a TIN reportin association withThe Global Serviced Apartments Industry Report 2013-14
Editorial teamMark Harris (Contributing Editor)Bard VosDesignCreativo www.creativodesign.co.ukWhilst every effort has been...
ContentsReport methodology 3Definitions – what is a serviced apartment? 4Regional reportsI. Africa 36II. Asia 40III. Austr...
The 2013/14 edition of the Global Serviced Apartments Industry Report has been compiled from primary andsecondary sources....
The term ‘serviced apartment’ is traditionally used to describe an apartmentalternative to hotel accommodation for long st...
2. Corporate housingCorporate housing is typically residentialapartments up-graded for stays of 30days or more and package...
Corporate housing vs. extended stayTravel managers or relocation agents selecting serviced apartments for their project,as...
FeatureWasher/dryerLaundry/valet serviceGarage parkingChoice of furnishingsFree breakfast buffetFree evening managers rece...
Welcome to the Global ServicedApartments Industry Report 2013-14.This is the fourth edition of our survey ofworldwide indu...
traveller, in turn reducing theireffectiveness at work because they don’thave such a pleasant trip and feelundervalued. Ot...
IntroductionThe global serviced apartments Industryis continuing to mature, albeit atdifferent rates in different places a...
Global travel trendsDespite the continuing worldwideeconomic recession, global tourism hitrecord levels in 2012 and, thank...
to £140 billion on accommodation forbusiness; so how much of that is beingallocated to serviced apartments?Serviced apartm...
Fig 3 Top global suppliers increasing supply 2013 vs. 2011(Source: The Apartment Service)Fig 3 Top global suppliers increa...
As figure 3 shows, 11 of the top 15 haveincreased their supply, with QuestApartments in Australia showing thebiggest rise ...
6.56.56.06.05.05.04.54.55.55.54.04.03.53.53.03.02.52.52.02.01.51.51.01.00.50.5002,0002,000 4,0004,000 6,0006,000 8,0008,00...
10,00010,0004,0004,0005,0005,0006,0006,0007,0007,0008,0008,0009,0009,0003,0003,0002,0002,0001,0001,0000020092009 20102010 ...
Serviced Apartments - demandDemand for serviced apartments hasgrown dramatically in the last 10 years,fuelled by gradually...
2012 occupancy figures collated bySavills show that, over the three yearsperiod to the end of 2012, servicedapartment occu...
EuropeEurope77.8%77.8%33.3%33.3%27.8%27.8%16.7%16.7%22.2%22.2%33.3%33.3%27.8%27.8%Middle EastMiddle East North America& Ca...
EuropeEurope77.8%77.8%33.3%33.3%27.8%27.8% 27.8%27.8%38.9%38.9%33.3%33.3%27.8%27.8%Middle EastMiddle East North America& C...
Serviced apartments vs. hotelsOur research shows that apartmentusage is growing as a percentage of totalhotel nights among...
LocationLocation52.5%52.5%63.8%63.8%70%70%68.8%68.8%20.0%20.0%CostCost ConvenienceConvenience Price/QualitycomparisonPrice...
Fig 15 Average rental rates achieved by serviced apartment operators (Source: The Apartment Service)Fig 15 Average rental ...
global apartment operator to match thecoverage of a major hotel chain. Whilstevery operator would love to have directrelat...
temporary home with all the benefitsthat a hotel could not offer. An increasingshift in the level of relocation contractso...
aspect, or whether there is someone atreception. There is such an array ofdifferent kinds of apartments, I’m notsurprised ...
Business optimismAs Figures 18 & 19 show, the air ofoptimism that has pervaded the servicedapartments sector over the past...
Fig 18 Serviced apartment optimism - occupancy 2013 vs. 2011 (Source: The Apartment Service)Fig 18 Serviced apartment opti...
Partner PerspectivesThe brand Aparthotels Adagio is providing urban accommodation solutions forextended stays in major Eur...
Quest is the largest and fastest growing serviced apartment operator in Australasiawith more than 150 properties located a...
Partner PerspectivesA world leader in serviced apartments and premier residences, Frasers Hospitality PteLtd (Frasers) has...
Fraser Suites, SukhumvitFraser Place, Anthill, IstanbulFraser Residence, ShanghaiFraser Suites, DubaiIn association with A...
Regional rates comparisonOn the opposite page is a comparison of rate ranges for studio, one bedroom and two bedroom apart...
RaterangesbyGlobalRegion(lowtohighpricerange)Theseratesareaverageratesandmayvaryperlocation,timeofyear,regionalpromotionsa...
spreading to other African countries,especially the coastal regions of sub-Saharan Africa, where the number ofhotel develo...
NigeriaNigeria, one of the world’s top tenpetroleum exporters, has 26 hotels underconstruction and 17 others indevelopment...
SupplyOur research has highlighted 4,634serviced apartments in 76 locations inAfrica. Based on our estimates of theworld’s...
Fig22Cityratesanalysis(Source:TheApartmentService)RatesThere is a significant disparity betweenthe average rental rates fo...
1,6001,6001,4001,4001,2001,2001,0001,00080080060060040040020020000ManufacturingofchemicalsManufacturingofchemicals$USbilli...
Hong KongServiced apartments first appeared inHong Kong as ‘aparthotels’ in the 1980’s.Today, the local market services as...
JapanThere are 13 new up-scale hotels cominginto an already saturated Japanese hotelmarket. The largest project is the 376...
TaiwanTaiwan is one of the crucial transit hubsin Asia, as an important industrial andexport partner for the United States...
