At your service

Asian serviced residences are making corporate travellers and their families feel at home. Now, everyone is sitting up and watching serviced residences come of age. SIM KOK CHWEE reports.

Corporate travel planners used to obtain long-stay rates from hotels with little more than additional requests to include a laundry package, a microwave oven and a few little extras.

That was until professionally managed five- and four-star serviced residences carved out a niche sector within the broader hospitality industry.

Horwath Asia Pacific managing director, Mr Robert Hecker, estimates the inventory of serviced apartments in key cities to be about 10 per cent of hotel room inventory and a little more perhaps in emerging markets where supply of hotel rooms lags behind demand.

"With the advent of serviced apartments, long stays which accounted for about five per cent of hotels' business has been somewhat eliminated," Mr Hecker said.

TQ3 Travel Solutions' managing director and senior vice-president Asia-Pacific, Mr Bicky Carlra, added: "Neccessity is the mother of invention and in places such as Bangalore and Shanghai, where the hotel room demand-supply equation is lop-sided, travel executives have to seek alternatives. Well-managed serviced apartments offer corporate executives the luxury of a junior suite at the price of a hotel room."

Indeed, serviced apartments have come a long way in a short span of time and three brands have become synonymous with the ultimate in accommodation for weary executives in the Asia-Pacific region.

The Ascott Group, Fraser Serviced Residences and Oakwood have emerged at the apex of the pecking order offering an inventory of 8,148, 1,520 and 1,557 units of serviced apartments or residences in the Asia-Pacific region respectively. A further inventory of 685 units of corporate residences available for corporate leasing in the region is held by The Ascott Group.

Oakwood Asia Pacific's director of sales and marketing, Mr Robert Philips, considers Bangkok and Singapore the key markets for serviced apartments now, with Tokyo, Hong Kong, Shanghai, Kuala Lumpur and Jakarta following behind. There is broad consensus about the need for more hotel rooms and serviced apartments in cities such as Shanghai and Bangalore, and Mr Philips disclosed Oakwood Premier would be the first internationally managed facility when it opens in Bangalore next year.

Driving force
Strong demand for extended stay options is driven mainly by booming foreign direct investments (FDI), trade and commerce across many parts of Asia. Its two most populous nations - China and India - provide obvious propulsion for growth in FDI and sentiments about Asia's economic health are made more bullish by the fact that underpinning fundamentals are positive across the entire region.

The Ascott Group chief brand and marketing officer, Mr Gerald Lee, views the Asia-Pacific region as the growth engine in the world economy that will continue to attract significant foreign investment. He said: "As more multinational corporations (MNCs) began sending staff on short-term assignments rather than long-term relocation, serviced apartments were a natural choice for meeting their staff accommodation needs."

Fraser's chief operating officer, Mr Choe Peng Sum, pays close attention to the movement of investments. He said: "Where the investment goes, the corporate executives follow, to ensure the business works out."

Financial controllers working for cost-conscious MNCs are also exerting pressure on corporate travel planners to control or reduce travel and entertainment (T&E) expenses.

FCm Travel Solutions' general manager global and client hotel programmes, Ms Rachel Grier, said, "Companies are increasingly recognising the economical savings that can be achieved by booking a two-bedroom apartment when two executives are travelling together and this is a key motivator for corporate clients requesting apartment-style accommodation within their hotel programme."

Corporate executives are also finding it beneficial to make arrangements for associates and clients to come to their serviced apartment for meetings. This arrangement achieves three key elements of cost savings: not having to book meeting rooms in a hotel's business centre, time effectiveness from not having to navigate through a city's unfamiliar streets and finally, privacy. There is also the flexibility to change meeting schedules without the need to consider if a hotel's meeting room has been booked during the rescheduled time slot.

The opportunity to network with other corporate guests staying at the serviced apartment is an added attraction.
Cities playing host to high-profile exhibitions and trade shows are often booked solid before and during these events. Serviced apartments and residences are a useful pressure valve and add both to the city's overall inventory of rooms and choice of accommodation.

