Serviced apartment operators optimistic for 2017
According to the results of the latest Operator Sentiment Tracker produced by the Association of Serviced Apartment Providers (ASAP) and Savills, optimism is higher now than it was in August.
While 70 per cent of operators expect both year-end occupancy and ADR to be lower compared to last year, 30 per cent said the reverse, which is 10 per cent more than stated in the summer.
Operators have also changed their position on expansion with 30 per cent planning to accelerate the roll out of their businesses (compared to 13.3 per cent in August).
ASAP chief executive James Foice said: “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 30 per cent 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.”
Customer demand
It was a mixed picture when operators were asked about the sources of demand. Sixty per cent of operators said they expected leisure demand to be up on 2015, with 40 per cent stating that year to date demand was already up. However, corporate demand post-Brexit is weak, they said, with just 35 per cent expecting year end demand from the corporate market to be up on 2015.
The biggest potential source market remains the UK for half of operators, although Europe’s share increased from 14.3 per cent to 22.5 per cent of operators, which correlates with the increase seen in leisure demand, said ASAP and Savills.
Wider economic conditions, Business Rates and property acquisition costs were the top three ranking business challenges facing UK operators over the next three years.