Global Report on Serviced Apartments 2013-2014
Global Report on Serviced Apartments 2013-2014
Global Report on Serviced Apartments 2013-2014
Global Report on Serviced Apartments 2013-2014
Global Report on Serviced Apartments 2013-2014
Global Report on Serviced Apartments 2013-2014
Global Report on Serviced Apartments 2013-2014
Global Report on Serviced Apartments 2013-2014
Global Report on Serviced Apartments 2013-2014
Global Report on Serviced Apartments 2013-2014
Global Report on Serviced Apartments 2013-2014
Global Report on Serviced Apartments 2013-2014
Global Report on Serviced Apartments 2013-2014
Global Report on Serviced Apartments 2013-2014
Global Report on Serviced Apartments 2013-2014
Global Report on Serviced Apartments 2013-2014
Global Report on Serviced Apartments 2013-2014
Global Report on Serviced Apartments 2013-2014
Global Report on Serviced Apartments 2013-2014
Global Report on Serviced Apartments 2013-2014
Global Report on Serviced Apartments 2013-2014
Global Report on Serviced Apartments 2013-2014
Global Report on Serviced Apartments 2013-2014
Global Report on Serviced Apartments 2013-2014
Global Report on Serviced Apartments 2013-2014
Global Report on Serviced Apartments 2013-2014
Global Report on Serviced Apartments 2013-2014
Global Report on Serviced Apartments 2013-2014
Global Report on Serviced Apartments 2013-2014
Global Report on Serviced Apartments 2013-2014
Global Report on Serviced Apartments 2013-2014
Global Report on Serviced Apartments 2013-2014
Global Report on Serviced Apartments 2013-2014
Global Report on Serviced Apartments 2013-2014
Global Report on Serviced Apartments 2013-2014
Global Report on Serviced Apartments 2013-2014
Global Report on Serviced Apartments 2013-2014
Global Report on Serviced Apartments 2013-2014
Global Report on Serviced Apartments 2013-2014
Global Report on Serviced Apartments 2013-2014
Global Report on Serviced Apartments 2013-2014
Global Report on Serviced Apartments 2013-2014
Global Report on Serviced Apartments 2013-2014
Global Report on Serviced Apartments 2013-2014
Global Report on Serviced Apartments 2013-2014
Global Report on Serviced Apartments 2013-2014
Global Report on Serviced Apartments 2013-2014
Global Report on Serviced Apartments 2013-2014
Global Report on Serviced Apartments 2013-2014
Global Report on Serviced Apartments 2013-2014
Global Report on Serviced Apartments 2013-2014
Global Report on Serviced Apartments 2013-2014
Global Report on Serviced Apartments 2013-2014
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Global Report on Serviced Apartments 2013-2014

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Informe de "The Apartment Service" sobre la oferta y demanda de apartamentos turísticos (aparthotel, condohotel, etc.) La oferta por ahora no cumple los requisitos demandados por corporate, ni por calidad, estandarización, canales de reserva, etc.

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  • The 5th edition of the Global Serviced Apartments Industry Report will come out in Jan 2015 and will address and provide an update on the issues raised in your comments. The sector is evolving at high speed and the corporate world is getting more educated about serviced apartments and serviced apartments in turn do their best to make the processes as smoothly as possible. Standardisation is and remains a big factor, but with the arrival of classification systems and stricter guidelines, this will get better as well.
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Global Report on Serviced Apartments 2013-2014

  1. 1. a TIN reportin association withThe Global Serviced Apartments Industry Report 2013-14
  2. 2. Editorial teamMark Harris (Contributing Editor)Bard VosDesignCreativo www.creativodesign.co.ukWhilst every effort has been made to ensure accuracy, The Apartment Service, Travel Intelligence Networknor Creativo can be held responsible for any errors or omissions.The Global Serviced ApartmentsIndustry Report 2013/14In association with Adagio, Frasers Hospitality & Quest Apartments4th editionA TIN reportPublished on behalf ofThe Apartment Service5 – 6 Francis GroveWimbledonLondonSW19 4DTUnited Kingdomwww.apartmentservice.comBy Travel Intelligence Networkwww.the-tin.coma TIN report
  3. 3. ContentsReport methodology 3Definitions – what is a serviced apartment? 4Regional reportsI. Africa 36II. Asia 40III. Australasia 48IV. Central & South America 54V. Europe 58VI. Middle East 66VII. USA & Canada 71Report conclusions 79Global apartments listingI. By brand 80II. Top 15 global suppliers 81III. Regional summaries 82IV. Corporate housing 92Acknowledgements & sources 3Glossary of terms 7Global industry overviewI. Executive summary 11II.2013 survey findings & key trends 12Commentary – Charles McCrow, The Apartment Service 8Partner perspectivesI. Adagio 30II. Quest Apartments 31III. Fraser Hospitality 32Regional rates comparison 34The Apartment Service Global Serviced Apartments Industry Report 2013/142
