Serviced apartment expansion unchanged post-Brexit

The ASAP/Savills Sentiment Tracker Survey has confirmed that serviced apartment operator expansion plans remain unchanged following the EU referendum.

ASAP and Savills Serviced Apartment Report following Brexit
The Association of Serviced Apartment Providers (ASAP) and Savills have just released the headline results for the sector from their Operator Sentiment Tracker Survey (Summer 2016).The key findings for the UK serviced apartment sector:
  • Over 75 per cent of operators report that they are making no changes to their expansion plans post Brexit
  • Demand from the leisure sector for 2016 is expected to be up on 2015 levels with 44 per cent of operators forecasting an uplift, with an additional 44 per cent expecting it to be in line with last year
  • Corporate demand over the first half of 2016 has softened, although half of the operators surveyed reported no change in demand
  • One-third of respondents are expecting a slight drop in occupancy and average daily rates (ADR) for 2016 compared to 2015. Currently, overall occupancy for the UK is down 2.6 per cent, according to the global hotel data benchmarking and analytics provider STR. The outlook for ADR is healthier with 34.5 per cent of respondents expecting year end ADR to be up on 2015
  • The UK is expected to be the key source market for the majority of operators for the rest of 2016
  • Property/acquisition cost and stock/inventory availability are confirmed to be the most significant challenges the sector faces over the next three years, along with wider economic conditions
James Foice, CEO of the ASAP, said, “It’s very encouraging to see that, while 2016 is proving to be a challenging year for operators in terms of the anticipated weakening in both occupancy and the average daily rate (ADR), there is overall optimism for the sector in the longer term. It’s especially good to see the majority of operators confidently continuing with their expansion plans post Brexit.”Marie Hickey, Director, Savills, comments, “The more immediate challenges facing operators are those related to expansion, essentially acquisition costs and stock/site availability. Improving awareness of the sector amongst developers and investors, particularly in London where they may be looking at alternative uses, should help to alleviate some of these ‘availability’ challenges.”    A further survey will be conducted later this year to track changes in operator sentiment as the year progresses.