Serviced apartments are set to expand faster than any other segment of the UK hospitality market over the next two years, according to new research from Savills and the Association of Serviced Apartment Providers (ASAP).
The report forecasts an 8.4% growth in supply per annum by the end of 2017 based on known planning consents, outpacing the 6% and 2.6% anticipated increase across budget hotels and all hotel types respectively.
While London previously dominated purpose built expansion, Savills and ASAP now highlight Scotland (growth rate in supply of 21.1%) and the Midlands (13.4%) as future growth hotspots. London continues to lead in terms of the number of new units, with 1,200 in the development pipeline for the next two years, followed by Scotland where 1,061 units will be delivered.
The expansion of serviced apartments by both national and regional operators in the UK are on track to increase the number of units they operate by 122.3% and 82.2% respectively, effectively doubling the total number of units across the country.
ASAP surveyed 48 serviced apartment operators, regarding their expansion targets in the UK and globally, to the end of 2018. The results revealed an anticipated global increase in supply of 145,000 units. UK-only operators led the expansion, with a 122.3% increase in stock to the end of 2018, effectively doubling current supply.
James Foice, managing director at ASAP, described the research as "a breakthrough moment" for the UK serviced apartment sector. "This growth will position the serviced apartment sector as a mainstream accommodation choice, a key player within the hospitality industry as a whole," he said. "We will have the critical mass of stock to ensure the consumer will have the option of booking a serviced apartment wherever they choose to travel in the UK."
Key operators expanding significantly over the next two years include Staycity, which intends to treble its estate from 1,000 to 3,500 units, with openings planned for London, York and Birmingham; Go Native, will double its portfolio to over 3,000 units, including new locations in Manchester, Bristol, Newcastle, Glasgow and Reading; and Lamington UK will grow 10 fold to 1,000 units by 2020, with new outlets in London and Southampton.
Hickey added that the serviced apartment sector has benefited from the impact of Airbnb on the hospitality sector. "It was previously touted as a big threat, but in fact it has helped to raise the profile of alternative accommodation such as serviced apartments and aparthotels to prospective consumers," she said. "This is reflected in the number of operators listing properties on the site and as a result travellers are becoming increasingly more open to concepts that are better aligned with their specific requirements."
The finding of the report will be shared with the 400 delegates attending ASAP's annual convention in London today.