  4. 4. The 2013/14 edition of the Global Serviced Apartments Industry Report has been compiled from primary andsecondary sources. Primary sources include a survey undertaken by The Apartment Service and TIN amongstserviced apartment operators worldwide.The other primary sources used in this report include articles contributed by, and interviews with commentatorsfrom around the globe, together with other research.Corporate Housing Providers AssociationEconomist Intelligence UniteMarketerErnst & Young – Top thoughts for 2013E travel BlackboardGlobal Business Travel Association (GBTA)Global Relocation Trends Survey Report2011-12Guild of Travel Management Companies(GTMC)Highland GroupHRGHR Magazine AsiaHVS InternationalIMF World Economic Outlook 2013Institute of Travel & Meetings (ITM)IPK International’s World Travel MonitorITB World Travel Trends Report 2012/13Invest in BrazilJohannesburg Tourism CompanyJones Lang LasalleJP Morgan Card ServicesLawpack PublishingOakwood WorldwidePhoCusWrightProperty Observer.comReport methodologyContributorsJill Chapman, Oakwood WorldwidePaul Constantinou, Quest ApartmentsTim Dueysen, DeragAlain Ferrecani, The Ascott LimitedRicky Kapoor, Hotel Booking AgentsAssociation (HBAA)María José Clariá Méndez, Clam! RelocationJim Murphy, Premier ApartmentsVangelis Porikis, AdagioMelvin Quah, The Ascott LimitedJonathan Seex, Tamarind GroupTony Soh, The Ascott LimitedSteve Thorne, Jumeirah LivingSourcesAfrican Business Travel AssociationAtchison Consultants - ServicedApartments ReviewAssociation of Serviced ApartmentProviders (ASAP)Bridgepoint VenturesBusiness Traveller AfricaBusiness Travel NowC9 HotelworksCarlson Rezidor Hotel GroupColdwell Banker VietnamColliers InternationalAcknowledgements & SourcesReal Capital AnalyticsRelocate magazineSavillsSmith, Jeff – corporate housingvs. extended staySTR GlobalSupply ManagementThe IndependentTravel AfricaTravel Weekly AustraliaTripAdvisorWorld Tourism Organisation (UNWTO)World Travel & Tourism Council –Business travel, a catalyst for economicperformanceWorldwide ERCWRRI – 2012 Employee Mobility Studywww.4hoteliers,comwww.extendedstayhotelnetwork.comwww.hoteliermiddleeast.comwww.hotelnewsnow.comwww.hotels.comwww.interimhousingsolutions.comwww.prweb.comwww.tophotelprojects.comIn association with Adagio, Frasers Hospitality, Quest Apartments 3
  5. 5. The term ‘serviced apartment’ is traditionally used to describe an apartmentalternative to hotel accommodation for long stay leisure or business travellers.However there are three types of accommodation to which the description servicedapartment applies, with an ever-growing list of sub-categories.Definitions - what is a serviced apartment?1. Extended stay hotelsExtended stay hotels are mainly studios,one bedroom with a few two bedroomapartments typically found in urbanlocations, ranging in standard frombudget to deluxe. All are fully furnishedand include:• En-suite bathrooms• Fitted kitchen or kitchenette• Lounge/dining area sometimesincluding a sofa bed or pull down bed.• Working area, desk, office chair,internet access & direct telephone line.The hotel services usually available fromextended stay hotels include:• Reception desks – some manned24hrs, others on limited hours(e.g. Candelwood Suites )• Daily or weekly cleaning & laundryservice. (Most properties have either ashared laundry facility or anin-apartment washing machine)There are typically no restaurants, bar orlounge areas, although the level ofservices is generally higher than thosehybrid aparthotels which are usually aleisure or resort based product, and alsocome in standards of accommodationand range of services from budget todeluxe.The Apartment Service Global Serviced Apartments Industry Report 2013/144
  6. 6. 2. Corporate housingCorporate housing is typically residentialapartments up-graded for stays of 30days or more and packaged togetherwith services such as:• Furnishings• Weekly cleaning• Utility charges• Local municipal taxes• Telephone, WiFi and TV channels• Guest services - telephone supportfor maintenance issues etcThis type of product - also referred to assuite living and residence living - worksas company apartments for either regularvisitors or for those on extended projects.There are two main types of corporatehousing services offered:• Apartments rented and maintained bythe operator on an on–going basis• Those rented specifically for aparticular housing requirement andlength of time, after which they arehanded back to the owner. This is alsoreferred to as virtual housing.3. Condo-hotelsPredominantly found in South America,a condo hotel, also known as a hotel-condo or a Condotel, is a building usedas both a condominium and a hotel.Condo hotels are typically high-risebuildings developed and operated asluxury hotels.These hotels have condominium unitswhich allow someone to own a full-service vacation home that, when not inuse, can be rented out and managed bythe hotel chain as it would any otherhotel room.Serviced apartments vs. HotelsFor business users in particular, serviced apartments offer tangible, quantifiablebenefits over traditional hotels. These competitive advantages can be summarisedas follows.1.Cost – for stays of a week or more, serviced apartments can be significantly cheaperthan hotels because their costs are lower and extra’s such as room service, hotelrestaurants and bars do not apply in the serviced apartment model. Manycorporates will measure these savings as ‘total cost of stay’ including car parking,WiFi, food, beverage and so on.2.Environment – a secure, home-like environment whilst away on business –especially for long periods – makes the traveller relaxed, and more productive.This is part of corporates’ statutory Duty of Care to their employees.3.Cooking – although hotel rooms are often equipped with microwaves and coffeemakers, apartments are usually equipped with fully-functioning kitchens, enablingthe traveller to entertain and the company to control food budgets.4.Personalised – serviced apartments allow guests to customise the service theyrequire, e.g. laundry and so on.In association with Adagio, Frasers Hospitality, Quest Apartments 5
