Europe: Serviced apartments across the continent saw occupancy rise 3.8 per cent in 2024, boosting RevPAR and prompting a shift toward longer stays.
The latest Serviced Apartment Operators Survey from HVS includes analysis from almost 6,000 units across Europe.
Occupancy increased by 3.8 per cent between 2023-24, and with rates remanding flat during the same period, RevPAR increased by 4.4 per cent. HVS suggests that the sector is shifting away from the shorter-stay model that has been more common in recent years.
Most European markets show occupancy growth except in the Dutch market, where occupancy rates marginally decreased alongside static average rates, leading to a decrease in RevPAR.
Paris outperformed the French national average in terms of occupancy growth in 2024. Booking behaviour has shifted significantly with respondents noting a trend towards flexible cancellation policies and shorter booking windows, with an increased number of last-minute bookings.
In London, properties reported high occupancy levels, however this has come with some softening of the average rate. In contrast, other UK destinations are demonstrating healthier average rate growth, indicating a more balanced performance dynamic outside of London.
Spain, Portugal, Italy, the UK, Germany and France were primarily identified as the most attractive markets for expansion. Around 16,500 rooms are expected to enter the market within the next five years, with the UK accounting for 30 per cent of this supply followed by Germany (20 per cent).
Among lenders, the biggest growth opportunities are expected to be represented by renovations or rebranding, as well as conversions rather than new developments. Compared to two years ago, lenders now show a stronger appetite to finance serviced apartments.
Labour cost increases, resulting from wage inflation and a constrained talent pool across Europe, were identified as the most significant challenge. Additionally, the rising cost of goods and utilities showed mixed impacts on bottom-line conversions; an equal share of respondents reported either erosion in net operating income or no noticeable impact.
Amid these challenges, technology has become central to operations. Notable improvements include automated guest communication, smart energy management systems, contactless check-in solutions, and personalised guest experience platforms.
The full report from HVS can be read here.
Highlights:
• European serviced apartment occupancy increased by 3.8 per cent in 2024.
• Flat rates still resulted in a 4.4 per cent increase in RevPAR.
• Operators are moving away from short-term stays in favour of longer stays.
• Around 16,500 rooms are planned over the next five years, led by the UK and Germany.
• Rising labour and utility costs are challenges, but technology adoption is improving efficiency.