Labelling user data is a central part of the design and evaluation of pervasive systems that aim to support the user through situation-aware reasoning. It is essential both in designing and training the system to recognise and reason about the situation, either through the definition of a suitable situation model in knowledge-driven applications, or through the preparation of training data for learning tasks in data-driven models. Hence, the quality of annotations can have a significant impact on the performance of the derived systems. Labelling is also vital for validating and quantifying the performance of applications. In particular, comparative evaluations require the production of benchmark datasets based on high-quality and consistent annotations. With pervasive systems relying increasingly on large datasets for designing and testing models of users' activities, the process of data labelling is becoming a major concern for the community. In this work we present a qualitative and quantitative analysis of the challenges associated with annotation of user data and possible strategies towards addressing these challenges. The analysis was based on the data gathered during the 1st International Workshop on Annotation of useR Data for UbiquitOUs Systems (ARDUOUS) and consisted of brainstorming as well as annotation and questionnaire data gathered during the talks, poster session, live annotation session, and discussion session.