  7. 7. Corporate housing vs. extended stayTravel managers or relocation agents selecting serviced apartments for their project,assignment or long-stay business travel needs can choose between the extended stayand corporate housing product types. The pros and cons of each category can besummarised as follows.1.Availability – Preferred options are not always available in some regions, or at therequired quality level.2.Cost – Luxury or ‘upscale’ extended stay hotels will typically cost 20% more thancorporate housing apartments based on a 30-day stay (with monthly discountrates). The higher cost reflects the range of services available to the guest in-house.However budget extended stay brands such as Studio 6 have more limitedamenities and services and are therefore cheaper.3.Minimum stay - Most corporate housing providers require a minimum stay of30 days or more, although there are some exceptions. Extended stay usually hasno minimum stay requirement because, unlike corporate housing, a lease is notbeing signed.4.Lease agreements – Whilst extended stay does not require a lease, the negotiatedrate could carry a penalty if a stay is cut short. Different countries and cities alsohave varying regulations governing taxes for temporary residence.5.Guest expectations – Corporate housing can be provided in conventionalapartments, condominiums, family homes or town houses. The variations betweenthese different types of corporate housing allow the traveller to match his or herneeds in terms of facilities, furnishings and location. Corporate housing is highly‘customisable’.6.Space – Corporate housing usually provides much more space and offers a fullkitchen, laundry facility in the apartment space, separate bedroom, living roomand dining room.7. Location – The comparative savings from extended stay, corporate housing orhotels can vary from location to location. For example, whilst corporate housing ina city centre should be cheaper than either of the alternatives, the same might notbe the case in a secondary location.8.Rates - Furnished rental rates are typically all inclusive whereas hotel tariffs canoften contain hidden extras.9.Amenities – These can range tremendously between locations and operators. It’s amatter of selecting what the traveller needs, and where the required amenities arelocated. This is what a traveller can typically expect from either corporate housingcompared to up-scale extended stay.Source: Jeff SmithThe Apartment Service Global Serviced Apartments Industry Report 2013/146
  8. 8. FeatureWasher/dryerLaundry/valet serviceGarage parkingChoice of furnishingsFree breakfast buffetFree evening managers receptionHousekeepingGrocery shopping serviceSwimming poolFitness centreTennis courtsBasketball courtRacquetball courts24-hour reception (i.e. ‘front desk’)Private mailboxLoyalty programmeHigh-speed internet accessPets allowedHousewares includedUtilities includedFree local telephone callsTax-freeMinimum stayCity centre locationsSuburban locationsSource: www.bizstay.comCorporate HousingOnsite, and often in unitSometimesOften availableYes – but mainly in the USANoNoVaries; usually weekly or biweeklyOccasionally but at extra costSometimesSometimesSometimesSometimesSometimesNoYesSometimesUsually available, and usually freeSometimesYes, and customizableYesSometimesUsually (for stays of 30+ days)Usually 30 daysLotsLotsUpscale Extended Stay HotelOnsite, but not in the suiteYesAvailable only in urban high-rise hotelsNoDailyMonday - ThursdayDailyOften available, and usually freeSometimesYes, but usually quite smallNoYes (‘sports court’)NoYesNoYesAlways available, and usually freeUsuallyYesYesSometimesNoNoneLotsLotsGlossary of termsA number of acronyms or abbreviations are used in this report. These are as follows.GDS Global Distribution Systems (e.g.Amadeus, Galileo, Sabre)HBA Hotel Booking Agent (e.g. Expotel)Occupancy The percentage of occupied bedrooms in a hotel during a set periodOTA Online Travel Agent (e.g. Expedia, Hotels.com)RevPAR Revenue per available (hotel) bedroomRMC Relocation Management CompanyTMC Travel Management Company (e.g. CWT, HRG etc)USP Unique selling pointIn association with Adagio, Frasers Hospitality, Quest Apartments 7
  9. 9. Welcome to the Global ServicedApartments Industry Report 2013-14.This is the fourth edition of our survey ofworldwide industry supply and demandtrends in this sector.We have reviewed many surveys,statistics and market intelligence sourcesfor this report. Sometimes it seemed thatthere was too much information, some ofwhich was contradictory, but in thispublication we have tried to present aclear and up to date picture of theserviced apartment market in each of theworld’s principal regions.By approaching this latest report in thesame way as we did in the previous threeGlobal Serviced Apartments IndustryReports and by posing the samequestions to corporates, agents andoperators we have been able to tracknew and existing trends. There is a lot ofdata in this report which I hope will berelevant to your business.The Mobility RevolutionOur world is steadily evolving, with thebalance of economic & industrial powertipping from the Western to theemerging economies – especially in theFar East.Though long-predicted, this change inaxis has caught many by surprise, withsome markets continuing to behave asthough the reality remains a far-offscenario. The increasing globalisation ofbusiness is both cause and effect,creating a more mobile global workforceworking on short to medium termcontracts and projects.Whilst this also means a secure andbright future for everyone in the servicedapartments sector, the key to sharing inthis success will lie in understanding thenew processes, how they facilitate greateremployee mobility, and supporting thesedrivers with services and products tomeet customers’ needs.The serviced apartment industry has oldand new issues to address. From theoperator’s side, the market needs greaterclarity of product and services, as well asbranding. In the corporate camp,company policies on traveller safety,travel policy compliance, environmentaland social responsibility issues need to beconsolidated into programmes that workfor both the employer and employee.Both ends of the supply chain need topay attention to sovereign state interestsin monitoring work and immigration.Despite growing concern overunemployment, a worldwide shortage oftalent is predicted. As a result we will seecloser government scrutiny of crossborder mobility, especially in regionswithout free trade agreements like in theEU and NAFTA.I recently attended two conferences thatfocussed on the issues mentioned above.One focussed on business travel, whilstthe other dealt with relocation issues suchas home search, schools, countryfamiliarisation and settling in, their themeswere the same – company policy focus oncompliance, the enforcement thereof andthe role of procurement systems.The latter is of major concern, not only tocompanies looking to cut costs but alsoto countries facing economic crises andmaking efforts to catch stealthperpetrators. Increased cost cutting cancause an increasing ‘frizz’ factor for theCommentaryby Charles McCrow,The Apartment ServiceThe Apartment Service Global Serviced Apartments Industry Report 2013/148
