The operational outlook is mixed with the general trend suggesting that operators expect both year end occupancy and ADR to be down on 2015, which is reflected in the latest STR data for the sector (UK occupancy down 2.6% at end October 2016, year to date).
The Association of Serviced Apartment Providers (ASAP) and Savills have released the headline results for the sector from their Operator Sentiment Tracker Survey (November 2016), which track the changes in operator sentiment compared to their August 2016 Survey.
The key findings for the UK serviced apartment sector:
- Overall operators are more optimistic about their business prospects for the next 12 months than they were in August.
- Encouragingly almost 30% of respondents reported they are accelerating their expansion plans (compared to 13.3% in August); the majority (60%) confirmed they were making no change to their existing plans but an increased proportion of 12.8% stated they were scaling back their plans which points to continued uncertainty in the market.
- The operational outlook is mixed with the general trend suggesting that operators expect both year end occupancy and ADR to be down on 2015, which is reflected in the latest STR data for the sector (UK occupancy down 2.6% at end October 2016, year to date); however, this is an improvement on what was reported in the August survey with 30% of operators in November stating that they expect their year end occupancy to be up on 2015, in the August survey it was 20%.
- It is a mixed picture when it comes to sources of demand with operator responses pointing to more robust leisure demand than corporate.
The majority of operators (60%) stated that they expect year end leisure demand to be up on 2015 levels with 40% stating that year to date demand was already up.
- The survey results suggest corporate demand post the Brexit vote remains, on the whole, weak but has improved on that reported in August. The improvement in sentiment is more marked when it comes to the year end outlook with 35% of respondents expecting that year end demand from the corporate market to be up on 2015, an increase on the 26.7% reported in August. This helped move the outlook net balance (balance between proportion of respondents expecting an increase in demand minus those expecting a decline) for corporate demand into positive territory.
- The biggest potential source market remains the UK for 50% of operators, although Europe’s share increased from 14.3% to 22.5% of operators, which correlates with the increase seen in leisure demand.
- Wider economic conditions, Business Rates and property acquisition costs were the top three ranking business challenges facing UK operators over the next three years. This reflects a shift on the August survey where wider economic conditions ranked second with 60% of operators stating it presented a slight to significant challenge; in the November survey this was 63%. The most significant shift in ranking has been for Business Rates. In August 41% of respondents flagged it as a challenge, ranking it seventh, in November it was 58% placing it second.
James Foice, Chief Executive of the ASAP comments: "It’s encouraging to see that, in spite of the operating challenges we’ve experienced in 2016 in terms of occupancy and ADR, operators are now at the end of the year feeling more positive in terms of the outlook for business performance for 2017 than they were back in August. And it’s especially good to see over 28% of operators reporting that they are accelerating their expansion plans. The pipeline of new serviced apartment/aparthotel developments for the UK in 2017 looks very strong, with over 2,000 units due to open next year."
Marie Hickey, Director Commercial Research, Savills comments: “There are a number of potential headwinds facing the sector as we go into 2017 around operational performance with operators rightly identifying wider economic conditions and Business Rates as posing significant challenges to their business over the next three years. No doubt the release of the draft revaluations in September has moved this up the agenda for operators. However, the sector as a whole remains well placed to weather these challenges.”
These headline results will be shared with the industry today at the ASAP Annual Convention in London, the flagship event for the serviced apartment sector which sees 400 delegates come together to hear the latest industry insights.
ASAP announces the winners of the 2016 Serviced Apartment Industry Awards
ASAP also announced the winners of the prestigious 2016 ASAP Industry Awards, exclusively supported by Sky, which were presented at a special Gala Dinner in London on 30 November.
Over 250 guests from across the serviced apartment industry came together for this black-tie event to celebrate this year’s ASAP Industry Awards at the Museum of London, on the eve of ASAP’s 2016 Annual Convention.
Speaking after the presentation of the 2016 Awards, James Foice comments: "I would like to congratulate all the winners and highly commended entries of our 2016 ASAP Industry Awards. This is the fourth year of our Awards programme which has been extended to 10 categories this year. It’s been fantastic to see the phenomenal response from the industry both in terms of the record number of entries received and the outstanding quality of the submissions. This is a direct reflection of the highly ambitious and dynamic sector we work in – it’s terrific to see so much innovation as this young sector continues to evolve as it rapidly becomes a mainstream part of the hospitality industry."
Damian Saunders, Commercial & Strategy Director, Sky Business, adds: "On behalf of everyone at Sky, congratulations to all who were recognised at Wednesday’s prestigious ASAP Industry Awards Gala Dinner. As providers of premium home-from-home TV and connectivity in thousands of Serviced Apartments, Sky is proud to have offered headline support of the ASAP Industry Awards 2016. It was a fantastic evening spent celebrating the best in the business in the great company of those who make a valuable contribution to the success of the Serviced Apartment industry."
Winners of the 2016 Serviced Apartment Industry Awards
Serviced Apartment Marketing Award
Winner: SITU Serviced Apartments
Highly Commended: SACO The Serviced Apartment Company
Serviced Apartment Investment in People Award
Winner: Fountain Court Apartments
Highly Commended: Staying Cool at the Rotunda
Serviced Apartment Rising Star of the Year Award
Winner: Gavin Pereira – Check-in-London
Highly Commended: Robert Godwin – Lamington
Serviced Apartment Team of the Year Award
Winner: Staying Cool at the Rotunda
Highly Commended: SilverDoor
Sky Industry Breakthrough and Innovation Award – ASAP Business Partners
Winner: AirPortr
Highly Commended: Maxxton
Sky Industry Breakthrough & Innovation Award – ASAP Members
Winner: Skyline Serviced Apartments
Highly Commended: SilverDoor & Citybase
Serviced Apartment Guest Experience Award
Winner: Cheval Residences Ltd
Highly Commended: Premier Suites
Serviced Apartment Business of the Year Award – SME
Winner: City Stay Apartments Milton Keynes
Highly Commended: SITU Serviced Apartments
Serviced Apartment Business of the Year Award – Corporate
Winner: SilverDoor
Highly Commended: Staycity Aparthotels
Serviced Apartment Outstanding Individual Award
Winner: George Westwell – Cheval Residences Ltd
Angelos is the news editor for TravelDailyNews Media Network (traveldailynews.gr, traveldailynews.com and traveldailynews.asia). His role includes to monitor the hundrends of news sources of TravelDailyNews Media Network and skim the most important according to our strategy.
He currently studies Communication, Media & Culture in Panteion University of Political & Social Studies of Athens.
