More and more skilled professionals are taking on short-term, freelancing and ad-hoc work assignments which require them to travel frequently. The proportion of revenue contribution from short stays of less than a month at our properties has also increased.
It used to be that the serviced apartment industry was all about corporates, but these days it is common for operators to have an expanded portfolio with offerings that cater to both long and short-stay guests.
“What we are seeing, as with the hotel industry over the years, is a fragmentation of the brands that operators are offering. A ‘short-stay’ concept is now being offered versus the more traditional long-stay offering. This allows operators to offer a wider variety of product to the market, thereby increasing its target segments,” said Govinda Singh, executive director, valuation and advisory services, Asia, at property consultancy Colliers.
In addition, this is likely in response to both a growing long-stay market – which requires a more residential feel rather than hotel – and short-stay segment – which come and go quite frequently. “Having both options can match companies’ requirements whether it is just for a placement or a relocation,” added Singh.
Short stays – what is it?
The majority of serviced apartments, governed by local law, have a minimum stay period, so properties which offer stays shorter than that require a hotel licence.
Regulation aside, the definition of a short stay differs – depending on who you speak to. But generally in this context, short stays are billed on a daily basis and defined as being 30 days or less. Conversely, hotels define anything that is seven days or more as a long stay.
These days the lines are increasingly blurred as operators now offer serviced apartments that can cater for either a long or short stay, as well as hotels that purely target transient travellers.
While The Ascott Limited’s (Ascott) portfolio of serviced residences branded under Ascott The Residence, Somerset, Citadines and Quest as well as coliving ‘lyf’ brand focus largely on the long-stay segment, most can cater to short stays with flexible lease terms. The operator also has short-stay offerings in the form of hotel brands, Citadines Connect and TAUZIA, the latter currently located mostly in Indonesia.
YELLO Hotel Manggarai Jakarta, a TAUZIA hotel.
Similarly Pan Pacific Hotels Group (PPHG) offers both hotel and apartment options, but has a unique hybrid model that sees selected properties housing both hotel rooms and serviced suites within one building, namely: Pan Pacific Hanoi (56 serviced suites, 273 hotel rooms); Pan Pacific Yangon (10 serviced suites, 331 hotel rooms ) and PARKROYAL Yangon (23 serviced suites, 319 hotel rooms).
Pan Pacific Yangon.
Within the Oakwood portfolio, properties are generally operated on a 70% long-stay and 30% short-stay basis. “In the last year, we’ve seen an estimated 20% increase in our short-stay business,” said Dean Schreiber, interim CEO, Oakwood, and managing director, Oakwood Asia Pacific.
Dean Schreiber, interim CEO, Oakwood, and managing director, Oakwood Asia Pacific
“One thing that’s driving it is the relaxed licensing for short stays in several jurisdictions. Many of our properties in Japan have managed to convert a portion of inventory for 180 days of short-stay usage without requiring any modification or capital investment to the apartments or public spaces,” he explained.
APAC SHORT-STAY REGULATIONS AT A GLANCE
• Singapore: minimum stay 7 days; will need hotel licence for shorter stays
• Vietnam: minimum stay 7 days; will need hotel licence for shorter stays
• Hong Kong: minimum stay 28 days; will need hotel licence for shorter stays
• Japan: minimum stay one month; will need hotel licence for shorter stays
• Malaysia/Thailand/CambodiA: no regulation on minimum stays
Source: Govinda Singh/Colliers
Global shift toward shorter assignments
From the demand side, a major factor driving short stays is the global trend for shorter assignments among companies.
“More and more skilled professionals are taking on short-term, freelancing and ad-hoc work assignments which require them to travel frequently. The proportion of revenue contribution from short stays of less than a month at our properties has also increased,” shared Kevin Goh, chief executive officer, The Ascott Limited.
Agreeing with Goh’s view is PPHG’s Richard Tan, vice president of operations, serviced suites, Vietnam and Myanmar Hotels, “Besides shrinking relocation allowances, some companies are adopting ‘lump sum’ arrangements, where the employee manages their own expenses for relocation and along with that, their accommodation. Serviced suites then become the solution for them with the flexibility of a shorter stay period while they seek out a more permanent housing arrangement.”
