The mobility conundrum
While organisations continue to restructure and recalibrate their operations ahead of 2015, one essential aspect remains the status quo: international assignments are here to stay.
According to PricewaterhouseCoopers’ Talent mobility 2020 and beyond report, assignee levels have risen by 25% over the past decade, and a further 50% growth in mobile employees is projected for the world by 2020.
The spurt in international assignments will also herald robust activity in the serviced apartments and relocation services industries.
Localising the headcount
While international assignments will remain a key thrust of organisations’ plans to expand their footprints overseas, there is a general consensus they may be scaled down in 2015 as companies look towards crafting a localised core of talent.
Ang Eng Ling – Director of Sales and Marketing, Great World Serviced Apartments, also believes there will be a scaling of expatriate relocation in the year ahead.
She says this will directly impact serviced apartments, as fewer employment passes are being issued to expatriates.
“This will see multinationals (MNCs) adjusting their hiring profiles to localise their current expatriates which will freeze relocations for a period. They will also move towards more local hires or offer “local packages” for singles or couples that are more willing to accept a lesser terms package to work in Singapore,” says Ang.
“Assignments to Singapore also tend to be on shorter terms, rather than two to three years.”
Peter Cheong, General Manager, Daimler Fleet Management, Singapore (DFMS), says corporate employers understand continually deploying costly expatriates abroad is not an ideal solution.
While many companies, especially multinationals (MNCs) with business operations in Singapore and Asia, are increasingly aware of the need to rely on developing local employees themselves, Cheong explains there is often a sense of uncertainty about the availability of suitable local talent. It can be difficult to find the critical “soft” skills needed to succeed. In these situations, senior and top management would have a strong influence in deciding whether to continue bringing in expatriates to run operations and train locals accordingly.
“Managers from developed nations are expected to continue serving assignments in Singapore, albeit on a slightly lower scale when compared to two years ago,” says Cheong.
Sylvia Lim, Senior Marketing Executive, Santa Fe Relocation Services, says changes in assignment packages can also be anticipated.
According to her company’s 2014 Global Mobility Survey, package components that are seeing a particular increase in popularity as compared to last year are accompanying partner assistance (49%), cultural training (45%) and insurances (33%).
“There is a notable trend toward the inclusion of cultural training as a common assignment package component, which is considered to be in answer to cultural aspects representing a major challenge to assignment success,” says Lars Iversen, CEO of the Santa Fe Group.
With tighter employment policies formulated by the government, Lim also says there will be a lot of emphasis on hiring locally, forcing firms to craft stronger talent retention strategies to remain competitive in 2015.
“We have noticed that there are an increased number of companies localising their expats by offering one way assignments via lump sum payments,” says Lim.
In fact, localisation –the act of moving an employee from traditional home-based expatriate terms to the host country terms and conditions – is also increasingly taking precedence.
According to the Fuelling the Asian Growth Engine: Talent mobility issues in Asia-Pacific report by Deloitte, 83% of survey respondents highlighted an employee would be likely to be localised in Asia if the assignment originated within Asia or if the assignee was an Asian national.
The three countries in Asia-Pacific most likely to localise expats were Singapore, China and Hong Kong.
Serviced apartments’ landscape
Lim also identifies a number of niche trends to look out for in 2015.
One important factor will be the importance of emerging markets, she says.
“With the vast majority of companies reporting emerging markets to be important to their mobility programmes, we see that emerging markets are not just a growth destination but also a source of international assignment growth,” explains Lim.
“Most emerging markets still face skill gaps and many are being sent on assignments for developmental reasons.”
Lim also notes that African destinations are becoming more popular, especially from a Chinese perspective.
“China is a massive investor in the continent, which can be seen by the flow of assignment traffic we have seen to sub-Saharan Africa,” says Lim.
Lim’s notion that China is becoming a powerhouse is also corroborated by Tan Boon Khai, Regional General Manager for Singapore and Malaysia, The Ascott Limited.
According to Tan, China continues to be Ascott’s fastest growing market.
