Extended stay (aparthotels and serviced apartments) is now an established sub-sector in the world of hotels and continues to grow strongly, with increased investment and new brands and designs pushing the sector to new heights.

With extended stay now mainstream, how has it developed so far and what’s next for the sector?

Investor confidence is growing, with the first half of 2018 seeing the completion of Brookfield’s £430 million purchase of SACO, the serviced apartment provider. The Canadian head-quartered asset manager aims to grow SACO and, in particular, its Locke brand across the UK and Europe. The deal marks the biggest investment yet into the UK extended stay space and is more than double Starwood Capital’s purchase of the Think portfolio of four assets for approximately £200 million in 2015.

Last year proved to be a mixed bag in terms of extended stay operating performance. London (helped by a boom in visitor numbers) and Edinburgh saw substantial increases in aparthotel revenue per available room (RevPAR). This can be attributed to average daily rate growth – the average income per occupied room/apartment. However, other regional cities saw more muted growth and even some declines as new supply of extended stay assets and hotels was absorbed.

Several of the bigger brands opened new properties in the first half of 2018. Staycity, the largest aparthotel operator in the UK, launched its new premium brand Wilde Aparthotels in London in March. The design-led 106 unit scheme will provide rooms and suites that focus on innovative ways to create an accessible living area in compact space. The next Wilde will follow in Edinburgh in 2019.

Hotly anticipated new openings for the summer include Edinburgh Grand, a 50-apartment luxury development from Chris Stewart Group in the centre of the Scottish capital; Native’s (formerly Go Native) new property at Bear Gardens, a 75-unit converted tea warehouse on London’s Southbank; and Starwood Capital’s 300+ suite Residence Inn by Marriott Kensington, to be run by Cycas.

The pipeline is strong with a range of international brands, national companies and local operators are all set to open in the UK’s key cities, providing a mix of corporate and design-led apartments.

Further information

Contact Savills Hotels