  10. 10. traveller, in turn reducing theireffectiveness at work because they don’thave such a pleasant trip and feelundervalued. Other journey-related costssuch as breakfast and WiFi can wind upmaking these cost cutting initiativescounter-productive.This is also true in the relocation marketswhere there has been much discussionover the years regarding assignee careand making sure the assignee feelsvalued, or alternatively offering a lumpsum package that enables the assignee todo their own thing. This has a big impacton the settling-in process and demandsspecialist destination knowledge to beexecuted correctly.This is a growing trend for the future asGeneration Y (those born after 1980),happily uses and depends on technologyto manage their arrangements. They arewilling participants in the mobilerevolution.The task of balancing cost with staffefficiency and wellbeing varies accordingto company size, culture andcircumstance but good, efficient servicedelivered by specialist suppliers willnever be easily replaced. Advice cannoteasily be delivered online, even if theencourage a concerted effort in agreeingcommon ground for operators’ servicesand products.Our 2013 survey for this reportre-affirmed that the standardisation ofservice levels and industry practice isessential to address corporates andagencies’ concerns and help them tomake the right travel or relocationchoices with confidence.The evolution of the serviced apartmentsector has varied between regions, withlocal flavours and styles forged by localdemand and regulation. But whilst this‘regionalism’ is a vital ingredient formatching supply with demand, this doesnot mean that greater homogenisation ofprocess is either impractical orundesirable.Standardisation should be theclarification of minimum service levelsand quality thresholds that can beexpected from different categories ofproduct. The emergence of strongbrands will also go a long way to enablethis but with such a large percentage ofindependent providers and systems,clarity on these issues is universallyrequired.mechanics of the transaction are, sopeople will continue to rely on humaninteraction when it comes to specialistknowledge.The flipside of the mobile technologydebate is that of policy enforcement,whether with corporate rules, local workand immigration laws or anti-briberylegislation. Increasingly the adoption ofmobile technology will force companiesto empower their staff to find their ownoptions within set rules which will bemonitored by intelligent softwareapplications that detect and report non-compliance. Governments will also usethese systems in order to keep an eye ontemporary workers and visitors onextended business trips.The world is changing at anunprecedented rate and there isdefinitely a structural change in the waybusiness is done and how, withinnovation and talent (now known as‘human capital’) the new drivers.Looking ahead, The Apartment Servicewill continue to work with the CorporateHousing Providers Association (CHPA) inthe USA and the Association of ServicedApartment Providers (ASAP) in the UK aswell as other interested groups toCapri by Fraser, ChangiIn association with Adagio, Frasers Hospitality, Quest Apartments 9
  11. 11. IntroductionThe global serviced apartments Industryis continuing to mature, albeit atdifferent rates in different places acrossthe regions.The wider hospitality industry is nowshowing real signs of post-recessionrecovery, especially in the servicedapartments sector. This recovery wasoriginally driven by hoteliers droppingtheir rates to attract business, but theemphasis is now on driving rate andrevenue per available room (RevPAR). Asa result, demand is still growing – butnot as quickly as it was two years ago.International travel is on the up, andmany of the world’s major cities areinvesting in infrastructure projects thatwill attract and facilitate the project workand associated business travel that drivesdemand for both traditional hotels andserviced apartments. However raisingfinance to build and refurbish newapartments remains tough, and this hassignificantly reduced the flow of newsupply coming on-stream in the twoyears since the last edition of this report.The 2013 hospitality industry has beendescribed as “big, beautiful andbranded.” Whilst the hotel chains launchnew brands, more independent hoteliersare turning to consortia such as BestWestern to benefit from their brandrecognition. Internationally, the majorchains are expanding their portfolios intothe emerging markets, customising theirproducts and brand standards to localmarket needs in a process dubbed‘Glocalization.’Demand for serviced apartments isoutstripping supply in many territories,due in part to greater adoption ofserviced apartments in corporate travelpolicies, but also to more apartmentoperators taking short-stay business(i.e. less than a week) away fromtraditional hotels.But despite the growth in awareness andunderstanding of the serviced apartmentmodel, there is still a long way to gobefore the sector is fully embraced bybusiness users. To a degree this hasbeen self-inflicted; the terminology usedvaries from country to country, as doesthe consistency of the product itself,whilst the GDS distribution channelsthrough which TMCs in particular booktravel, do not work so well for servicedapartments.Serviced apartment operators, corporatebuyers and agents alike agree thatgreater standardisation is the key todriving the greater understanding ofserviced apartments that will ultimatelyrealise the potential of the sector. Theyalso agree that a Code of Conduct foroperators is essential for the samereason. And yet neither initiative seemsto be any nearer to fruition than theywere at the time of our last report.Global Industry Overviewby Mark Harris,Travel Intelligence NetworkThe Signature, Damac Maison, Dubai In association with Adagio, Frasers Hospitality, Quest Apartments 11
