The latest ASAP/Savills Sentiment Survey shows that overall sentiment in the serviced apartment sector has improved considerably since June 2019, with 56.1% of respondents stating they were ‘slightly to significantly more optimistic’, up from 46.5% at the time.

In net balance terms, this equates to 39.0%, the highest net balance of positive responses of all sentiment surveys. The results are also significantly up on the November survey last year where net balance was 27.3%.

Marie Hickey, director in the commercial research team at Savills, comments: “This improvement in confidence was reflected in a greater proportion of respondents revising their year-end operational performance expectations upwards, albeit some operational headwinds exist in some regional markets.” 

Further highlights from the survey include:

  • Demand from corporate guests has improved, with net balance (i.e. those who stated improvement in demand vs those reporting decline) reaching 34.1%, the highest of all sentiment surveys to date and ahead of that seen in November 2018 (net balance of 20.5%).
  • Despite the relative improvement in confidence, the share of respondents planning to accelerate expansion plans has fallen slightly to 36.6% (down from 46.5% in June), with the majority of respondents stating they are making no change to previous expansion plans. This is partly mirrored in the fact that increased supply/competition ranked second in terms of presenting a potential significant challenge to operators’ business over the next three years, although in net balance terms it was down on the previous survey.
  • The survey highlights that respondents anticipate guest demand to become more international over the next six months. Expected demand from Asia-Pacific and North America increased noticeably compared to previous surveys with 19.5% and 22.0% of respondents stating that they believe the bulk of demand over the next six months will originate from these two markets respectively. The historical average has been 9.7% and 11.4% respectively. At the same time the share of operators stating that UK based demand will dominate declined to 34.1% in the November survey with historical average being 51.8%.
  • Wider economic conditions continue to be the highest perceived challenge facing serviced apartment operators over the next three years, with 70.7% of respondents noting it as a potential challenge. This is undoubtedly being driven by the continued political and economic uncertainty in the UK, with 22.0% of respondents listing the outcome of Brexit and/or UK politics as an additional threat to their business.

James Foice, CEO at ASAP, adds: “It continues to be very encouraging to see that overall optimism in the sector remains positive for 2019 and into 2020, especially given the uncertainty with continued Brexit challenges and the general election. The expected growth in international travellers supports our calls to globalise our activity and collaborate still further with similarly positioned associations in different markets.”