UK: New research from Savills shows that serviced apartments’ resilience during the Covid-19 crisis in Europe is “shining a light on the sector”.
Serviced apartments accounted for an estimated 7.9 per cent of total bed nights across Europe’s top 10 gateway cities pre-Covid-19, and have outperformed hotels during travel restrictions.
Analysis by Savills shows that serviced apartments had “already started to outperform hotels” before Covid-19. In London, serviced apartment RevPAR has grown by an average of 3.9 per cent each year between 2014 and the end of 2019, increasing to an average of 5.2 per cent per year over the last three years. London hotel RevPAR growth recorded an average annual growth of two per cent over the last five years, with a three year average of 3.3 per cent.
Savills also found that some markets have a higher representation of serviced apartments relative to hotels, including Paris, Munich and Frankfurt, with more than 13 per cent of hotel supply represented by serviced apartments. In contrast, Amsterdam and Madrid continue to have relatively constrained stock levels.
Richard Dawes, director, EMEA Hotels at Savills, said: “Serviced apartments are still relatively under-represented in key European markets, which not only points to further development opportunities, but also potential mid-term structural shift in pricing outlook. Despite the lack of stock preventing large scale investment volumes, serviced apartments remain attractive with continued investor interest and a number of deals are expected to complete in 2020. The relative resilience of serviced apartments during this time is shining a light on the sector, which could result in further interest from new buyers, supporting pricing over the medium to longer term.”
Marie Hickey, Savills director of commercial research, added: “While Covid-19 has adversely impacted occupancy levels across all parts of the accommodation market, serviced apartments have displayed slight resilience in terms of performance. Their guests, who tend to be longer-length stay, and the configuration of properties as self-contained units have supported serviced apartments going into lockdown and will continue to do so as we move out of it with shifting booking patterns, suggesting that serviced apartments could lead the recovery, as we’ve seen during previous recessions.”
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