Asia Pacific’s serviced apartments sector continues to enjoy robust growth and optimism remains strong as operators look to accelerate their expansion plans in the region in 2018.
"There is strong growth potential for serviced residences in key gateway cities globally and Asia Pacific will continue to lead this growth" - Kevin Goh, chief executive office, The Ascott Limited
“There is strong growth potential for serviced residences in key gateway cities globally and Asia Pacific will continue to lead this growth. Ascott has been fast expanding and in the first quarter this year, we have added 5,000 units in 20 properties across 16 cities. This is a 300% year-on-year increase in number of units,” said Kevin Goh, chief executive officer of The Ascott Limited (Ascott).
With a burgeoning middle-class segment, China is a key market that cannot be overlooked by hospitality players.
Ascott, in particular, is expecting to open 18 new properties across the country this year – more than half of their 2018 pipeline – in Chinese cities such as Nantong, Shaoxing and Wuhan.
“The Chinese are our top customers at our properties globally and continues to be the fastest growing segment in 2017, growing at 33% year-on-year. Revenue from Chinese guests also grew 26% year-on-year in 2017. Our portfolio in China has expanded close to 40% this quarter as compared to the same period last year,” said Goh.
South-east Asia is also high on the radar, especially countries such as Indonesia, Vietnam, Thailand and Myanmar, according to Richard Tan, vice president, serviced suites, Pan Pacific Hotels Group (PPHG).
Pan Pacific Hanoi.
At Pan Pacific Hanoi, which offers 56 serviced suites in addition to hotel rooms, occupancy rose by 6% while average room rate grew by 3% in 2017, year on year.
Choe Peng Sum, chief executive officer, Frasers Hospitality
“These markets have opened up with the easing of trade and travel barriers in recent years, coupled with rapid urbanisation which has produced a growing middle class with spending power and a bigger appetite for travel,” remarked Tan.
Demand in the region has accelerated, especially in in capital cities where regional offices of MNCs are based and trade fairs are held, noted Frasers Hospitality (Frasers) chief executive officer Choe Peng Sum.
This explains why the company is “more than doubling its footprint in South-east Asia” in key cities including Hanoi, Singapore, Kuala Lumpur and Jakarta.
But despite the bright spots, the sector needs to pay close attention to industry shifts in order to tailor the right strategy.
While there is a rise in bookings from Asia as a whole, Frasers’ Choe notes that lead times are getting shorter. Organisations are also becoming more budget-conscious when it comes to business travel, with more sending their employees on shorter assignments or as project groups instead of being assigned one- to two-year contracts.
Concurred Ascott’s Goh, “Customers are increasingly staying for less than a month due to greater connectivity and ease of travel. We offer corporate clients flexibility in lease terms to cater to their need for short-term stays.”
From the supply side, more hotel players are coming up with their own serviced apartment offerings; the digital revolution has also brought onboard the likes of Airbnb especially in places where short-term rental of private apartments is allowed.
“Serviced apartments, just like hotels, will need to better segment their markets to drive revenue and profitability and employ a different strategy given shorter stays and higher guest turnaround,” said PPHG’s Tan.
Innovation the name of the game
While great service remains the cornerstone to winning the hearts and minds of customers, hospitality players are leveraging technology to create seamless online and offline experiences.
Artist's impression of Capri by Fraser China Square executive lounge.
Frasers is taking the charge with its upcoming Capri by Fraser, China Square/Singapore property. “We are creating an infrastructure that will allow us to meet the lifestyle needs of e-generation travellers,” said Choe.
When opened in 1Q2019, guests can look forward to quicker check-ins via a guest experience app, which will “integrate various functions from bookings to check-ins and housekeeping requests”, as well as showerheads equipped with speakers that allow them to practise their vocals or simply enjoy relaxing beats while showering.
The property will also adopt a “cloud-based mobile solution, applying robotics into workflow management and smart room control systems” to enhance the efficiency of work processes.
“Consumers are moving beyond mobile-responsive websites and booking engines to smartphones, where they also make bookings,” noted PPHG’s Tan. To better understand the evolving customer journey, PPHG is harnessing data analytics to better create targeted and meaningful campaigns and experiences.
Work hard and play hard
Business travel can be a weary affair for professionals who need to juggle family and career advancement, but younger executives increasingly subscribe to the belief that business and pleasure can blend perfectly. This has culmulated in the term ‘bleisure’, which refers to the growing trend of travellers combining business trips and leisure activities.
“We are seeing a rising demand for co-living spaces, driven by a mobile generation of young people who demand flexibility, openess and collaboration. Millennials no longer draw distinctions between business and pleasure, work and play. They have no qualms about being digital nomads, travelling frequently or relocating for work. More than anything else, they seek out experiences and value being part of a community,” said Ascott’s Goh.
While Airbnb usually springs to mind when one thinks of unique living spaces, operators are giving it a run for its money with their own interpretations of ‘homes away from home’ that are imbued with distinctive designs and local touches and evoke a sense of community.
With millennials forming a quarter of Ascott’s customers, this has driven the company to introduce a new brand that will appeal to them. In 2017, Ascott conducted a pilot run of lyf with students from the Singapore Management University, giving them a say in how lyf properties are shaped.
To date, they have already secured five properties in China, Singapore and the Philippines, and are gearing up for the launch of its inaugural lyf property, lyf Wu Tong Island Shenzhen, in late 2018.
lyf Funan Singapore and lyf Farrer Park Singapore will open in 2020.
lyf Funan Singapore will open in 2020
On a broad level, Ascott also offers a lifestyle programme allowing guests to experience bespoke cultural, gastronomical and wellness activities such as guided tours to wet markets and heritage sightseeing visits; while Frasers offers options centred on giving back to the local community.
Partnering for success
But it is not sufficient for operators to enhance their offerings without the support of partners. To optimise distribution across multiple channels, Frasers partnered Sabre Hospitality Solutions to launch its private label chain code’FI’, giving travel agents and travel management companies instant inventory access to check rates and make reservations.
“We also continue to engage with the trade through shows such as ATM (Arabian Travel Mart) and GBTA (Global Business Travel Association),” added Choe.
For Ascott, travel agents are offered both static rates that are fixed over a contract term as well as dynamic rates “as apartments at static rates may not be available when the property is yielding”.
“The option of dynamic rates provides the agents with greater flexibility and more available apartments to sell,” shared Goh.
BREAKDOWN OF PROPERTIES IN ASIA PACIFIC 2018
*Figures are accurate at published date.