Serviced apartments: new challenges; great opportunities
Once upon a time, relocation leaders had a simple accommodation choice for their travelling staff: would they stay with a hotel, or with a serviced apartment. But these days, there are several other options that could provide a roof overhead.
What’s more, both hotels and serviced apartments have broadened their reach and appeal to provide dozens more options for every organisation’s mobility arm.
Serviced apartment providers do acknowledge the landscape has become more competitive in recent years. Pauline Heng, Vice President of Sales and Operations of Ariva Hospitality says the Airbnb phenomenon has taken place just as residential real estate markets in Southeast Asia were coming down from their most recent peak. “Technology and oversupply of private apartments have made it so much easier for customers to go directly to private apartments for leases or even on extended stays and within a shorter booking window,” she tells HRM Magazine Asia.
Arthur Kiong, CEO of Far East Hospitality says the regional inventory of serviced apartments has also grown since 2015, by as much as 63% according to the latest industry report. Now, faced with flattening demand and other economic pressures, the pressure to innovate and try new things is soaring.
“Demand is unlikely to maintain its upward momentum in 2019, despite increasing awareness among corporate travel managers (on the benefits of serviced apartments),” he said, offering two reasons for the predicted stagnation. “The trade war between the US and China has resulted in Singapore being ranked the top Asian city for expatriates, it is also regarded as expensive and companies hiring expatriates with families are on the decline.”
But within all of these challenges lie new opportunities for established serviced apartments and property groups. Many, for example, are segmenting their brands and properties to appeal to different demographics within the business traveling community.
Kiong says that is a key strategy for Far East Hospitality currently. “For instance, our Village brand targets travelers with a keen interest in the local culture and open to being located in ethnic enclaves,” he said.
Ariva’s Heng says his team relishes the challenges ahead.
“With every issue, there are new opportunities, and Ariva is ahead in this aspect,” he said.
“We have already been offering our customers a hybrid style of high-end accommodation with hospitality services,” he said. “Our customers get the intangible travel experience to be able to immerse and co-live with the local communities’ culture and lifestyles, while enjoying more value in living connectivity.”
Investments in co-living
Some operators are also looking at brands and concepts that target the Millennial travel specifically. For this demographic, an era of “co-living” is being developed. The Ascott Group’s lyf brand, for example, promises to redefine serviced apartments for this burgeoning group of business travelers – with flexible, communal spaces that facilitate collaboration and social activities among guests.
“lyf is an exciting new concept in the serviced residence industry in Singapore,” Ervin Yeo, Ascott’s Regional General Manager for Singapore, Malaysia, and Indonesia said. “It is designed and managed by millennials for the millennial-minded.”
Likewise, Ariva is also developing the co-living concept at its Ariva Trillion Residences in Kuala Lumpur. “We are certainly looking forward to being more pronounced in our co-living concepts,” Heng said. “(This) not only extends within our community, but also developing them on the properties.”
Take the pressure down
Serviced apartment operators are facing a wide range of economic and market issues in the disruptive business environment. Among the factors affecting demand for their product are: