Serviced apartment growth outpacing Europe’s hotels

UK: Growth in the serviced apartment sector across Europe continues to outpace that of traditional hotels according to a report from hotel consultancy HVS.

The report, The Serviced Apartment Sector in Europe: Poised to Outperform, says many of the biggest serviced apartment operators are set to double their portfolios over the next three years.

RevPAR growth for serviced apartments has outperformed that of traditional hotels with a seven per cent improvement across Europe for the sector last year, compared with five per cent for hotels. In the UK RevPAR growth for serviced apartments was 3.5 per cent, compared with 1.5 per cent for hotels, and in London the sector saw RevPAR growth of four per cent, compared with three per cent for hotels.

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 per cent of the total UK pipeline, followed by Manchester (16 per cent), Edinburgh and Cambridge with around 10 per cent each.

Germany represents some 25 per cent of the European pipeline, with Frankfurt representing 20 per cent of the country’s expansion, with Berlin at 15 per cent, Hamburg (11 per cent), Düsseldorf (10 per cent) and Munich (nine per cent) 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).

The report's co-author Simon Hultén, associate with HVS, 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 over-supply in some Western European markets.”

“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,” concluded report co-author Sophie Perret, director at HVS.”

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