No longer catering to the traditional market of long stayers, operators get more creative with their product offering, rolling out new millennial-oriented brands, bleisure amenities and even service robots
Kevin Goh, CEO, Ascott
Market outlook There are significant opportunities for serviced residences to expand in Singapore, as the government ramps up efforts to attract MNCs and innovative startups. We added five properties in Singapore in 2017, making Ascott the largest and fastest-growing serviced residence operator in Singapore with close to 2,300 units across 13 properties.
New initiatives We are opening the first property under our new lyf brand that is designed by millennials for millennials – lyf Wu Tong Island Shenzhen and lyf DDA Dalian (both 2018), lyf Funan Singapore (2020), and lyf Cebu City and lyf Farrer Park Singapore (both 2021).
Ascott is actively looking at other potential markets including Australia, France, Germany, Indonesia, Japan, Malaysia, Thailand and the UK. Our target is to have 10,000 units under the lyf brand globally by 2020.
We are also opening our first properties in cities such as China’s Nantong (Ascott Harmony City), Pattaya (Citadines Jomtien Beach), Danang (Citadines Blue Cove) and India’s Gurgaon (Ascott Ireo City).
Challenges Firstly, aggressive competition within the hospitality industry will continue to drive mergers and acquisitions. We have acquired an 80 per cent stake in Synergy Global Housing in the US. We also increased Ascott’s stake in Quest to 80 per cent, which leapfrogged Ascott to becoming the largest serviced apartment provider in Australasia.
Secondly, the sharing economy concept is growing driven by the increasing prevalence of mobile technology. Companies are likely to devote more resources towards this area to cater to the customers and sharpen their competitive edge. Ascott has invested in Tujia, China’s largest online apartment-sharing platform.
2018 expectations We are confident of achieving our global target of 80,000 units in 2018, well ahead of 2020 as we press ahead with our aggressive expansion plans. We will continue to focus on key gateway cities in markets such as Singapore, China, Australia, capital cities in South-east Asia, Seoul, Tokyo, Paris, London, key cities in Germany and the US.
Arthur Kiong, CEO, Far East Hospitality
Market outlook Specific market segments that serviced residences serve – project groups, corporate relocations and medical tourists, to name a few – have increased steadily in 2017 fuelled by various factors.
There is an improvement in product knowledge among corporate travel managers. Furthermore, organisations have cut back on their spending on business travel in response to the slow economy in 2017. This is where serviced residences come in to offer the flexibility of keeping travel expenses low, while balancing business travellers’ needs.
New initiatives We have improved our property management system across all properties. This allows for real-time rate proposals, room-availability checks as well as reservations, regardless of sales office closure, weekends or public holidays.
To cater to a new generation of business travellers, we launched the first serviced residence under the Oasia brand – Oasia Residences – in October 2016. The serviced residence houses amenities such as a fitness centre, tennis court and swimming pool to offer wellness-conscious individuals a chance to recharge.
Challenges Business travel is expected to pick up in 2018, according to the Global Business Travel Association, with spending growing by 6.1 per cent against 5.1 per cent in 2017. This trend, coupled with the ever-changing business traveller demand, will continue to be a challenge in 2018.
With the growth of bleisure travellers, an accommodation that only offers business elements such as Wi-Fi or a business centre will no longer appeal to them. It is important that serviced residences provide options that allow bleisure travellers to engage in fun activities and wellness opportunities throughout their stay.
2018 expectations Singapore is uniquely situated in a region where travel volume and potential is growing. It is key for hospitality players to be forward-thinking, in order to be ready for the uptick in tourism as well as the changing needs of business travellers.
Choe Peng Sum, CEO, Frasers Hospitality
Market outlook 2018 is poised to be a promising year for the hospitality sector in Asia-Pacific, as intra-regional corporate travel is expected to receive a boost from the stronger-than-expected growth in China, Japan, South Korea and South-east Asian economies.
Coupled with the structural shift in corporate accommodation requirements where travel managers are challenged to seek quality accommodation while stretching budgets, as well as the steadying supply growth in the market, we are confident that the serviced residence sector is set to deliver better performance in 2018. Both occupancy and rate are broadly expected to improve.
