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Over one third of operators looking to accelerate their expansion plans

Overall operators are more optimistic about business prospects when compared to November 2016, although the optimism for next year – 2018 – has softened with 55% significantly to slightly more optimistic, versus 65% in November (2016).

The Association of Serviced Apartment Providers (ASAP) and Savills have released the headline results for the sector from their Operator Sentiment Tracker Survey (June 2017), which track the changes in operator sentiment compared to the November 2016 Survey.

The key findings for the UK serviced apartment sector are:

  • Overall operators are more optimistic about business prospects when compared to November 2016, although the optimism for next year – 2018 – has softened with 55% significantly to slightly more optimistic, versus 65% in November (2016)
  • Encouragingly almost 36.7% of respondents reported that they are accelerating their expansion plans – compared to 28.2% in November and only 13.3% back in August, immediately after the EU referendum. 
  • The operational outlook has improved significantly on the last survey with a net balance of 41.7% of respondents expecting 2017 occupancy to be up on last year with a net balance of 36.7% in terms of the average daily rate (ADR). This suggests a bounce back on the challenging operational conditions in 2016.
  • There is a significant increase in optimism from the leisure segment with 56.8% of respondents reporting demand up on last year compared to 39.4% in November 2016.
  • There is also increasing optimism from the corporate sector with 37.5% reporting demand up on last year compared with 27.5% in November.
  • The UK is confirmed as the biggest potential source market for 64.6% of operators compared to 50% in November; while Europe has decreased as the main source market to 10.4% (down from 22.5%).
  • Business Rates is once again the most significant challenge which operators face – 33.3% – compared to 27.5% in the last survey. This is followed by safety concerns/terrorism – 22.9% – which has risen from 9th position in the November survey, which is understandable in light of the recent terrorist attacks. Next, in joint third position, wider economic conditions and property acquisition costs, at 20.8%. 

Staff costs and staff availability have also moved up the agenda as challenges with 10.4% of operators rating both as significant compared to 5% and 2.5% respectively in the last survey.  This suggests that concerns regarding Brexit implications on staff may be starting to feed through.

James Foice, Chief Executive of the ASAP comments: "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% of operators reporting that they are accelerating their expansion plans, up 8% from last November. 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, adds: "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."

Co-Founder & Chief Editor - TravelDailyNews Media Network | Website | + Posts

Vicky is the co-founder of TravelDailyNews Media Network where she is the Editor-in Chief. She is also responsible for the daily operation and the financial policy. She holds a Bachelor's degree in Tourism Business Administration from the Technical University of Athens and a Master in Business Administration (MBA) from the University of Wales.

She has many years of both academic and industrial experience within the travel industry. She has written/edited numerous articles in various tourism magazines.

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