ASAP & STR: U.K. serviced apartments see slight occupancy decline, but rate growth in H1 2018
LONDON - H1 2018 performance results for the U.K. serviced apartment sector showed a marginal 0.6% decline in occupancy to an actual level of 79.0% and a 1.2% increase in ADR (average daily rate) to GBP140.28, resulting in a 0.6% increase in RevPAR (revenue per available room) to GBP110.84.
In terms of individual city performance, London’s occupancy was down 1.1% to an actual level of 81.1%, impacted by significant supply growth. The capital also recorded a 2.3% drop in ADR, bringing RevPAR down 3.3% to an actual level of GBP146.73. Edinburgh experienced more significant declines, with occupancy down 8.5% and ADR down 3.5%, resulting in an 11.8% decline in RevPAR to GBP77.86. The sector’s performance was more positive in Birmingham, with occupancy up 4.7% to an actual level of 83.1% and ADR up 1.5% to GBP86.80, bringing RevPAR up 6.3% to GBP72.13. Manchester also posted increases, with occupancy up 1.9% to 79.4%, ADR up 0.8% to GBP97.52, and RevPAR up 2.7% to GBP77.44.
Thomas Emanuel, director of business development for STR, comments: “Despite the slight decline, the U.K. serviced apartment sector is still seeing strong actual occupancy levels. However, new supply at the levels we are seeing in this sector are bound to make an impact, and those markets with the highest supply increases are seeing the highest impact on occupancy performance. Operator confidence remains strong, and rates are growing accordingly. These occupancy challenges are likely to continue in the future due to a very robust pipeline across the sector, although demand should also continue to grow.”
James Foice, chief executive of the ASAP, comments: “While the new supply is creating some challenges this year for our sector, especially in London, it’s really encouraging to see that operators remain confident about the future. This was also borne out by our June 2018 ASAP/Savills Sentiment Survey where operators confirmed that their future expansion plans remain robust.”