Room for growth
Industry leaders are in broad agreement that demand for serviced apartments and residences continue to lag behind supply in many cities, especially those in China, India, Singapore, Seoul and Tokyo.

Estimates of Bangkok's inventory of serviced apartments range from 3,500 to 7,542 units.

With prospects for more hotel rooms and serviced apartments coming into the supply chain, there are concerns an over-supply situation may be reached.

There is expectation a minimum-stay ruling may be imposed to safeguard the interests of hotels opening in the next few years.

Singapore's ever-evolving status as a hub for the pharmaceutical industry, medical services, research and operational headquarters for MNCs and development of integrated resorts (including the gaming activities) has boosted demand for hotel rooms and serviced apartments.

Although Mr Lee considers Singapore to be a mature market, he feels it is not saturated and disclosed The Ascott Group "may add one or two more properties over the next two to three years".

Fraser's Mr Choe is particularly bullish about China (not just in the cities of Shanghai, Guangzhou, Shenzhen and Beijing but also Chengdu and Chongqin), Tokyo, Seoul and Hong Kong in North Asia and envisaged strong growth also in Kuala Lumpur, Jakarta, Bangkok and Ho Chi Minh City.

The only "cool spot" in North Asia is Taiwan whose prospects Mr Choe considers "iffy".
Describing serviced apartments and residences as the "darling of the hospitality sector", he disclosed Fraser's properties were achieving sustained high-90 per cent occupancies and said: "Manila is a wonderful surprise as it clocks 98 per cent occupancy, while the Fraser Suites, Insadong in Seoul, is 100 per cent full."

Commenting on Bangkok's situation, he confirmed while saturation might indeed be an upcoming issue from a purely numerical perspective, there was a strong case for market positioning and "branding is absolutely very important". This policy will ultimately "separate the men from the boys" in this very competitive sector.

Sharing the industry's broad consensus about China's and India's bullish outlook for growth, Mr Philips said: "Oakwood is (also) projecting tremendous growth in Japan and Indonesia."

FCm Travel Solutions' Ms Grier boldly predicted the serviced apartment sector would expand to between 33 and 35 per cent of FCm's room night totals in the future.

Women corporate executives are growing in numbers and for them, safety, security and privacy are of paramount importance.

Ms Grier noted "the separate dining area within the apartment enables a single female traveller to dine comfortably in her room, or perhaps to cater, which is a benefit if the traveller is uncomfortable dining alone in a restaurant".

There is certainly no shortage of investors and capital in developing more service apartments and residences.
Mr Hecker said growth in the inventory of service apartments would keep pace with the increase in hotel rooms in key cities.

Wherever occupancy of at least 90 per cent is sustainable - as is the case in Singapore, Bangkok and Hong Kong - the return-on-investment is greater.

He said: "Departing tenants at serviced apartments and residences are more easily replaced by new arrivals - something which hotels do on a daily basis. This has a positive effect on yield."

Mr Philips confirms Oakwood is seeing "large property developers in each city create a serviced apartment development division to complement their usual real estate businesses of condominiums, office buildings and shopping malls".

This is where Oakwood, Fraser and The Ascott Group come in as management companies.
Mr Choe favours combining Fraser's brand value with a purpose-built service apartment building as opposed to trying to retrofit or convert an existing one. The latter, he feels, can sometimes be "sick" and suffer from ventilation or water
pressure problems, among others.

The Ascott Group, Fraser Serviced Residences and Oakwood are uniformly bullish about this sector's continued phenomenal growth rate, and all have been similarly single-minded in their quest for both numerical and qualitative goals.

Over and above all the top-of-the-line amenities the operator can install in a serviced apartment, the long-stay guest is more likely to remember the "human touches" that he encounters during his stay. Recognising many executives relocate with their families, staff members at every level receive specialised training to anticipate and attend to the needs of spouses and children.

Safety and security are issues at the core of the business and investment in both technology and training ensures that these are quietly achieved.

