Indeed, an audience at the Hotel Investment Conference Asia Pacific, held in Singapore, in March was told that time-deficient professionals on short-term work trips to the region prefer a quick bowl of cereal for breakfast to the lavish buffet style breakfast provided by hotels. One request from embassy staff from the U.S. on short-term assignments in Beijing over the December period was for a serviced apartment with a fully-equipped kitchen.
Across China, serviced apartments are booming as staff on short-term work contracts make the most of home living without the need to spend time or money kitting out their new abode. Serviced apartments also tend to be located in key business districts, which helps to cut commuting time to work.
Flexibility is another key reason why serviced apartments are so popular, says Kousloglou.
“A noticeable trend is that the average length of stay is shortening and increasingly one-bedroom apartments are becoming very popular as business travellers are predominantly single travelers,” he says. “Changing social-economic trends such as the increase in the number of dual-income families where both spouses work are contributing factors to more travellers embarking on work trips without their family.”
Airbnb – friend or competitor?
While some serviced apartment operators regard Airbnb as a competitor, others are increasingly looking to Airbnb to drive bookings. BridgeStreet Global Hospitality Group, for instance, plan to make its serviced apartments available through Airbnb’s recently launched corporate travel portal, Airbnb for Business.
Singapore’s Ascott, CapitaLand’s serviced residence business unit, wants to have 2,000 units under its new Tujia Somerset brand of serviced residences in China by the end of the year. Tujia Somerset is the product of Ascott’s joint venture company with Tujia.com, China’s largest online apartment sharing platform equivalent to Airbnb.
“Branded operators are tapping the Airbnb platforms to widen their distribution network,” says Kousloglou.
With the rising popularity of serviced apartments, hotel operators are increasingly looking to include serviced apartments as part of their offerings. Others are expecting increased demand for one-bedroom and studio apartments as a slowdown in the global economic leads more companies to cut back on longer-term assignments and relocations.
“The serviced apartment industry in Asia looks set to grow in the coming months as the region continues to drive global growth, leading to more overseas assignments and work projects,” says Kousloglou.
It’s also providing a good opportunity for investors. “The serviced apartment asset class with its high profit margins, stable cash flows, high space efficiency, conversion flexibility and lower development cost provide investors more flexibility in their hospitality real estate investments,” Kousloglou concludes.
