A report published yesterday by property experts Savills revealed that a number of serviced apartment operators have plans to expand their inventory across Europe over the next two years, targeting the key gateway cities of London, Paris, Frankfurt, Amsterdam and Belgium.
Savills said the growth in branded apartments reflected the sector’s movement away from reliance on the long-stay market, with operators looking to capture a greater share of short-stay spend.
“Some of the larger operators are moving away from a reliance on the traditional long stay corporate market and are tapping into shorter stay guests, particularly as businesses reliance on travel management companies wanes,” said Marie Hickey, director of research at Savills.
“As a result, developing a branded product that appeals to a variety of guest segments and which raises consumer awareness has become all the more important to operators.”
London is currently leading the pack in terms of serviced apartments in Europe, with supply accounting for 12 per cent of total hotel rooms. It also has the greatest number of international operators present compared to other European cities, with include Ascott, Frasers, Staybridge Suites, Bridgestreet and AKA all operating single or multiple properties.
However, Savills said there remained ‘significant scope for further expansion’ in the capital, which attracts 14.9 million overseas visitors per annum but currently only has 0.6 serviced apartment units per 1,000 overseas visitors.
The report revealed that Bridgestreet, Staycity and Staybridge all have new UK properties in the pipeline for the next two years.
StayCity in particular is pursuing aggressive European expansion, with plans to increase its inventory 30 per cent by 2019, including 161-serviced apartments in Greenwich.
The operator recently launched a TV advert campaign on Sky, which was hailed as a ‘breakthrough moment’ for the serviced apartment sector in the UK.
Savills predicted that the expansion of branded operators will improve investor confidence in the sector, with a ‘significant increase in capital’ expected over the next few years.
“However, over the short term, private equity and owner operators will continue to be the primary driver of expansion,” said James Bradley, associate director of Savills hotels.
“When institutional demand does materialise we expect it to be focused on the major cities in the UK, France, Germany and Benelux.”