Investors 'struggle to understand' growing serviced apartment sector

By Sophie Witts contact

- Last updated on GMT

SACO St Martin's - one of the growing number of serviced apartments in the capital
SACO St Martin's - one of the growing number of serviced apartments in the capital

Related tags: Serviced apartment, Management

The serviced apartment sector is set to continue to grow and diversify, though investors still struggle to understand the market.

That’s according to a report from hospitality intelligence firm HVS released today (6 June) which reveals that a majority of lenders are keen to participate in the growth of the industry, with 60 per cent considering the UK as a main market.

However many feel that fragmentation of the sector and the wide variety of offerings make it difficult to obtain comparative information such as occupancy, average rate and operating margins.

“The industry still has some way to go to ensure investors and lenders understand the various business models and terminology used to describe different serviced apartment offers, and they need to have data to enable them to more easily compare performance,” commented HVS director Arlett Oehmichen.

“Lenders and investors are in search of quantitative rather than qualitative information in order to fuel the growth of the market with capital.”

Evolution

Oehmichen predicted that the rapid growth of serviced apartments would result in greater differences emerging between leading brands.

“The next generation of serviced apartments is likely to focus on better use of technology, more efficient use of space and a tendency towards smaller units," she said.

“We have already seen this with Zoku, the new brand from HotelsAhead, which claims to be a home-office hybrid targeting so-called ‘bleisure’ travellers.”

Accreditation schemes

Further evidence of the expanding market is the growth of the ASAP (Association of Serviced Apartment Providers), the key industry body representing the sector.

ASAP has attracted 30 new members in the last three months and now represents 120 organisations with a total of 20,000 serviced apartments in the UK, Ireland and Europe.

The group has also introduced the ISAAP (International Serviced Apartment Accreditation Programme), the first quality assurance scheme of its kind developed for the international serviced apartment sector.

ASAP’S managing director James Foice said: “It is not just proof of the buoyant market, but important testimony to the added value ASAP membership brings. The ASAP Quality Accreditation programme [sets] the industry benchmark for best practice and quality standards for the sector.”

Major sales

Key transactions in the serviced apartment industry this year include the £206m acquisition of 650 London units by Starwood Capital Group and the merging of of the Serviced Apartment Company (SACO) and Oaktree Capital Management to create a £60m firm.

A number of new brands have entered the market, including Union Hanover’s first Urban Villa in West London​ and CLSA’s high-tech Beyonder ApartHotels brand, due to open in London in December 2015.

Members of the industry are set to gather in London this week at the third annual Serviced Apartment Summit at The Park Plaza Hotel between 7-8 July.

Related topics: Business, Hotels

Related news

Show more

Spotlight

Follow us

Hospitality Guides

View more

Featured Suppliers

All suppliers