Nearly one third of serviced apartment operators are to accelerate their expansion plans as confidence in the sector grows, according to a new survey from the Association of Serviced Apartment Providers (ASAP) and Savills.
The Operator Sentiment Tracker Survey highlights that operators are now more confident about the next 12 months than they were in August.
However, 12.8% of those surveyed said that they intend to scale back their plans, pointing to uncertainty in the market.
The operational outlook is mixed with year-end occupancy and average daily rate (ADR) expected to be down on 2015, reflecting the STR data for the sector which recorded a 2.6% fall in occupancy for the year to the end of October.
Over one third of respondents (35%) expect that demand by the end of the year from the corporate market will be up on 2015.
Wider economic conditions, business rates and property acquisition costs were said to be the top three challenges facing UK operators over the next three years.
James Foice, chief executive of the ASAP, 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 over 28% 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.”
Marie Hickey, director commercial research, Savills, added: “There are a number of potential headwinds facing the sector as we go into 2017 around operational performance with operators rightly identifying wider economic conditions and Business Rates as posing significant challenges to their business over the next three years.
“No doubt the release of the draft revaluations in September has moved this up the agenda for operators. However, the sector as a whole remains well placed to weather these challenges.”
The survey results were published at the ASAP Annual Convention in London, attended by 400 delegates.
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