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Serviced apartments are set to expand faster than any other sector in the UK hospitality market over the next two years.
That is according to new research from the Association of Serviced Apartment Providers (ASAP) and estate agent Savills, which forecasts a growth in supply of 8.4% each year by 2017 – based on known planning consents.
This outpaces the 6% anticipated for budget hotels and the 2.6% average across all hotel types.
While London previously dominated purpose built expansion, the research highlights Scotland and the Midlands as future growth hotspots with an average increase in serviced apartment supply of 21.1% and 13.4% per annum respectively.
Despite this, 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.
Marie Hickey, commercial research director at Savills, said: “The serviced apartment or apart-hotel segment – also known as extended stay – is currently a relatively small part of the UK accommodation sector with a 3.1% market share (approximately 19,000 units).
“This is set to change and with national operator targets pointing to a potential doubling of stock, the level of growth is likely to be far in excess of that indicated by the known development pipeline.”
As part of the research, ASAP surveyed 48 serviced apartment operators regarding their expansion targets both in the UK and globally to the end of 2018. The survey revealed an anticipated global increase in supply of 145,000 units.
UK-only operators lead the expansion,with a 122.3% increase in stock to the end of 2018 – effectively doubling current supply.
Hickey added that there has been an “unexpected positive impact” of Airbnb on the serviced apartment sector.
She said: “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 apart-hotels to prospective consumers.
“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.”