More on the bandwagon Strong demand for extended stay programmes from corporate travellers had been the catalyst for the development of the serviced apartment and residences sector. The latter's success is unsurprisingly now receiving reverse attention from hotels - and some are adapting and integrating the concept back into the hotel.
A key player in this "reverse engineering" is Marriott Executive Apartments whose Asia-Pacific inventory totals 1,034 units in Bangkok, Hong Kong, Mumbai, Tokyo, Beijing and Shanghai.

In an effort to deliver the comfort of home-style living combined with the indulgences of quality hotel services, incoming guests are consulted ahead of their arrivals on their needs.

While a familiarisation tour of the property is expected, guests are also taken on a tour of the host city to help them settle in smoothly.

Marriott Executive Apartments director of sales and marketing for Asia and South Pacific, Mr Dominic Sherry, said: "As the global economy expands, there is an increasing market for high-end luxury apartments for business travellers who have a need to be in a market for an extended period of time."

JW Marriott Hong Kong and Mumbai continue to enjoy a "significant' volume of extended stay guests.
According to JW Marriott Mumbai manager - marketing communications, Ms Khushnooma Kapadia, this sometimes constitute as much as 45 per cent of its guest population. She credits this to the large numbers of businessmen trading with and investing in India.

JW Marriott Hong Kong's director of communications, Ms Therese Necio-Ortega, credits the property's popularity with extended stay guests to its diligence in pre-arrival consultation to identify the guests' needs. She said: "After ensuring a consistent delivery of the JW Marriott brand promise of approachable luxury, we also work to ease the corporate traveller into the local culture."

Not all hotels that have gone into the serviced apartment sector have done so in a big way.
Carlton Hotel, Singapore has a small inventory of only 10 Premier Serviced Suites which are offered to guests who require a minimum stay of one month.

Describing these as a move to "test the water", its assistant director of sales, Mr Benny Lim, said: "In the last full year these suites have been operational, they have achieved 70 per cent occupancy and subject to demand, Carlton Hotel may consider expanding this service.

"This may include developing a plot of land adjacent to the hotel."

Its location is seen as its key selling point as there are no serviced apartments located closer to the Suntec Singapore and Raffles City. Even guests' spiritual needs are easily taken care of - churches of various denominations, Hindu and Chinese temples and the Sultan Mosque are all a short walk from the hotel.

Mr Lim sees the hotel/serviced apartment combination as a plus that affords the hotel the unique flexibility to take in associates of serviced apartment guests on short visits.

No stopping now "There is definite scope for more players in the market," Ms Grier emphasised. She notes a number of global hotel chains are already diversifying into the apartment sector and adding a specific brand catering to this market niche.

Within Australasia, her attention is set on companies such as TOGA hospitality and Mirvac, which already offer both standard hotel accommodation and apartment-style products.

Obviously, the hospitality industry pie continues to grow at a rate deemed healthy enough to attract new investors and competitors.

At the fringe of the Asia-Pacific region, the Middle East - led by Dubai - is another booming market. Redevelopment of airports in Dubai, Doha and Abu Dhabi are clear indicators of things to come.

With keen competition and growing inventory of serviced apartments in ever more locations, corporate executives and their families may never say "not
another business trip" again.

Inventory of serviced apartments/residences owned/managed/leased by
the three major companies in the Asia-Pacific region
Fraser Serviced Residences
Fraser Suites, Insadong Seoul, Korea 230
Fraser Suites, Singapore Singapore 270
Fraser Place, Singapore Singapore 180
Fraser Place, Forbes Tower Manila, The Philippines 160
Fraser Place, Langsuan Bangkok, Thailand 150
Fisherman's Village Resort Petchaburi, Thailand 40
Fraser Place, Shekou Shenzhen, China 250
Fraser Corporate Residences, Futian Shenzhen, China 180
Fraser Corporate Residences, Singapore Singapore 60
Total 1,520

