Despite strong underlying demand for long-stay accommodations, the Indian serviced apartments segment has not really caught up with the demand. However, with market players starting to understand the potential of this accommodation category, supply is expected to increase significantly in the coming years.
Michael Price, country manager for Oakwood Worldwide in India, feels the serviced apartment industry has tremendous growth potential in the country. “The domestic economy is strengthening at an impressive rate and this growth will provide business development opportunities and increased consumerism. The demand for this accommodation category here is rising thanks to increasing foreign investment, business development and increased domestic spending,” said Price.
A distinct offering vis-a-vis hotels, serviced apartments are designed for long staying guests as compared to hotels that cater to short stay. While there are operators selling inventory on a daily basis as well, serviced apartments generally cater to guests with a minimum stay of a week going up to 12 months. Daily rates in a serviced apartment property ranges between Rs 6,000 to Rs 8,000 depending on the market and the monthly charges are anything between Rs 40,000 to Rs 250,000 based on the positioning of the property.
In terms of organised supply in India, industry experts estimate the current serviced apartment inventory to be just a fraction of the overall hotel room supply. While global hospitality consultant HVS International India estimates overall supply of hotel rooms (organised segment) to be a little over 110,000, there is no quantifiable data to put a number to serviced apartments inventory.
Industry experts familiar with the segment however, envisage the number of serviced apartment (organised category) units in the country to be under 2% of hotel rooms supply or between 1,500 to 2,000 units. However, taking into account the huge demand supply gap, existing players seem to be ramping up supply to gain market share.
The excitement in this accommodation category is evident from the development plans being chalked out by existing and new pure-play serviced apartment operators. While Oakwood, Ascott, Frasers have already put a development plan for India, the latest entrant is in the form of London headquartered leading international provider of serviced apartments and corporate housing BridgeStreet.
Outlining the extend of demand their company has been geting for corporate housing in India, Max Thorne, SVP – international, BridgeStreet Residences, Serviced Apartments, Suites, said that the host of MNCs (IBM, Microsoft, Honeywell,
Sapient etc) they work with demand close to 1,000 rooms every week.
“We are unable to fully meet their demands owing to lack of such facilities in India at present. As a result, we are now looking to expand our presence here. The target is to have a minimum of 1,000 units across categories in our network within the next 12-18 months from now. We will pursue management and franchise route managing properties across three-star to five-star categories in India,” he said.
As for existing player Oakwood Worldwide is concerned, it currently operates with 525 units and is looking to quadruple the inventory by 2014. “We are involved in several projects throughout India for our three brands viz. Oakwood Premier, Residence and Apartment,” said Price without divulging precise details. However, in an earlier interaction, Oakwood's then country manager for India, Praveen Nair had put the overall number to 2,000 serviced residences by 2014.
Singapore-based CapitaLand subsidiary, The Ascott Ltd is another player with an extensive development pipeline. As per Ascott website, the company has signed up six properties under its Somerset and Citadines brands across four Indian cities viz Bangalore, Ahmedabad, Hyderabad and Chennai. Scheduled to open between 2011 and 2012, Ascott is likely to add over to 1,200 serviced residences in India. In fact, industry sources indicated that the first 'The Ascott' branded property has been finalised and is expected to come up in the National Capital Region (NCR).
Not too far behind Singapore-based Frasers Hospitality Pte Ltd, which is the hospitality arm of Frasers Centrepoint Ltd (a wholly-owned subsidiary of public-listed Fraser and Neave Ltd). Frasers has already announced three properties in Bangalore and another two properties in New Delhi and Chennai are slated to open by 2012.
In all Frasers will be managing 585 units in separate developments scheduled to open in India by 2012. In fact, in an earlier statement, Choe Peng Sum, chief executive officer, Frasers Hospitality had said that the company is aggressively working towards achieving a target of morethan 700 individual units under management contract by 2011, elevating
India to Frasers’ second largest market globally after China.
Among prominent serviced apartment brands (domestic and international) operatoring in India currently include Marriott Executive Apartments (Powai), Hyatt Residences (Mumbai and Pune), Grand Residences (Mumbai) Taj Wellington Mews (Mumbai), The Leela Residences Kempinski (Gurgaon) and pure-play serviced apartment operators like Oakwood with properties in Mumbai, Pune and Bangalore.
Providing all the features of a hotel, serviced apartments are set in a residential environment, offering a much larger space vis-a-vis a hotel room with facilities like a fully equipped kitchen, individual washing / drying machine, ample storage, quality furnishings ensuring comfort convenience, safety and security for the long-stay guests. The irony however is that thanks to the under supply of serviced apartments in the country, a significant percentage of long-stay demand is absorbed by hotels and this category contributes close to 20% of the hotel's overall business.
(Courtesy: DNA Money)
informative,great potential but few players
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