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.

Singapore Business Review - - CONTENTS -

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.

Chal­lenges ahead

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.

Ris­ing trends

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.

Look­ing ahead

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.”

Sin­ga­pore’s health in­surance seg­ment’s gross pre­mi­ums in­creased by 11% to a to­tal of S$322.9m amidst per­sis­tent health­care in­fla­tion in the coun­try.

Oak­wood Pre­miere OUE

Great World Ser­viced Apart­ments

Tree­tops Ex­ec­u­tive Res­i­dences

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