UK industry sentiment on the up

George Sell George Sell Uploaded 04 December 2019

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UK: The latest ASAP/Savills Sentiment Survey shows that overall sentiment in the UK serviced apartment sector has improved considerably since June.

The survey found that 56.1 per cent of respondents were "slightly to significantly more optimistic" than when previously polled, up from 46.5 per cent.

In net balance terms, this equates to 39 per cent the highest net balance of positive responses in the survey to date. The results are also significantly up on the November survey last year where net balance was 27.3 per cent.

Marie Hickey, director in the commercial research team at Savills, said: “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 per cent, the highest of all sentiment surveys to date and ahead of that seen in November 2018 (net balance of 20.5 per cent).

• Despite the relative improvement in confidence, the share of respondents planning to accelerate expansion plans has fallen slightly to 36.6 per cent (down from 46.5 per cent 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 per cent and 22 per cent 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 per cent and 11.4 per cent respectively. At the same time the share of operators stating that UK based demand will dominate declined to 34.1 per cent in the November survey with historical average being 51.8 per cent.

• Wider economic conditions continue to be the highest perceived challenge facing serviced apartment operators over the next three years, with 70.7 per cent 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 per cent of respondents listing the outcome of Brexit and/or UK politics as an additional threat to their business.

James Foice, CEO at ASAP, said: “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.”

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