Industry Benchmark
By Mark Harris
Regional Analysis
UK
According to PwC, compared to almost
240,000 rooms in the extended stay
hotel sector in the US alone, in 2007 the
branded UK sector comprises mainly
serviced apartments and residences and
accounts for around 3,400 rooms.
| | Units | Average Units per bldg |
| Number of units | 100 | 100 |
| Central London | 6,234 | 45 |
| Manchester | 338 | 66 |
| Birmingham | 268 | 32 |
| Leeds | 143 | 36 |
| Bristol | 125 | 31 |
| Edinburgh | 207 | 19 |
| Cardiff | 42 | 21 |
Source: Savills
Management agreements are one of the
key ways operators have grown in the
UK. Of shorter duration than most hotel
management contracts (10 years),
operators obligations cover the appearance
of the property, maintenance of the
business, standards of the operation,
quality of service, repairs andmaintenance,
fixtures & fittings. The operator will
normally charge a management fee
equating to 3% of total revenue
and 10% of Gross Operating Profit.
Management agreements allow operators
to increase the size of their inventory at
relatively low risk, whilst for the building's
owner; the units are operated under a
recognised brand name enhancing
occupancy and returns.
Source: Savills UK Serviced Apartment Market 2008
Some commentators believe that
branding will be key to raising the profile
and appeal of serviced apartments in the
UK, and by widening the appeal of the
product will open the sector up to new
sources of demand and expansion. At
the moment however branding does not
appear to be the major attraction for
agents nor bookers in choosing a serviced apartment.
Source: The Apartment Service 2008 Global Survey
increased adoption of tourist board grading will help bring some uniformity
The increased adoption of tourist board
grading will help bring some uniformity,
and is likely to bolster demand from the
leisure sector.
Although the continued slowdown in
the US economy may have implications
for serviced apartment demand in the
UK, the potential business from the
emerging economies of China and India
may counteract any fall in demand from
US corporates. The economic situation
will also encourage corporate buyers to
look at serviced apartments within their
mobility programmes as potential means
to save on their transient spends.