Oakwood
Oakwood Premier Ayala Center Manila, The Philippines 306
Oakwood Premier Coex Center Seoul, Korea 280
Oakwood City Residence Bangkok, Thailand 560
Oakwood Gold Arch Guangzhou, China 125
Oakwood Residence Azabuiyuban Tokyo, Japan 83
Oakwood Residence Roppongi T-Cube Tokyo, Japan 54
Oakwood Residence Akasaka Tokyo, Japan 41
Oakwood Residence Aoyama Tokyo, Japan 72
Oakwood Apartments Shirokane Tokyo, Japan 36
Total 1,557

The Ascott Group
The Ascott Singapore Singapore 153
Somerset Bencoolen Singapore 107
Somerset Compass Singapore 72
Somerset Grand Cairnhill Singapore 144
Somerset Liang Court Singapore 193
Somerset Orchard Singapore 88
The Heritage Singapore 33
Char Yong Gardens Singapore 36
Riverdale Residence Singapore 37
The Ascott Sathorn Bangkok, Thailand 177
Somerset Lake Point Bangkok, Thailand 358
Somerset Park Suanplu Bangkok, Thailand 243
Somerset Suwan Parkview Bangkok, Thailand 152
Omni Tower Bangkok, Thailand 127
Somerset Grand Hanoi Hanoi, Vietnam 185
Somerset West Lake Hanoi, Vietnam 66
Somerset Chancellor Court Ho Chi Minh City, Vietnam 152
Somerset Ho Chi Minh City Ho Chi Minh City, Vietnam 165
The Ascott Jakarta Jakarta, Indonesia 198
Somerset Grand Citra Jakarta, Indonesia 206
Somerset Berlian (opening in 2006) Jakarta, Indonesia 152
Country Woods Jakarta, Indonesia 249
Somerset Surabaya Surabaya, Indonesia 385
Puri Darmo Residences Surabaya Surabaya, Indonesia 64
The Ascott Kuala Lumpur Kuala Lumpur, Malaysia 221
Somerset Seri Bukit Ceylon Kuala Lumpur, Malaysia 96
Suasana Sentral Residences Kuala Lumpur Kuala Lumpur, Malaysia 54
Somerset Gateway Kuching Kuching, Malaysia 70
Somerset Millennium Manila, The Philippines 138
Somerset Olympia Manila, The Philippines 116
Somerset Salcedo Manila, The Philippines 150
The Ascott Beijing Beijing, China 272
Somerset Grand Fortune Garden Beijing, China 221
Luxury Serviced Residence Beijing, China 100
Somerset Harbour Court Dalian, China 106
The Ascott Pudong Shanghai, China 248
Somerset Grand Shanghai Shanghai, China 334
Somerset Xu Hui Shanghai, China 167
Citadines Jinqiao Shanghai, China 260
The Ascott Guangzhou (opening 2007/8) Guangzhou, China 192
Springdale Serviced Residence Guangzhou, China 175
Citadines Chongrui (opening Q1 2006) Suzhou, China 167
Somerset Olympic Tower Tianjin, China 169
Somerset Azabu East Tokyo, Japan 79
Somerset Roppongi Tokyo, Japan 64
Green Park Akasaka, Tokyo Tokyo, Japan 90
Nakameguro Residence, Tokyo Tokyo, Japan 10
Nibancho Park Forrest, Tokyo Tokyo, Japan 48
Shochiku Square Residence, Tokyo Tokyo, Japan 45
Somerset Palace Seoul, South Korea 430
Somerset on Salamanca Hobart, Australia 18
Somerset on the Pier Hobart, Australia 56
Somerset Botanic Gardens Melbourne, Australia 126
Somerset Gordon Place Melbourne, Australia 64
Somerset on Elizabeth Melbourne, Australia 135
Oakford Gordon Towers Melbourne, Australia 54
Oakford on Collins Melbourne, Australia 55
Oakford on Lygon Melbourne, Australia 53
Oakford The Mews Melbourne, Australia 40
The Ultimate Apartments, Melbourne Melbourne, Australia 19
Somerset Darling Harbour Sydney, Australia 119
Somerset North Ryde Sydney, Australia 173
Oakford City West Sydney, Australia 31
The Ascot Metropolis Auckland, Australia 126
Total 8,833

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