UK: The ASAP/Savills Sentiment Tracker Survey has revealed that serviced apartment operator expansion plans remain unchanged following the Brexit referendum result.
The headline results from the ASAP/Savills Operator Sentiment
Tracker Survey (Summer 2016) are:
• More than 75 per cent of operators report that they are making no changes to their expansion plans post Brexit
• Demand from the leisure sector for 2016 is expected to be up on 2015 levels with 44 per cent of operators forecasting an uplift, with an additional 44 per cent expecting it to be in line with last year; corporate demand over first half of 2016 has softened although half of the operators surveyed reported no change in demand
• One third of respondents are expecting a slight drop in occupancy and ADR for 2016 compared to 2015; albeit the outlook for ADR is healthier with 34.5 per cent of respondents expecting year end ADR to actually be up on 2015
• The UK is expected to be the key source market for the majority of operators for the rest of 2016
• Property/acquisition cost and stock/inventory availability are confirmed to be the most significant challenges the sector faces over the next three years, along with wider economic conditions.
ASAP CEO James Foice said: "It's very encouraging to see that while 2016 is proving to be a challenging year for operators in terms of the anticipated weakening in both occupancy and the average daily rate (ADR), there is overall optimism for the sector in the longer term. It's especially good to see the majority of operators confidently continuing with their expansion plans post Brexit."
Marie Hickey, director at Savills said: "The more immediate challenges facing operators are those related to expansion, essentially acquisition costs and stock/site availability. Improving awareness of the sector amongst developers and investors, particularly in London where they may be looking at alternative uses, should help to alleviate some of these 'availability' challenges."
A further survey will be conducted later this year to track changes in operator sentiment as the year progresses.