  12. 12. Global travel trendsDespite the continuing worldwideeconomic recession, global tourism hitrecord levels in 2012 and, thanks to theemerging markets in Brazil, Russia, Indiaand China (the BRIC nations),international travel in particular will growin 2013 (source: ITB World Travel TrendsReport 2012/13).IPK International’s World Travel Monitorestimates that 1.08 billion business traveltrips took place in 2012, with IPK and theWorld Tourism Organisation bothpredicting 3 - 4% growth in internationaltrips during 2013.The internet is now the world’s preferredbooking channel, accounting for 54% ofall travel bookings, with travel agentsnow handling just 24% of bookings. Boththe Asian and South American marketsare fast catching up with their US andEuropean counterparts in booking travelon-line (source: World Travel Monitor).The fastest-growing regions in terms ofoutbound travel are South America (tripsup 12% on 2011), Africa (up 9%) and theAsia Pacific region (up 7%), although thelatter is still regarded as the powerhouseof world travel with the IMF’s WorldEconomic Outlook predicting a 5.4%2013 surveyAs with each of the three previouseditions of this report, The ApartmentService has again researched the keydemand and supply trends in the sector.Wherever possible we have comparedthe results of this year’s survey withprevious years before presenting them toserviced apartment professionals fromaround the world for their commentsand reactions.We have, wherever possible, tried topresent the most up-to-date figures.Where 2012 data has not been available,we have used 2011 figures instead.In this year’s report, we have widenedthe net to collate responses fromcorporates and agents, as well asoperators. Whilst the corporates andagents surveyed were largely UK-based(but with international travel profiles),operators were once again surveyedworldwide.As with our 2011 report, the highestpercentage of serviced apartmentoperators who took part in the surveywere European, followed by Asia (15%)the Americas (12.5%), the Middle East(7.5%) and Australasia (6.3%).800,000800,000700,000700,000600,000600,000500,000500,000400,000400,000300,000300,000200,000200,000Extended stayExtended stayCorporate housingCorporate housing100,000100,0000020092009 20102010 20112011 20132013Fig 1 Serviced apartments – global estimates (Source: The Apartment Service)Fig 1 Serviced apartments – global estimates (Source: The Apartment Service)increase in Asia’s Gross Domestic Product(GDP) in 2013.Global accommodation industryOverall, the global accommodationindustry (including hotels) enjoyed agood 2012 with demand driving upoccupancy and room rates in most worldregions (source: STR Global).Demand is outstripping supply in the US,Asia and Middle East, as well as the BRICcountries, but whilst hotel occupancyrates in Africa have improved, rates havefallen back.There is a mixed picture In Europe. Majorevents such as the Olympics in the UKhave driven both occupancy and rate,but hotels in Western Europe have seenrelatively low growth and hoteliers inSouthern European hoteliers arestruggling (source: STR Global).The UK’s Guild of Travel ManagementCompanies (GTMC) and JP Morgan CardServices independently estimate thataccommodation accounts for 24.6% ofbusiness travel expenditure by companiesin the UK and US. This suggestscompanies worldwide are spending upThe Apartment Service Global Serviced Apartments Industry Report 2013/1412
  13. 13. to £140 billion on accommodation forbusiness; so how much of that is beingallocated to serviced apartments?Serviced apartments - supplyThe serviced apartments sector hasexpanded significantly over the last 30years, although the rate of thatexpansion has varied from region toregion, city to city, and from year to year.However the impact of the recession anddifficulties faced by developers whenraising finance have seen the overallsupply of extended stay apartmentsdecline in the last two years.In 2011, our research put the number ofextended stay apartment unitsworldwide at 599,187 in 8,362 locations,increasing inventory by 34% andlocations served by 17.5% over 2010levels. Today, we estimate that there are655,911 units in 8,802 locations. Thissuggests that supply has increased by9.4%, however the picture in individualregions, or even destinations, inevitablyvaries.This rate of growth is not reflectedamongst the inventory of the 15 topglobal suppliers, whose supply hasgrown by just 1.7%, suggesting that theoverall increase in supply is due toindependent apartment operators joiningthe market. Figure 2 shows that theglobal supplier rankings have notchanged much since 2011, with just onenew entrant – Sun Suites – to the top 15in 2013.Fig 2 Top 15 global operators 2009 - 2013 (Source: The Apartment Service)Fig 2 Top 15 global operators 2009 - 2013 (Source: The Apartment Service)140,000140,000120,000120,000100,000100,00080,00080,00060,00060,00040,00040,00020,00020,00000QuestServicedQuestServicedOakwoodCorpOakwoodCorpFrasersHospitalityFrasersHospitalityMarriottMarriottValuePlace(USA)ValuePlace(USA)MantraGroupMantraGroupChoiceHotelsChoiceHotelsAccorHotelsAccorHotelsExtendedStayHotelsExtendedStayHotelsHiltonHomewoodHiltonHomewoodHawthornSuitesHawthornSuitesIntercontinentalHotelIntercontinentalHotelTheAscottLtdTheAscottLtdPierre&VacancesPierre&VacancesSunSuitesSunSuites20092009201020102011201120132013Sun Suites, Hattiesburg, MS, USAIn association with Adagio, Frasers Hospitality, Quest Apartments 13
