Serviced apartment sector sees strong growth in 2017

The UK serviced apartment sector enjoyed strong growth throughout 2017, according to new figures from ASAP and STR.

Based on STR’s year-end performance figures, UK serviced apartments recorded an actual occupancy level of 81.7 per cent, a 0.2 per cent increase over 2016. Meanwhile, average daily rate (ADR) spiked by 5.4 per cent to £148.48.

London accounted for the majority of the sector’s growth, reaching a 2.2 per cent increase in occupancy to 83.8 per cent and a 9.8 per cent increase in ADR to £198.

Meanwhile, the rest of the UK saw a decline of 1.7 per cent across the sector to an actual level of 79.7 per cent.

“Although results were quite mixed across UK markets, it is encouraging to see that overall performance levels in the serviced apartment sector continued to grow in 2017,” said Thomas Emanuel, director of business development for STR.

“Supply growth has been considerable, which confirms the high level of investment interest in further developing this sector, but strong demand growth and the ability of operators to drive rate growth in several markets are positive indicators for how the sector will continue to adapt as its inventory expands.”

Elsewhere, performance was mixed across key UK cities; Manchester saw an increase in supply over the course of 2017, and witnessed a 6.3 per cent drop in occupancy.

Edinburgh recorded a 0.4 per cent growth in occupancy to 84.4 per cent and a 7.3 per cent growth in ADR to £119.21.

James Foice, chief executive of the ASAP, added: “It’s really fantastic to see our serviced apartment sector continuing to perform very strongly in 2017 in spite of the economic uncertainty and the significant increase in supply, which proves that the consumer demand for this alternative way to stay continues to grow at a very impressive rate, year on year.

“We are very excited about the many new developments opening right across the UK in 2018 which includes properties in Southampton, Manchester, Edinburgh, Glasgow, London and Brighton which reflects the undaunted confidence in our sector as operators continue to accelerate their expansion plans.”