Increased demand from leisure travellers has driven business in the serviced apartment sector during 2017 as operators prepare for an uncertain year ahead.
These were some of the findings in the Operator Sentiment Tracker Survey published today by the Association of Serviced Apartment Providers (ASAP) and Savills, ahead of the ASAP 2017 Serviced Apartment Convention, which is being held today in London.
Optimism for the next 12 months has dipped, with only 34.1% of survey respondents having a positive outlook on the year ahead compared to 55% who were questioned at the same time last year, suggesting that uncertainty around Brexit is starting to take a more significant hold.
However, 40.9% of operators said that they were accelerating expansion plans in 2018, up from 28.2% a year ago.
In what has been a strong year for performance across all accommodation sectors, 47.6% of serviced apartment operators said that they expect to end the year with an increase in average daily rate (ADR), compared to 2016, while 63.6% forecasted that 2018 operational performance will be up on 2017.
An improvement in business in 2017 appears to have been driven from the leisure segment, with 70.6% of respondents highlighting an increase from this sector, compared to 56.8% in June. A rise in corporate demand is more muted, up in respect of only 15.9% of operators.
The future of the economy is the biggest perceived challenge for operators in the next three years, as outlined by 65.9% of respondents, while property acquisition costs and increased competition are also of major concern.
James Foice, chief executive of the ASAP, said: "It's been a phenomenal year of growth for our serviced apartment sector right across the UK and it's particularly encouraging to see operators confirming in our Sentiment Survey that, in spite of the challenging economic environment, they remain firmly committed to their future expansion plans, firm proof that demand for this flexible way to stay from both the business and leisure traveller is set to continue unabated."
Marie Hickey, commercial director of research at Savills, added: "Its growing appeal, to both consumers and investors, is generating some unintended challenges in some parts of the market as operators pursue expansion plans to meet this growing demand. These will be short-lived absorption issues as the fundamentals supporting further expansion remain robust."
Around 400 delegates from 14 countries are expected to attend the ASAP 2017 Serviced Apartment Convention, which is being held at Etc Venues in the City of London.
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