Serviced apartment operators optimistic about future: new survey

Results from the latest ASAP/ Savills Sentiment Survey reveal that serviced apartment operators are optimistic about business prospects and many are looking to accelerate their expansion plans.

Serviced apartment operators optimistic about future: new survey
The Association of Serviced Apartment Providers (ASAP) and Savills have released the headline results from their June 2017 Serviced Apartment Sentiment Tracker Survey – a bi-annual report which compares the changes in operator sentiment.

Key findings from the UK Serviced Apartment sector

  • Overall operators are more optimistic about business prospects when compared to November 2016, although the optimism for 2018 has softened with 55% significantly to slightly more optimistic, versus 65% in November (2016).
  • Encouragingly almost 37% of respondents reported that they are accelerating their expansion plans – compared to 28% in November and only 13% back in August, immediately after the EU referendum. 
  • The operational outlook has improved significantly on the last survey with a net balance of 42% of respondents expecting 2017 occupancy to be up on last year with a net balance of 37% in terms of the average daily rate (ADR). This suggests a turnaround on the challenging operational conditions of 2016.
  • There is a significant increase in optimism from the leisure segment with 57% of respondents reporting demand up on last year compared to 39% in November 2016.
  • There is also increasing optimism from the corporate sector with 38% reporting demand up on last year compared with 28% in November.
  • The UK confirms its status as the largest potential source market for 65% of operators compared to 50% in November; while Europe has decreased as the main source market to 10% (down from 23%).

Significant challenges for the Serviced Apartments Sector

  • Business Rates are once again the most significant challenge operators face in the sector today – 33% of respondents highlighted this as a concern compared to 28% in the last survey. 
  • In addition, safety concerns/terrorism are also seen as a significant challenge by 23% of respondents, which has risen from ninth position in the November survey, understandable in light of the recent terrorist attacks. In joint third position, wider economic conditions and property acquisition costs (21%) were seen as challenges. 
  • Staff costs and staff availability are also becoming an increasing challenge; 10% of operators rating both as significant compared to 5% and 3% respectively in the last survey. This suggests that concerns surrounding Brexit implications on staff are starting to have an effect.
“It’s very encouraging to see that, in spite of the challenges which operators are facing, overall optimism in the sector remains positive for 2017. And it’s especially good to see over 36 per cent of operators reporting that they are accelerating their expansion plans, up 8 per cent from last November”, said James Foice, Chief Executive of the ASAP.“It’s great to report that a number of our members have already delivered on their expansion plans for 2017 and there are a number of further new developments on track to open later this year”.    James Bradley, Associate Director in the Hotels team at Savills, added, “The outlook for the serviced apartment sector is fundamentally strong despite the headwinds and challenges over the last 12 months. This research illustrates strong operator demand for expansion – both in London and the UK’s leading cities – and we are seeing significant investor interest in the sector. There remains substantial potential for the extended stay market in the UK.”For related news and features, visit our Serviced Apartments section.Access hundreds of global services and suppliers in our Online DirectoryClick to get to the Relocate Global Online Directory  Get access to our free Global Mobility Toolkit Global Mobility Toolkit download factsheets resource centre