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.
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.