■ Last year's key message was the legitimisation of the sector through planning via expansion with purpose-built stock with a hotel (C1) consent. Thus allowing for stays of one night.

■ This trend continues, helped in part by the continued growth of international hotel owned brands in the UK.

■ This shift towards C1 development however, has not resulted in a clear categorisation of the sector along brand and/or operator lines.

■ Figure 1 tries to categorise a sample of operators/brands into the two primary subsectors; traditional Serviced Apartments and Aparthotels. A definition of these along with Corporate Housing is detailed in the table below figure 1.

Click image below to enlarge

■ For some operators/brands there is no definitive categorisation as they trade across several subsectors, with the location and property dictating the offer. This largely reflects the opportunistic nature of the sector's expansion historically and, in some cases, providers' varied client base.

■ For example, a number of operators offer relocation and corporate housing services for those on longer stays. As a result demand remains for traditional residential property.

■ Yet, the drive to build greater economies of scale and tap into the short-medium stay business market, plus leisure segment, is leading some traditional Serviced Apartment operators to develop their own aparthotel type offering.

■ As a result operators are dealing with a relatively varied property portfolio. This may lead to greater brand development in the sector as operators look to categorise their offer.

■ Greater brand clarity would not only be beneficial from a consumer perspective, but would also offer greater clarity to investors/developers and lenders. Hotel brands and their associated property requirements, in particular the budget brands, have provided investors/developers with a clear understanding of the offer aiding confidence in the proposition.

■ While some of the international Aparthotel brands have relatively defined property requirements, this is not universal across the sector. In those cases where branding is less developed, investors and lenders may need to focus on the property fundamentals of a particular asset rather than just the brand.

Taken from:
UK Serviced Apartment Report - Q4 2014