New initiatives To cater to the growing group of millennial travellers, Frasers will soon launch its flagship Capri by Fraser property in China Square, Singapore, which will serve as an innovation lab for cutting-edge hospitality concepts including the use of service robots to enhance customer experiences. This property will also focus on delivering e-efficiencies to tech-savvy guests with the use of iPad-activated check-ins, e-concierge, e-print facilities and high-speed Wi-Fi connectivity.
Challenges Disruption through the ongoing digital revolution and the sharing economy is the new constant, and staying nimble is a given. The flood of capital investment into the global travel ecosystem in the past two years has been significant and the possibility of having another Airbnb-like disruptor is high. We also cannot overlook Airbnb, given the changing nature of its business and its desire to expand into corporate travel.
2018 expectations We are on track to achieving our target of 30,000 keys under management by 2019, as we press ahead with strategic expansion via management contracts and investments in key regions such as China, South-east Asia and the Middle East. We have opened our first properties in Saudi Arabia and this year also marks our entry into Africa.
The group is on track to double its portfolio in China with presence in fast-growing cities such as Shenzhen and Shanghai as well as new cities like Dalian and Hefei.
Marc Hediger, CEO, Lanson Place Hospitality Management
Market outlook Despite a slowing regional economic growth, the market for quality serviced apartment remained strong last year, particularly within top and second-tier cities in China, and key gateway cities such as Singapore, Bangkok, Jakarta, Manila and Taipei.
The latest mobility trends in these cities include shortened tenancies due to more temporary project assignments and corporate relocations to cheaper de-centralised CBD locations, and a shift of workforce and travel demographic towards millennials.
The industry has transformed from a pre-dominantly foreign expatriate market of seasoned travellers into a mixed market of local and foreign expatriates of varied seniority levels. The market demand has moved towards leaner and more affordable serviced apartments, as opposed to traditional serviced residences providing more upscale and extensive services.
New initiatives We are reopening our newly refurbished property in Singapore in spring 2018, now renamed as Winsland Serviced Suites by Lanson Place. The property offers a total of 109 studio to two-bedroom units, tailored towards millennials, young couples and small families.
Challenges The emergence of Airbnb, the sharing economy concept and a consumer landscape of instant gratification are challenges for the serviced residence industry.
Furthermore, with millennial travellers and the bleisure trend on the rise, we are poised to fine-tune our current products and services to offer unique and customised accommodation, and a social and authentic experience for this growing sector of tech-savvy and discerning customers.
2018 expectations We foresee expansion mainly in the South-east Asian region, with Bangkok, Kuala Lumpur, Singapore and Jakarta in the pipeline.
With shifting trends to inter-Asian and inter-China business postings, we see this business transformation being a regular phenomenon to keep up with.
Following the success of Two MacDonnell Road in Hong Kong, the group will continue to venture into the hotel and serviced suites hybrid this year, capitalising on online distribution channels and offering larger accommodation spaces.
Dean Schreiber, managing director, Asia-Pacific, Oakwood Worldwide
Market outlook Demand for serviced residences across an ever-widening geography continues to grow in line with the growth of the business travel market in Asia-Pacific, now the biggest travel market in the world.
Serviced apartments have progressively become the accommodation of choice for business travellers working on short-term assignments as cost-effective alternatives to traditional hotels. This factor, twinned with the continued rise in the ratio of short-term to long-term assignments, as companies increasingly choose to send employees on short-term secondments to fill skills gaps and save on relocation costs, indicates that the serviced residence sector will continue to grow robustly.
New initiatives In 2018, we will continue both to strengthen our regional and global presence and provide an increasingly flexible inventory of accommodation. This year will see us open seven properties in Surabaya, Ho Chi Minh City, Osaka, Tokyo (two), Sanya and Yangzhou.