Richard Tan, vice president of operations, serviced suites, Vietnam and Myanmar Hotels, PPHG
Family travellers a key driving force
But it is not just the corporate crowd that has opted for serviced apartments. Tourists are drawn to them as well, especially those travelling with their families, due to the ample spaces offered by a separate living room, kitchen and multiple bedrooms – on top of hotel-like amenities including housekeeping, 24-hour reception and in-house security.
“We’re seeing a massive swing in leisure travel, which is definitely our biggest growth market now,” said Oakwood’s Schreiber who attributes the growing leisure demand to better consumer awareness.
“With hotels, it’s common to see people dropping in to enjoy the restaurant or spa, but that hasn’t been the case [with serviced apartments]. We’re changing that with more features that encourage people to step in even if they don’t have accommodation needs.”
Citing Oakwood Premier OUE Singapore – one of two Oakwood-branded products in Singapore and the only one with a hotel licence at the moment – as an example, Schreiber highlighted restaurant Se7enth and rooftop infinity pool as the property’s top draws.
Ascott’s Goh said the leisure traveller trend is especially prevalent during peak holiday season, and in markets such as China, Indonesia, India, the Philippines, Vietnam, Singapore, Thailand, Belgium, Germany, France and the United Kingdom.
“We see more families choosing to stay in serviced residences instead of booking multiple hotel rooms, even when they are on short trips. This allows the family to stay together, while enjoying the privacy of individual bedrooms and family-friendly facilities such as washer and dryer, kitchen and even children’s playroom,” said Goh.
Implications for travel agents
With better consumer awareness, more clients are demanding serviced apartments as an accommodation option on top of hotels. Understanding what properties are available as short-stay options can help agents make better recommendations.
“Our serviced suites’ advantage lies in being able to offer an extensive range of culinary concepts and wellness facilities within our properties located around the vicinity. Our travel agent partners know they can find a Pan Pacific or PARKROYAL in key cities across Asia Pacific, and this is an appealing selling point because location always comes out tops whether one is travelling for business or leisure,” said Tan.
In Kuala Lumpur, guest will find PARKROYAL Kuala Lumpur and PARKROYAL Serviced Suites Kuala Lumpur near each other. When Pan Pacific Serviced Suites Kuala Lumpur opens in 2021, it will be located behind PARKROYAL Kuala Lumpur.
Oakwood offers leisure programmes through agents at a number of its properties, and only a handful of properties still have minimum nights’ stay that restrict them from booking. The operator also conducts famils both for leisure and corporate travel agents.
“Agents can service client needs a lot better now because you’ve got flexibility with serviced apartments, which is something hotels can’t particularly offer up even though they have a couple of suites here and there,” commented Schreiber.
While it is logical for operators to widen their offerings in order to attract more customer segments, not all properties are made for shorter stays.
“Some of our properties are very small, like 20 or 30 keys, so we don’t necessarily have the full facilities to offer a short stay. And with a short-stay customer base, you do increase operating cost, because you’ve got customers transiting more often,” said Schreiber.
Location is also a key consideration. “A property would be suited for longer stay if it is located where many expatriates work or there is demand from project groups on assignments. The property would be suited for shorter stay if it is within a tourist enclave, near tourist attractions or offices with frequent travellers on short business trips,” explained Goh.
A good example would be Ascott’s Singapore properties: Both Ascott Orchard Singapore and Ascott Raffles Place Singapore, located in equally prime locations, have hotel licences to take in stays shorter than seven days.
Being able to offer more options for both the corporate and leisure markets has paid off for the operators as “you get a whole year of stable market condition,” according to Schreiber.
As a result, in 90% of the markets Oakwood operates in, “we almost always outperform hotels in our com set in terms of RevPar.”
The extended range of offerings also allows operators to sharpen their expertise in managing hotel assets and scale up their lodging business at a faster rate.
“With our serviced residences and apartments for corporate leasing targeting the long-stay segment, to the middle-class business hotels under TAUZIA’s brands and Citadines Connect select-service business hotels for shorter stays, we will fast-track Ascott’s expansion to achieve our global target of 160,000 units by 2023,” said Goh.