“Ascott recently secured five more management contracts and crossed our milestone of 12,000 apartment units in China,” explains Tan.
“This reinforces our position as the largest international serviced residence owner-operator in the country with 69 properties across 23 cities.”
Besides Beijing, Shanghai and the Hong Kong Special Administrative Region, Tan says Ascott’s footprint in China covers other high growth cities including Dalian, Foshan, Hefei, Nanjing, Shenyang, Xiamen, Xi’an, Wuhan and Wuxi.
“These cities have strong potential for economic growth and foreign investments which generate a large demand for serviced residences,” he says.
In addition, Ascott is also witnessing robust demand for its serviced residences across the Asia-Pacific, Europe and Gulf regions.
“Given Ascott’s global scale and experience over 30 years, our corporate customers prefer to have their employees stay with us when they are on relocation, project assignments or business trips, rather than working with multiple accommodation providers,” elaborates Tan.
In the Singapore landscape, Tan adds the demand for Ascott properties remains strong, with occupancy rates above 80% despite corporations having lower accommodation budgets.
“The demand is driven by the inflow of foreign investment and various government initiatives to reinforce Singapore’s position as an exciting business and leisure destination,” says Tan.
“In 2017, we will open our eighth property in the premier shopping and lifestyle district of Orchard Road in Singapore. Besides catering to expatriates, the new serviced residence will appeal to medical travellers as it is near prominent medical centres in Singapore.”
From Santa Fe’s viewpoint, the serviced apartment market has seen a change in attitude, from straightforward cost reduction in previous years to overall better cost management today.
“It has become more important to focus on making the assignment work,” Lim says. “There comes a point where cost reduction starts impacting the effectiveness of your mobility programmes.”
Options abound for international employees
According to the HSBC Expat Explorer Report 2014, more than three quarters of expatriates in Singapore pay more for their accommodation than they did at home (77%), significantly higher than the global average of 52% of international workers.
Ang says serviced apartments in Singapore have always been in keen competition for international assignments and therefore, the similar business and economic climate that Great World faced in 2014 will persist next year.
“The International Monetary Fund has adjusted its forecast downwards for global economic growth to be 3.8%, and this will have some impact on the expatriate management movements as our clientele is global,” says Ang.
“This is primarily due to recent revelations from the US, Europe and Japan.”
In addition, she says China’s economic growth is projected to be slower than it was in 2014, and this will further impact the global economy.
“The contraction effect will affect businesses globally and Great World Serviced Apartments will not be spared,” adds Ang.
In terms of accommodation choices for 2015, Ang says Great World Serviced Apartments is able to accommodate a variety of customer profiles encompassing singles, couples and families (pets included) through its range of one, two, three and four bedroom apartments, both with and without balconies.
Tan says Ascott currently has 25 properties slated to open in 2015, in cities such as Suzhou, Chongqing, Xiamen and Wuxi in China, Jakarta and Surabaya in Indonesia, Cyberjaya and Nusajaya in Malaysia, Manila in the Philippines, Hai Phong in Vietnam, Bangalore in India, and Jeddah and Muscat in the Gulf region.
Moreover, Tan says a selection of suites at Ascott Raffles Place Singapore was recently redesigned and refurbished to create a new category of one-bedroom suites – Collyer Suites.
“With a generous floor area of 52 square metres, the Collyer Suite is luxuriously outfitted with the best Egyptian silk and modern appliances,” says Tan.
In addition, Ascott also has a growing pool of service staff to take care of the needs of their extended-stay guests before their arrival and ensure they have a memorable stay.
“Each resident is assigned a dedicated Ascott Host that is available 24 hours throughout their stay. The Ascott Host will provide guests with personalised services from arranging formal meetings to grocery shopping,” says Tan.
Sante Fe has adopted a consultative approach towards its customers’ mobility programmes, due to companies focussing more on strategic planning and returns on investment.
