More pull from serviced apartments

Saturday December 22, 2012


E&O Residences and the St Mary Residences. E&O Residences and the St Mary Residences.

THE serviced apartments industry, which is part of the hospitality sector, is expected to have a greater profile with more players entering the industry and the expansion of seasoned players.

Market leader The Ascott Ltd is on an expansion drive which will go on until 2016. Hotel operators are also tapping into the serviced apartment sub-segment of the hospitality industry, offering guests the option of staying in a hotel or a serviced apartment.

The Ascott group is currently the market leader in the industry in terms of inventory. They account for about 20% of the total 2,500 units in the country. The group is currently undertaking a refurbishment programme to spruce up accommodation facilities.

The growth in the serviced apartment industry is due to greater demand as a result of the various large-scale constructions being undertaken by the Government like the Tun Razak Exchange, the My Rapid Transport (MRT) rail project and the latest developments in the oil and gas sector, industry players say.

Says country general manager Tony Ho: “Foreign direct investments are on the uptrend. Large-scale constructions in the form of Tun Razak Exchange and new developments in the oil and gas sector mean new construction teams will be coming in. The last two years have also seen a growth in tourism. This means long-term staying guests are expected to increase.”

National oil company Petroliam Nasional Bhd (Petronas) made new gas discoveries off Sarawak recently.

The Ascott group will be increasing its current 573 units to 1,600 units by 2015/2016, about 180% more units offered by the group. The Ascott has three brands in its stable, namely The Ascott, Somerset and Citadines, each of them targeted at different markets.

The Ascott brand is targeted at senior management, Somerset for mid-management and business executives and Citadines’ guest profile is the independent and tech savy traveller. Between 70% and 80% of its guests are from the oil and gas sector.

“While the hotel industry attract guests who stay between three and four nights, those who opt for serviced apartments may stay for more than a year,” he says.

Artist impression of Ascott at KL Sentral scheduled to open next year. Artist impression of Ascott at KL Sentral scheduled to open next year.

The serviced apartment propostion offers cooking facilities and families have an option of having a suite comprising two or more rooms.

There are currently about 2,500 pure-play serviced apartments in the country and include the likes of PNB’s Darby Park, Wing Tai’s Lanson Place, Fraser Place, Micasa Suites, Park Royals’ One Residency, Pacific Regency All Suites Hotel, Garden Residences and Prince Hotel and Residences.

The Singapore-based hospitality player has also invested about RM30mil in refurbishment of The Ascott in Jalan Pinang. This is scheduled to be completed by the middle of next year. A second Ascott will be opening in the third quarter of next year in KL Sentral. Ascott is a wholly-owned subsidiary of CapitaLand Ltd, one of Asia’s largest real estate companies.

Ho: ‘Those who opt for serviced apartments may stay for more than a year.’ Ho: ‘Those who opt for serviced apartments may stay for more than a year.’

Its first Citadine will be opening in Kuching this month and its second Citadine will be opening in Cyberjaya by end-2014 or 2015, Ho says.

It will also be expanding its Somerset brand to include a third Somerset Puteri Harbour in the first quarter of 2014. The group currently has Somerset Ampang and Somerset Seri Bukit Ceylon. A fourth Somerset is scheduled to be opened in Damasara Uptown by 2015 or 2016.

Other than Somerset Ampang which is 100% owned by Ascott, the group owns 50% of the Ascott in Jalan Pinang and Somerset Bukit Ceylon, Ho says, adding that the company will be managing and operating the new premises and will not own them.

The Eastern & Oriental (E&O) group has also opened its first serviced residences at its St Mary Residences development in the city. Although it is no newcomer in the hospitality industry it owns and operates Lone Pine Hotel and the E&O Hotel in Penang E&O Residences will be the group’s first serviced residences.

Says Jamie Case, chief operating officer of Eastern & Oriental Hotel Management in an email: “For the E&O group, this will be an extension of the group’s expertise in hospitality management.”

“The additional capacity is in tandem with the growing demand for serviced residences,” Case says.

“With the unfolding of the Economic Transformation Projects and the Greater KL initiatives, there will be more opportunities in the city which will in turn attract more business professionals and expatriates to fuel the demand for such accommodation,” he says.

The Synod of the Diocese of West Malaysia or the Anglican Church owns the land where the St Mary Residences development is sited. The Synod then selected E&O, through an international tender process conducted by property consultants DTZ Nawawi Tie Leung to operate the 200-unit serviced residences.

“We are targeting 60% occupancy in the first year,” says Case, adding that E&O’s target audience includes both global business and leisure travellers on an extended stay in the city.

The serviced apartment concept also seems to getting popular in Malacca. Swiss-Garden International Hotels, Resorts & Inns recently launched The Shore in Malacca, which combines both a hotel and service apartments. These serviced apartments are open for sale to the public and hotel operator will manage them on behalf of the owners in renting them out.

Its corporate marketing communications manager Linda Evelyn Wong says the The Shore Tower 1 has achieved 75% sales this month.

Hospitality trend has evolved over the past decade “with an increasing demand for serviced apartments from both the leisure and business segment.” She says this trend of combining a hotel and service apartments is expected to continue in key cities because leisure travelers are now opting for accommodation that provides spacious homely comfort while business travellers are seeking space, privacy and modern facilities yet complemented with refined hotel services.

A strong factor pushing hotel operators to offer the serviced apartment proposition is the profit margin, which is 50% compared to a hotel’s 35%.

The average rate for a four-star hotel in Kuala Lumpur is RM250++ and for a service apartment in Kuala Lumpur is RM330++. In Malacca the average rate for a four-star hotel is about RM200++ and for a serviced apartment is RM250++.

Source: The Star

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