Singapore’s domestic property market is riding on the coat-tails of its buoyant economy. As such, hotel room rates have been on the rise and apartment rents have increased. While it might be a bane to some, the serviced apartment industry is clearly benefitting from the inflated prices.
Most serviced apartment providers have reported high occupancy with some averaging 90%. However, with insufficient labour, changing global trends and rising operating costs, can the serviced apartment industry keep itself ahead of its competitors?
Boomtime for industry
In June this year alone, Singapore registered a 7.5% growth in visitor arrivals, compared to the corresponding period last year. And with the Singapore Tourism Board’s latest initiative to draw more tourists and the development of new businesses, these numbers are expected to keep climbing.
Anita Kwan, vice president, hospitality and corporate leasing, Park Avenue Suites, says: “Recent reports have shown that Singapore is a top choice for expatriate relocation to Singapore due to [the] excellent infrastructure and facilities, as well as socio-political stability.”
Despite rising living costs, Singapore remains a popular choice for expatriate relocation. With the economy performing well above expectations, more multinational corporations are setting up their head offices in the country, and the city state is welcoming more direct foreign investment, trade and commerce. Governmental efforts positioning Singapore as a healthcare and MICE hub have industry players expecting a surge in holiday makers and business travellers.
Tonya Khong, general manager, Fraser Suites and Fraser Place, Singapore, says that serviced apartments for overseas patients and their families are an attractive option “as these properties offer all the amenities, facilities and comforts of a home”.
Staging of globally recognised events like the International Olympic Committee Session, CommunicAsia and the IMF World Bank’s Annual Meeting have stimulated the MICE market and many other industries. With the property market in the upswing comes the rising trend of collective en bloc deals, which become a push factor for strong demand of extended stays for business travellers.
“The high property prices and increased rental rates have affected not only the occupancy, but the rates of the serviced apartments in a positive way,” observes Patricia Chan, senior resident manager, Le Grove Serviced Apartments.
Knowing what they want
To take advantage of the surge in demand, industry players should has a good understanding of what clients are looking for in serviced apartments and the specific target market.
“Apart from price comparison, a client’s first priority when searching [for] a serviced apartment would be a convenient location whereby their expatriates could travel to work easily,” says Kwan. “Other considerations include nearby eateries, easy access to transportation and grocery shopping.”
As employers have to be attuned to diverse employee demographics to enhance staff retention and attraction, the serviced apartment industry also has to keep up to date with changing trends.
A current changing trend is today’s mobile global workforce. Arthur Kiong, director, hospitality operations, Far East Organisation, agrees that there is a global trend of an increasingly mobile workforce, with companies sending more staff on short to medium-term business assignments. “This dynamic trend augurs well for [the] serviced residence industry in Singapore to accommodate this increasingly mobile global workforce,” he adds.
The mobile global workforce includes executives seeking a more sophisticated lifestyle. Frank Foster, vice president – marketing and sales, Oakwood Asia, feels it is important that not only does the serviced apartment industry remain aware of ongoing trends, but serviced apartments should also suggest something more. “It’s imperative that serviced apartments offer alluring accommodations to harmonise such behaviour and provide augmented services and amenities to meet their needs,” he says. Thus, Oakwood Asia has three distinctive brands that each caters to the specific lifestyle needs of its target markets, from young executives through to senior management.
Staying ahead of the competition
With the boom of the serviced apartment industry spurred by a flourishing economy, it is no surprise that many are wanting part of the action. The entry of new players is giving the industry stiff competition.
Condo hotels, hybrids of condominiums and hotels incorporating concepts of home ownership and investment potential, are gaining popularity in Asia. And according to Foster, hotels are also tapping into the benefits of services usually offered by serviced apartments to target long-term guests.
However, Alan Kenyon, assistant director, business development, Shangri-La Apartments, is not worried. “Competition from new entrants and an increase in choices of accommodation should bring out the best in the industry players and ultimately benefit the consumer. Nevertheless, serviced apartments are becoming an increasingly popular option amongst relocating expatriates as they tend to offer better value and greater levels of comfort than condo hotels, and provide expatriates with a feel of a home away from home.”
According to Foster, to stay in the game, serviced apartments have introduced 24-hour front desk and concierge services, and meeting and function rooms have been added to cater to MICE travellers. Some serviced apartments have also begun operating like condo hotels, where apartments are strata-titled with a certain number of units open for private investment. Foster also says that serviced apartments have an added advantage of space where it is a constraint for most hotels.
Reinvention and redesigning is another part of the strategy in retaining and attracting guests. Tonya Khong, general manager, Fraser Suites and Fraser Place, Singapore, says that guests’ expectations are constantly evolving with the economic and social climate. “In Singapore, for instance, we’re currently upgrading our facilities and apartments at both Fraser properties to offer more value to our guests,” she elaborates. “Our competitive strength and the reason for Fraser’s success is our staff, the service we provide our guests and the feeling of home we provide them with.”
Kwan also insists that providing a consistent level of good service will make you memorable to the customer and chances are, he or she will return.
Everybody wins
It is a well known fact that the demand for accommodation far surpasses the supply of hotel rooms and serviced apartments available. While hotels and serviced apartments are competing for the same pool of customers, it also means that both industries are moving in the same direction – to supply accommodation to the influx of visitors to Singapore. Chan adds: “To a certain extent, they’re competing for the same pie, but then again, the pie is sufficient for everyone, even for hotels that operate serviced apartments there’s minimal cannibalisation.”
Meanwhile, the industry is gearing itself up for the much anticipated Integrated Resorts (IR). “With the launch of the integrated resorts in 2009/10, we foresee a new target segment for serviced apartments, as many visitors may extend their stays in Singapore to enjoy the new facilities and attractions,” Kenyon notes.
Khong affirms that the accommodation sector in Singapore will continue to do well in the immediate future. “We expect demand fore long and mid-term housing for expatriates, prior to and after the opening of the IRs.”
Park Avenue Suites are well prepared to receive the next wave of guests. According to Kwan, the serviced apartment is providing more than 300 rooms by 2009 to feed the market. Far East Organisation is also expanding their inventory and enhancing their products and services for guests.
But the industry itself also has to contend with high operating costs and rising attrition in the light of a tightening talent market. Kiong laments that high costs and unattractive yields are not wooing many developers to contribute to the serviced apartment industry and hence, supply stagnates while demand increases. “With the influx of the service and hospitality industry players, recruiting and retaining talent is a common issue faced by most organisations today,” he says.