Growth in the serviced apartment sector across Europe continues to outpace that of traditional hotels with many of the biggest operators set to double their portfolios over the next three years, according to a new report from global hotel consultancy HVS.
HVS found RevPAR growth for serviced apartments outperformed that of traditional hotels with a 7% improvement across Europe for the sector last year, compared with 5% for hotels. In the UK RevPAR growth for serviced apartments was 3.5%, compared with 1.5% for hotels, and in London the sector saw RevPAR growth of 4%, compared with 3% for hotels.
It also found the sector’s pipeline is set for further expansion across Europe, with 23,600 additional apartments due to be added to the inventory by 2022, making it one of the most active sub-sectors in the hotel industry. The UK represents a third of this development with 7,507 apartments planned over the next four years. London accounts for 39% of the total UK pipeline, followed by Manchester (16%), Edinburgh and Cambridge with around 10% each.
Germany represents some 25% of the European pipeline, with Frankfurt representing 20% of the country’s expansion, with Berlin at 15%, Hamburg (11%), Düsseldorf (10%) and Munich (9%) as international brands mark their expansion and entry into the German market. Other destinations with high pipeline figures include Ireland (2,807 units), France (2,070), The Netherlands (872) and Poland (734).
Report co-author and HVS associate, Simon Hultén, said: “As the sector becomes more mainstream we are seeing operators push for further expansion into key destinations. In the UK and Germany they are moving into secondary and tertiary cities as sites become more difficult to secure in leading cities.
“The lenders we surveyed continue to be happy to support further developments, particularly those in gateway cities, although brand and location are important requirements and some concern has been expressed about oversupply in some Western European markets.”
Brands seeing the fastest growth across Europe over the next four years include Adagio, opening some 6,100 apartments across Europe, Staycity, opening some 4,800 apartments in the UK, Ireland, Germany, France and Italy, and Adagio with just under 4,800 openings. Saco, Adina and Residence Inn also have plans for over 1,000 units each.
HVS director and co-author Sophie Perret, added: “It’s an innovative sector, with alternative concepts such as co-living, co-working, student accommodation and home-sharing merging with the serviced apartment model creating fascinating hybrids that respond to changing demands.”