The relocation services firm uses a combined understanding of its customers’ businesses, their relocating employees and the business objectives to gain a complete overview of requirements, which in turn enables Santa Fe to design programmes and services that balance the needs of all stakeholders.
“Given our customers have global operations, we have developed the Perfect Relocation in which we ensure our customers benefit from our consistent service across the globe. This, in turn, allows them to focus on their business, rather than managing multiple suppliers and spending time explaining their business needs,” explains Lim.
Looking ahead to 2015, Cheong says Daimler Fleet Management Singapore (DFMS), which counts expatriates among the majority of its corporate leased car assignees, will continue to offer its full service lease products. These provide corporate customers with a hassle-free mobility experience at competitive monthly rates, and give them a peace of mind to focus on their work life and family, he says.
Cheong adds that DFMS’s corporate leased car insurance are comprehensively covered for both business-related usage and private leisure driving.
“Therefore, our lease programmes are accorded the same privileges of combining work and leisure in the usage of our leased vehicle,” he explains.
“They can even drive the leased vehicle into Peninsular West Malaysia and all the way up to the border of Thailand for a motoring holiday!”
The “bleisure” fad?
The BridgeStreet Annual International ‘Bleisure’ Survey indicates an overwhelmingly positive reaction towards mixing business travel with leisure, dubbed “bleisure” (see: boxout).
The survey revealed that a staggering 83% of respondents use the free time garnered from business trips to explore the city they are visiting.
Pointedly, 78% of respondents agreed that adding leisure days to business travel added value to their work assignments.
Lim says from Santa Fe’s prospective, the industry is not witnessing a significant trend in international employees looking to mix business with leisure.
Nevertheless, Sante Fe launched a number of new initiatives in 2014, with one of them being a collection of destination “Super Guides” for its clients and their assignees.
“We offer detailed information for all locations worldwide, and even more in-depth information for locations where we have our own offices,” says Lim.
“We also offer cultural training as part of the customised individual relocation package for employees to understand more about the country they are relocating to.”
Ang from Great World also believes there has been an increase in “bleisure”-focused expatriates.
“The ‘bleisure’ profiles tend to be of couples and younger families and this group of customers are very technically inclined. They enjoy effective and efficient reservations at a click of a few buttons,” Ang says.
According to Tan, the concept of mixing business with leisure is nothing new.
“To provide business travellers with a balanced lifestyle, our Ascott and Somerset-branded serviced residences come with facilities such as a swimming pool, jacuzzis, tennis and basketball courts, fully-equipped gymnasium and a rooftop garden where one can relax and recharge,” he says.
Ascott Hosts are also on hand to assist, recommending places of interest to visit and booking tickets to attractions if the residents require assistance.
“We also organise programmes such as visits to local attractions, fitness and leisure classes such as yoga, aerobics and ikebana for our residents,” says Tan.
“Our residents therefore can enjoy a home away from home where their needs will be taken care of.”
Business + Leisure= “Bleisure”?
Forget the usual notions of business and leisure.
BridgeStreet Global Hospitality, an international provider of serviced apartment experiences, unveiled the results of its global survey this year.
The results pointed to rousing positive feedback towards mixing business with leisure, coined as “bleisure”.
Deliberating during the “The Bleisure Principle” panel at the annual Serviced Apartments Summit, Kelly Murphy, BridgeStreet vice president of marketing said: “Employees feel bleisure opportunities benefit them and add value to work assignments, contributing to higher job satisfaction and loyalty.
“The majority of our guests surveyed had taken bleisure trips before. They are also equally or more likely to blend business and leisure travel in the future, compared to five years ago.”
Some findings from BridgeStreet’s Annual International Bleisure Survey were:
Uncertainty in housing expenses in the Middle East
According to the Expat Explorer Report 2014 by HSBC, rental rates and volatile housing expenses are huge worries among expatriates in the Middle East, with 44% of expatriates there saying fluctuations in rental fees pose a risk to their financial wellbeing. Over a fifth (22%) claimed changes in house expenses posed the largest threat to their financial wellbeing.