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COVID-19 shifts U.K. serviced apartments occupancy patterns

Several weeks ago, we examined the impacts of COVID-19 on London’s alternative accommodations sectors as part of STR’s ongoing webinar series. In this follow up, we check in with the serviced apartment sector in four U.K. markets to highlight some of the ways in which the pandemic has changed industry performance patterns.

COVID-19 has shifted travel patterns

Prior to the onset of the COVID-19 pandemic, U.K. serviced apartments traditionally anticipated rising occupancies in May and June as the weather warmed and business and leisure travelers alike flocked to the country’s cities. A strong summer season coupled with the longer stays associated with serviced apartments led to little difference in weekday and weekend occupancy in prior years.

COVID-19 has of course turned travel on its head, and in 2020, a pattern of stronger weekday occupancy and lower weekend occupancy is evident among serviced apartments outside of London. Birmingham, Edinburgh, and Manchester serviced apartment occupancy is highest during the week, a distinct shift from 2019 when weekend and weekday occupancy were nearly equal.

COVID-19 Occupancy patterns: weekdays outperform weekends

This shift in patterns highlights the complete standstill in leisure travel in the U.K. With the country on lockdown, serviced apartment guests are no longer holidaymakers, but rather key workers, self-isolating individuals, or others in need of longer-term, self-contained accommodation.

In London, where weekday occupancy is usually higher than weekend occupancy, the difference in weekday and weekend occupancy has decreased. This shift highlights another impact of the pandemic on London serviced apartments: the loss of day of week patterns.  

Day-of-week patterns present outside London

In normal times, occupancy rises and falls depending on the day. Mid-week and weekends are typically higher occupancy days, while Sundays and Mondays are weaker “in-between” periods where leisure travelers have left the market and business travelers have not yet arrived.

Over the past seven weeks, serviced apartment occupancy in London has slowly crept up, but with little distinct difference in occupancy over the course of the week. This is likely due to the strict lockdown limiting movement, as well as the longer average length of stay associated with serviced apartments. Longer-term stays can lead to less variation in day-of-week patterns, as the apartments are continually inhabited.

Day of week patterns present in 3/4 markets

In Birmingham, Edinburgh, and Manchester, a slow occupancy climb is also evident, as is the hill-like pattern we’d expect to see in more normal times. However, during the pandemic, that “hill” has shifted.

In 2019, occupancy in all four markets peaked mid-week on Tuesday and Wednesday nights. Friday and Saturday occupancy was almost as high, and Sunday and Monday night occupancy was weakest. This year, Tuesday and Wednesday remain peak nights for U.K. serviced apartments, but the weekly trough has shifted back to encompass Saturday and Sunday.

The pattern may have only shifted back by one night, but Saturday’s switch from a top occupancy night to a low occupancy night highlights the importance of leisure travel to the sector and suggests the length of stay might be shorter in cities outside of London.

A permanent change?

U.K. serviced apartment performance has suffered due to the pandemic, but beyond dismal data, the pandemic has caused fundamental shifts in sector performance. These shifts are driven in large part by the country’s strict lockdown that banned non-essential travel. As the U.K. lockdown begins to lift and travel potentially resumes, we will keep a close eye on serviced apartment performance to determine if previous patterns resume or if the shifts remain permanent.