  14. 14. Fig 3 Top global suppliers increasing supply 2013 vs. 2011(Source: The Apartment Service)Fig 3 Top global suppliers increasing supply 2013 vs. 2011(Source: The Apartment Service)140.00%140.00%120.00%120.00%100.00%100.00%80.00%80.00%60.00%60.00%40.00%40.00%20.00%20.00%0.00%0.00%QuestServicedApartmentsQuestServicedApartmentsOakwoodCorpHousing(estimated)OakwoodCorpHousing(estimated)FrasersHospitalityFrasersHospitalityMarriottMarriottValuePlace(USA)ValuePlace(USA)MantraGroupMantraGroupChoiceHotels(USA)ChoiceHotels(USA)AccorHotelsAccorHotelsExtendedStayHotelsExtendedStayHotelsHiltonHomewoodSuitesHiltonHomewoodSuitesHawthornSuitesHawthornSuitesIncreasingSupplyIncreasingSupplyDecreasingSupplyDecreasingSupply70,00070,00060,00060,00050,00050,00040,00040,00030,00030,00020,00020,000USAUSACanadaCanada10,00010,0000020092009 20102010 20112011 20132013Fig 4 Corporate housing – global estimates (Source: The Apartment Service)Fig 4 Corporate housing – global estimates (Source: The Apartment Service)The Apartment Service Global Serviced Apartments Industry Report 2013/1414
  15. 15. As figure 3 shows, 11 of the top 15 haveincreased their supply, with QuestApartments in Australia showing thebiggest rise (28%), followed by Oakwood(21.3%) and Frasers (9.2%).By comparison, supply of corporatehousing in the primary US and Canadianmarkets has remained almost static. AsFigure 4 shows, 2013’s 2.2% reduction(65,396 to 63,911) was not as severe asthe 13.9% fall in corporate housingsupply in 2010 over 2009.This reflects corporate housing operators’ability to withdraw inventory from themarket during tough times and theconsequently fluctuating level of supply.Confirming the picture of increasingsupply, serviced apartment operatorsreport that their local markets arebecoming more competitive. Figure 5shows that 77.4% of operators said thatlocal supply was increasing.The spread of supply of servicedapartments across the world’s regionsreflects the roots of the sector, with theUS and Asia Pacific’s vast domestic traveldistances driving extended stays, as themost mature.100100808060604040202000IncreasedIncreased DecreasedDecreased Stayed the SameStayed the SameFig 5 Is the number of apartment operators growing in your region? (Source: The Apartment Service)Fig 5 Is the number of apartment operators growing in your region? (Source: The Apartment Service)Quest ApartmentsIn association with Adagio, Frasers Hospitality, Quest Apartments 15
  16. 16. 6.56.56.06.05.05.04.54.55.55.54.04.03.53.53.03.02.52.52.02.01.51.51.01.00.50.5002,0002,000 4,0004,000 6,0006,000 8,0008,000 10,00010,000 12,00012,000Fig 6 International serviced apartment supply comparison (Source: Savills, ASAP, STR, ABS, STB)Fig 6 International serviced apartment supply comparison (Source: Savills, ASAP, STR, ABS, STB)Unitsper1,000businessvisitorsUnitsper1,000businessvisitorsBusiness visitors per annum (000’s)Business visitors per annum (000’s)Hong Kong5.3 unitsHong Kong5.3 unitsSydney2.6 unitsSydney2.6 unitsSingapore1.8 unitsSingapore1.8 units London1.2 unitsLondon1.2 unitsNew York5.2 unitsNew York5.2 unitsEurope remains relatively under-developed. As Figure 6 shows, Londonhas just 1.2 apartments per 1,000business visitors compared to Singapore(1.8), Sydney (2.6), New York (5.2) andHong Kong (5.3). However there are anumber of factors restricting furthergrowth in supply.Development opportunities are oftenlimited, with strong competition fromresidential developers. Financiers do notyet fully understand the commercialpotential of the serviced apartmentsector which can make it harder fordevelopers to raise the money to buildnew apartments.Our research shows that there has beena significant increase – 11% – in thelocations being served by servicedapartments (see Figure 7), so whatinfluences operators’ choices of newlocations?Oakwood Worldwide’s Jill Chapmanprovides an insight. “We’ve seen asignificant increase in demand forhousing in Canada. Many citiesthroughout the Alberta province areattracting businesses who want toexplore the region’s untapped naturalresources. Companies involved in theindustries of oil, gas, energy, mining andpotash have begun sending employeesand contractors to the area in greaternumbers over the past two years.”Ricky Kapoor of the UK’s Hotel BookingAgents Association (HBAA) providesanother, arguing that new supply comesonline “because of the old adage‘location, location, location’. The cleverbit is identifying what makes thatlocation, the corporate offices or theamenities.”And whilst economic factors may havepreviously limited growth in supply, thepipeline is starting to flow once more,as figure 8 shows.The Apartment Service Global Serviced Apartments Industry Report 2013/1416
