainable fail the credit check.“

Limehome operates very efficiently in terms of costs, but some traditional hotel KPIs don’t apply, which leads to questions from banks. „There is no reason why financing costs for serviced apartment projects should be higher than for traditional hotels – quite the opposite. The problem is that financing banks rely on hotel KPIs, where operating costs are sometimes twice as high“, says Vollmayr.

Even though Limehome differs from traditional hotels, it still competes with them. While serviced apartments may sound like a concept aimed at business travelers staying for extended periods, 60–65% of Limehome’s guests are classic hotel customers. Others stay longer – though guests at Limehome can’t book stays longer than six months. The company’s model is reminiscent of Airbnb, but with one key difference: Limehome is an operator, while Airbnb is a booking platform. As such, Airbnb isn’t a competitor but rather a distribution channel – albeit a secondary one – the most important is Booking.com.

Limehome currently offers more than 11,500 apartments and hotel rooms across 154 cities in 13 European countries. The company sees the growing involvement of institutional investors as a measure of the segment’s maturity as an asset class. According to Limehome, serviced apartment projects will account for one-third of the hotel industry pipeline by 2029.