The fourth Serviced Apartment Summit Europe took place on Thursday, July 13, at Park Plaza Victoria in London, with BBT as the event’s official UK media partner.
Chief economist Trevor Williams of TW Consultancy told the summit that growth in the UK economy had slowed to 0.2 per cent and 0.3 per cent in the first two quarters this year with all growth being from the services sector.
Williams added that the Bank of England would probably not raise base interest rates (currently at 0.25 per cent) this year, although doing so could allow the UK to cut the rate in 2019 when the country is due to leave the EU.
According to hotel data firm STR, revpar rose by 6.5 per cent in the UK serviced apartment sector, compared with a 7 per cent rise for hotels.
In the UK, occupancies at serviced apartments were 78 per cent, up by 1.9 percentage points year-on-year while ADR (average daily rate) reached £137, up 4.5 per cent for the first five months of 2017.
London’s occupancy stood at 80 per cent, up 4.7 points while ADR rose by 10 per cent to £181. Regionally, UK occupancies fell by 1 point to 76 per cent but ADR was up 1.6 per cent to £89 over the same period.
The forecast for the rest of 2017 looks “positive” with Brussels, Moscow, Paris and Milan set to rebound; Amsterdam, Barcelona, Dublin and Madrid continuing to have high occupancies; but supply “headwinds” are predicted to affect London, Edinburgh, Manchester and Dusseldorf.
Data from consultancy HVS showed that more than half of serviced apartment stays are less than 10 nights and that Marriott’s Residence Inn brand has the largest pipeline in Europe with around a dozen projects in its pipeline, including two London properties due to open this year.
An investment and finance panel session agreed that aparthotels appealed to institutional and sovereign wealth investors, who recognised their similarity to hotels.
Serviced apartments also have less operational complexity than hotels and “better added value”. In the UK, getting the right planning consent presented a trading risk, and consolidation was “inevitable” among operating companies.
Serviced apartment CEOs were bullish and updated delegates on their latest developments:
• Staycity is launching a premium brand.
• Frasers commented on the resilience of the market in London, which had not shown the expected downturn.
• Cheval has signed its first management contract, giving it an international presence.
• BridgeStreet had launched an OTA for its properties
• Staycity recognised the need to start owning its distribution channels.
• Accor is investing in aparthotels and distribution to become a one-stop shop.
• Adina has invested its own capital to establish itself in Germany and now has partners to help it grow.
• IHG is developing Staybridge Suites as a franchise operation with Cycas Hospitality and is using its loyalty scheme to market this brand to members.
But buyers felt there remained a “lack of clarity” in the sector with no single body to bring it together and create consistency. This role is currently fulfilled by ASAP (Association of Serviced Apartment Providers), but delegates claimed it was “inward rather than outward looking”.
The sector was also described as “still a cottage industry” when it came to booking technology.