REGIONAL SOAR

THE GLOBAL serviced apartments industry’s continued growth in recent years has been primarily driven by its success in dealing with difficulties, according to the latest and sixth edition of the “The Global Serviced Apartments Industry Report 2016/ 17” released by The Apartment Service.

“Throughout this, and the five previous editions of the [‘Global Serviced Apartments Industry Report’] we have charted the rise and rise of serviced apartments. It could be argued that the sector has succeeded because of, rather than despite, the challenges it has overcome,” the global serviced apartment booking agent noted in its report.

In particular, it cited global recession and corporate cost-cutting, the United Kingdom’s corporate manslaughter legislation, and the millennials’ incipient dominance of the consumer market as just three of the main reasons serviced apartments have become a go- to hospitality product among business and leisure travelers, investors as well as operators.

However, the report said adoption rates are leveling off and the state of maturity is now evident in some corporate programs that include serviced apartments.

The adoption of serviced apartments for business travel saw a 9% drop versus the result of 74.29% in 2015. Less than 50% of corporate respondents, specifically 49.24%, were also found to use apartments regularly for project or assignment work, a slight decrease from the previously recorded 51.43%. For relocation purposes, it was down to 35.61% from 42.86%.

“Serviced apartments continue to be adopted into corporate travel and mobility programs, although our latest research shows that while usage of apartments by existing clients is still growing, the rate of adoption could be slowing down,” Charles McCrow, chief executive officer of The Apartment Service, said in the report.

In terms of corporate usage, the figures were also low. Last year, only 47.37% said their usage of serviced apartments for business travel is increasing, whereas it was 82.62% in 2015. 54.9% and 30.43% made more use of serviced apartments for assignments and for relocation, respectively, in 2016. These were higher a year prior; 72.73% was registered for assignments and 58.33% for relocation.

“This does not suggest that interest is waning, but that mature corporate accommodation programs now routinely include serviced apartments and that the sector is now more secure in its niche,” explained Mr. McCrow.

With the increased awareness of the serviced apartment product among corporates, travelers, and travel management companies, the level of expectation is also up.

High-speed Internet connectivity was no. 1 on the priority lists of corporates with 83.08%, followed by single occupancy, 75.38%; family accommodation, 49.23%; shared occupancy, 39.06%; in-house services, 35.38%; amenities, 32.31%; manned reception, 21.88%; and pre-trip assessment, 17.19%.

“Overall, 88% of companies now use serviced apartments for one business reason or another. And yet only a half have a formal procurement process in place, suggesting that serviced apartments are either too difficult to source or book, or that they do not represent a high enough proportion of overall accommodation spend to be incorporates [sic] into annual RFPs (request for proposals),” Mr. McCrow noted.

He added that the obstacles to greater corporate use of serviced apartments have not changed. These still involved shortage in key locations, inconsistent quality of guest services, lack of recognized brands, and lengthy booking process.

According to the report, the demand for serviced apartments across the Asia-Pacific region over the last decade has grown by up to 25%.

This has been seconded by the Association of Serviced Apartment Providers, saying that it is “largely due to companies offering short-term contracts when looking to plug skills gaps and contain costs, and options for short- and longterm stays make serviced apartments a desirable model for assignments of varying durations.”

Professional services company JLL, in its article “How business travel is driving Asia’s serviced apartment boom.” cited the Global Business Travel Association’s statement that Asia Pacific’s share of the business travel spend market is the largest, and that by next year it will have gained an additional 5% market share. This eclipses even the North America and Western Europe markets.

For its part, The Apartment Service noted that while serviced apartments were initially viewed as “early disruptor” in the traditional hotel business, they are now highly considered as formal accommodation in most urban destinations. Investors and heritage brand operators are also keen to tapping into the product to build market inventory. Further, it said that because of these positive developments, the future will still be bright for the serviced apartments operators and the industry in general despite a lower economic growth foreseen in the region.

“From being early opponents, most heritage hotel brand operators no longer show reluctance to be also seen to manage serviced apartments among the accommodations offered to their customers. The two largest, branded operators, The Ascott Ltd. & Frasers, are Asian based, and involved with rapid expansion almost everywhere, while linked to ownership that carry traditional hotels in their own real estate holdings,” it said in the report.

It cited, in particular, the The Ascott Ltd.’s accelerated expansion across central and west China, and its plans of opening more properties in several countries, including the Philippines.