The expansion of European serviced apartment operators will raise awareness of the sector so it can reach its full potential, according to a Savills report.
The firm’s research found that just 59% of consumers were familiar with serviced apartments and 43% with apart hotels. Data from business travellers was slightly higher, at 72% and 52% respectively.
More than three-quarters of those surveyed could not name a single serviced apartment or apart hotel operator.
Europe’s largest operators are already tackling this lack of awareness through expansion, with 3,500 units across 26 sites in the development pipeline, up from 12 sites at this time last year.
Staycity is developing 800 units in cities including Lyon and Edinburgh, while Frasers Hospitality has 500 planned across Germany and Switzerland. Starwood’s Element is developing 200 in Amsterdam and London.
Marie Hickey, commercial research director at Savills, said: “Strengthening both will make consumers more familiar with the product and with its advantages over a hotel for certain types of trips, widening demand as a result.”
Savills attributes heavily constrained transaction volumes in serviced apartments and apart hotels to lack of purpose-built stock. Activity in the UK, one of the largest markets in Europe, has totalled just £300m across relatively few transactions since January 2014.
However, the entrance of corporate private equity and institutional investors suggests that confidence and interest in the sector are expanding. The largest transaction to date in the UK was Starwood Capital’s £206m acquisition of the Think portfolio earlier this year.
James Bradley, associate director of hotels at Savills, said: “Some investors now see serviced apartments as a subsector of the ever-expanding hospitality landscape and not fundamentally different to hotels. This, combined with the expansion in purpose-built stock, means that we expect investor interest to rise accordingly.”