Challenges A key challenge for the industry is resourcing. As the average duration of an assignment falls, less client resources are usually allotted to manage each one. The time required to coordinate the logistics of a workforce on the move when amortised over three, six and 12 months, as opposed to five years, can begin to look prohibitive to companies. Ultimately, companies may need to place greater responsibility for the delivery of their mobility programmes on their accommodation solutions partners.
Our focus is therefore to continue to support our clients as a greater ratio of their employees move more regularly across a more complex international assignment landscape than before.
2018 expectations The serviced residence market will continue to be dominated by three main trends this year – an increasing number of millennials in the workplace, a rise in short-term assignments and globalisation.
As well, increased consumer awareness of serviced residences, a direct result of increased global inventory as well as platforms such as Airbnb, means Oakwood Worldwide is seeing a rise in uptake among leisure travellers.
Douglas Martell, president & CEO, Onyx Hospitality Group
Market outlook We are very positive for the serviced apartments market across Asia in 2018. The robust activities around our serviced apartments brand tells us that the market is indeed on the upswing with high consumer demand as well as increasing investor interest.
New initiatives Shama has been keeping us very busy and engaged lately. We kicked off 2018 with four new Shama signings in January 2018 alone and are now preparing to open five new Shama properties between January and August, namely Shama Island North Hong Kong, Shama Daqing Heilongjiang in China, Shama Lakeview Asoke Bangkok, Shama Hongqiao Shanghai and Shama Changfeng Shanghai.
These new openings will bring the brand to 13 operating properties, with seven in the development pipeline. From its beginnings as a China- and Hong Kong-centric brand, Shama now counts Australia and Malaysia among its pipeline destinations.
Challenges The changing demographics of the serviced apartment residents from larger families to couples or individuals is leading to a higher demand for studios and a lower demand for the larger multi-bedroom units. At our newer Shama properties in Shanghai and Daqing, a majority of our apartments are studio units and one-bedroom apartments.
With serviced apartments fast gaining popularity along short-stay leisure travellers, it is also essential for operators to balance the guest versus tenant mix to ensure that extended stay residents are not inconvenienced by the movements of the more transient guests.
2018 expectations The serviced apartments sector across Asia-Pacific is enjoying an upward momentum. This, coupled with the trend among more travellers opting to use serviced apartments even for short breaks or business trips, is changing the serviced apartment industry’s traditional long-stay model.
We target to have a minimum of 99 properties in our portfolio by 2024, and our serviced apartment brand Shama will represent a significant proportion of this growth.
Richard Tan, vice president, serviced suites, Pan Pacific Hotels Group
Market outlook Demand has stabilised as Asia-Pacific’s biggest market, China, eases into a more sustainable pace of growth. At the same time, the serviced apartment sector continues to be exposed to competition from the likes of home rental platforms and apart-hotels. The trend for shorter assignments continued, and so did the relocation of transnational corporations to lower-cost locations.
Performance was generally muted and uneven across markets in the past year. To illustrate, RevPAR for the serviced apartment sector in Singapore declined by nine per cent as at September 2017, whilst RevPAR grew by two per cent in neighbouring Kuala Lumpur.
New initiatives Later this year, we will debut our Pan Pacific brand in Malaysia with the opening of Pan Pacific Serviced Suites Puteri Harbour in Iskandar, Johor. In 2020, we will launch our first serviced suites property in Jakarta, as well as our flagship property, Pan Pacific London.
Challenges As a “traditional” accommodation provider, we will have to work harder to explain what customers can expect from us, which boils down to quality assurance.This is something we have to impress on millennials and post-millennials, who will shape the serviced suites sector as they join the workforce. This emerging generation of travellers also value customisation and flexibility over stunning décor and facilities, which has challenged us to look at – and also deliver – our service differently.
2018 expectations Asia-Pacific is expected to grow 6.2 per cent this year. Vietnam in particular stands out for its business travel boom and rapid economic growth. Similarly, in China, we anticipate more growth in 2018 as one in three Chinese companies expect travel budgets to rise over the next 12 months.
Pamela Chow, Rachel AJ Lee and Xinyi Liang-Pholsena contributed reporting to this article