Serviced residences switch to hotels to lure overnight guests
Operators are going into a higher proportion of smaller units offers compared to the usual three-bedroom apartments from a few years back.
Great World Serviced Apartments remains at the top of Singapore Business Review’s Serviced Residences Survey with the most number of rooms at 304 units for lease and stay.
Coming in at second is Oakwood Premier OUE Singapore, with 268 units. “Being the only Oakwood Premier brand in Singapore, our serviced apartment is geared toward tailored experiences for C-suite executives and business owners, who appreciate our premium facilities and spacious rooms,” Roy Liang, General Manager for Oakwood Premier
OUE Singapore, said.
Rounding up the top five in SBR’S Services Residences Survey is Fraser Suites Singapore located in the exclusive River Valley precinct, with 255 units in third place, and Orchard Parksuites at fourth place with 223 units each in their operations.
Meanwhile, Ascott Orchard Singapore and Treetops Executive Residences, with 220 units each, scored the fifth spot.
According to Tay Hock Soon, senior director for hospitality management of Edmund Tie
& Company, stock for serviced apartments in 2018 hit 5,700 units, with average occupancy rate of hotels improving for the second consecutive year, growing by 1.2 ppt to 86%.
“This high occupancy rate suggests the hotel industry is operating at close to full capacity, which bodes well for serviced apartments, as both are considered to have similar product offerings,” he said.
Rentals remained largely flat despite the high increases in recent year, said Govinda Singh, executive director of valuation and Advisory Services for Colliers International, citing data from the Urban Redevelopment Authority that leasing transactions increased by a mere 0.6% in 2018.
Another impending issue that has been affecting the industry from an internal operations and revenue perspective is the government of Singapore’s plan to reduce the quota of foreign workers in the city-state from 40% to 38% in 2020, and further to 35% in 2021. Singh noted that the drop in foreign workers’ demand for longer leases, likely caused by and may be exacerbated by the impending lower foreign worker quota, is one of the main challenges that the industry faced in 2018.
Corporations and companies around the world are also trying to cut costs and shifting their views on recruitment, financing, and reassignments, given different requirements and the overcast global economic outlook. “This continued in 2018 and will remain a problem in the foreseeable future. Singapore’s tight labour market and an even more stringent control on foreign workers has made it difficult for us to find quality staff,” said Henrietta Chong, the general manager of Great World Serviced Apartments.
“Corporates are now focusing more on placing employees on short-term assignments reducing long-term [ones]. This is due to cost reduction policies adopted by many organisations. As a result, the length of stay has decreased to between one and three months, which used to be only classified as the transient period,” Zhang Jiahao, manager of CBRE Hotels in Asia Pacific said. This reduction in the length of stay has proven to be a challenge, as operators constantly have to source for new corporate contracts, due to a higher turnover of guests within one to three months, Zhang added.
We expect more new openings to be outside of the city centre as more corporates and businesses are locating themselves in the suburban locations.
Given these challenges, operators and owners of serviced apartments and residences have been trying to offer clients innovative services and packages, whilst shifting their business models. For instance, Zhang noted that newer serviced apartments are now including a higher proportion of reduced spaces like studio and onebedroom units in their inventory, as compared to the three-bedroom units or bigger that was normal a few years back.
The decrease in corporate demand for leases, meanwhile, has given rise to clients seeking shorter stays, which are not necessarily travelling for business. Tay said that serviced apartments like Treetops Executive Residences have been
working to accomodate the increase in personal leases, focused on tenants seeking short-term stays.
Given this demand in shorter stays, serviced apartments have also been securing hotel licences - allowing them to offer their services with minimum stays more appropriate for leisure travellers, as compared to a serviced apartment licence where the minimum stay is at least a week. Zhang noted that operators such as Ascott and Pan Pacific have serviced apartment properties with a hotel licence. Meanwhile, Oakwood Premier OUE Singapore recently secured a hotel licence, allowing the property to be open for daily stays. “This is our gateway to forage into the [business-to-consumer] travel industry and opens up opportunities to attract short stay visitors or local staycationers,” Liang said.
Zhang also noted the rise of serviced apartments outside of the city centre as companies look away from the expensive real estate of downtown Singapore.
“We expect more new openings to be outside of the city centre as more corporates and businesses are locating themselves in the suburban locations—including Fusionpolis, Biopolis, Mapletree Business City, and other areas which are being developed into regional hubs such as Paya Lebar, Jurong Lake, and Woodlands,” Zhang added.
Hotel-like services, amenities
Aside from acquiring hotel licences, serviced residences have also started to offer hotel-like services and amenities. Oakwood Premier OUE Singapore, for instance, is currently offering an in-house restaurant helmed by a culinary team. The property, according to Liang, has also partnered with nearby establishments to offer a variety of amenities to guests, including fitness organisations like Aquaspin and other personal training classes, whilst also offering tourism guide options for guests’ easy navigation of the Lion City.
“Our leisure segment was relatively untapped last year due to the absence of a hotel licence but with the implementation this year, we expect a surge in lifestyle travellers, compared to business travellers traditionally,” he explained. There is also the trend of using automation and even robots in doing some parts of the service.
“We now have robots sending linens to our room attendants on the floors and delivering extra towels or blankets to our residents. We are still looking for ways on how to take further advantage of technology and think outside the box to ensure that our residents’ comfort and needs are not short-changed by our manpower issues,” Chong said.
Amidst growing concern on market conditions and the global economic situation, analysts believe that Singapore will continue to be a top destination for travellers, whether business or lifestyle, looking for longterm or short-term stays.
For 2019, Tay expects approximately 880 units to be completed, mainly from the larger serviced apartment providers such as Frasers (Fraser Residence Orchard Singapore with
115 units), Ascott (co-living life at Funan Singapore with 279 units), and Citadines Rochor with 320 units opening in 2020.
Henrietta Chong, the general manager of Great World Serviced Apartments, thinks that 2019 will remain a tough year. “Although we have our loyal customers, we cannot be resting on our laurels. A consolidated effort, comprising our operations staff to our sales personnel, through to our Department Heads, will be working together, finding new ways to capture the interest of new customers whilst ensuring our existing ones are well taken care of,” the official said. “We hope to capitalise on the information technology wave to remain at the forefront of the industry.”
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Oakwood Premiere OUE
Great World Serviced Apartments
Treetops Executive Residences