  17. 17. 10,00010,0004,0004,0005,0005,0006,0006,0007,0007,0008,0008,0009,0009,0003,0003,0002,0002,0001,0001,0000020092009 20102010 20112011 20132013Fig 7 Locations served by serviced apartments 2009 – 2013 (Source: The Apartment Service)Fig 7 Locations served by serviced apartments 2009 – 2013 (Source: The Apartment Service)Chain Location Brand Apartments OpeningHiltonHiltonFrasers HospitalityFrasers HospitalityFrasers HospitalityFrasers HospitalityFrasers HospitalityFrasers HospitalityThe Ascott Ltd.CHI ResidencesMarriottJumeirahWorld HotelsAdina ApartmentHotelsFrasers HospitalityFrasers HospitalityFrasers HospitalityThe Ascott Ltd.The Ascott Ltd.HyattHyattDamac PropertiesFrasers HospitalityFrasers HospitalityFrasers HospitalityRezidorEmaar PropertiesFrasers HospitalitySwissotelFrasers HospitalityIraqPhiladelphiaGurgaonTianjinKuala LumpurBangaloreBahrainWuhanMalaysiaSingaporeEdinburghLondonMakatiBaulkham HillsFrankfurtChennaiWuxiParisMuscat (Oman)ShanghaiShanghaiDubaiSetiabudiAl Jadaf, DubaiRiyadhDohaDubaiKuninganDubaiJohor, MalaysiaDoubletreeHome2SuitesFraser PlaceFraser PlaceFraser ResidenceFraser SuitesFraser SuitesModena by FraserSomerset ResidencesCHIResidence InnJumeirah LivingWorld HotelsToga HospitalityCapri by FraserFraser ResidenceModenaCitadinesSomerset ResidencesHyatt PlaceHyatt HouseCapri by FraserFraser ResidenceFraser SuitesFraser SuirtesCapri by Fraser200246186204451071331491065122014007054220132013201320132013201320132013201320132013201320132014201420142013201420142014201420152015201520152015201620162017Fig 8 New openings (Source: The Apartment Service)In association with Adagio, Frasers Hospitality, Quest Apartments 17
  18. 18. Serviced Apartments - demandDemand for serviced apartments hasgrown dramatically in the last 10 years,fuelled by gradually improving productknowledge, understanding of thebenefits of serviced apartments amongstcorporates, improving standards ofapartment and the arrival of majorbrands into the sector.The gradual easing of the impact of theworldwide recession is illustrated byimproving occupancy figures – up year-on-year for 65% of operators during 2012and un-changed for 23% over 2011,compared to 59% and 22% respectivelyin 2010.94% of operators report that demand forserviced apartments in their regions isincreasing. This compares to 77% in2011, whilst Figure 9 shows how demandfor one apartment operator - OakwoodWorldwide - has grown. Further evidenceof optimism comes from a 2013 survey ofthe Association of Serviced ApartmentProviders which revealed that 74% ofoperators in the UK and Ireland expecttheir business to increase during 2013.Of those, 50% expect an increase of up to10% whilst 20% expect an increase ofover 10%.25,00025,00010,00010,00015,00015,00020,00020,0005,0005,0002012 Placements exceed 20,0002012 Placements exceed 20,0000020002000 20022002 20042004 20062006 20082008 20102010 20122012Fig 9 Growth in demand for serviced apartments – 2000/2012 (Source: Oakwood Worldwide)Fig 9 Growth in demand for serviced apartments – 2000/2012 (Source: Oakwood Worldwide)Global expansion inthe Euro ZoneExpansions in Asia Pacific& CanadaInvestment in Latin America& Emerging MarketsOakwood Worldwide, Marsham Street, LondonThe Apartment Service Global Serviced Apartments Industry Report 2013/1418
  19. 19. 2012 occupancy figures collated bySavills show that, over the three yearsperiod to the end of 2012, servicedapartment occupancy exceeded that ofhotels in four of the five main globalcities, with an average differential of3.5% (see Fig 10).This growth in demand has been fuelledby the global economic recession,particularly amongst corporates whohave turned to serviced apartments as acost-effective alternative to long-termhotel stays, although in some cities100%100%95%95%90%90%85%85%80%80%75%75%70%70%65%65%60%60%Hong KongHong Kong New YorkNew York SydneySydney LondonLondon SingaporeSingaporeFig 10 Occupancy trends Serviced Apartments vs. Hotels 2009 – 2012 (Source: Savills, ASAP, STR, ABS, STB)Fig 10 Occupancy trends Serviced Apartments vs. Hotels 2009 – 2012 (Source: Savills, ASAP, STR, ABS, STB)OccupancyOccupancyServiced apartments Q2 12Serviced apartments Q2 12Serviced apartments 3-yr aveServiced apartments 3-yr aveHotel 3-yr aveHotel 3-yr avewhere demand is particularly high (e.g.London), hotels can sometimes work outcheaper.Demand is being further fuelled by thegrowth in project and assignment work.Ernst & Young’s 2012 Global MobilityStudy predicts that long term and shortterm assignments will increase by 11%and 20% respectively over the next twoyears. Just under half of the companiessurveyed are increasing the number ofpeople sent to the BRIC countries.Hotel Booking Agents Association 2013 member survey• Usage growing – 56.5% of HBA clients used apartments more in 2012 than in 2011• Large domestic usage (65% of clients), with Europe (43.5%) and the US (21.7%) the mostpopular international destinations in which serviced apartments are preferred• 23.8% of HBA clients have average stays of 7 – 29 nights• Price, duration of stay and total cost of stay are primary purchasing factorsSource: Hotel Booking Agents AssociationThe UK Institute of Travel and Meetingshas found that serviced apartment usageis growing in 86% of British companies.Our research shows that 60% of UKcorporates’ travel policies now includeserviced apartments, rising to 77% fortravel policies managed by TMCs.77% of British business travellers nowstay in serviced apartments up to 5 timesa year for trips of up to 7 nights. Of thosewho have stayed in a serviced apartment,79% prefer them to hotels. This trend isreflected in the UK’s Hotel BookingAgents’ sector (see panel below).In association with Adagio, Frasers Hospitality, Quest Apartments 19
  20. 20. EuropeEurope77.8%77.8%33.3%33.3%27.8%27.8%16.7%16.7%22.2%22.2%33.3%33.3%27.8%27.8%Middle EastMiddle East North America& CanadaNorth America& CanadaLatin &South AmericaLatin &South AmericaAfricaAfrica AsiaAsia Australasia(Australia &New Zealand)Australasia(Australia &New Zealand)Fig 11 Regions in which UK-based TMC clients use serviced apartments (Source: The Apartment Service)Fig 11 Regions in which UK-based TMC clients use serviced apartments (Source: The Apartment Service)The same applies to those companiesconsidering serviced apartments in thefuture with Europe and Asia topping thelists (see Figure 12) amongst Britishcorporates. However demand is alsogrowing in Africa and Latin America -both up 10 points for consideringserviced apartments in the future - andin Canada.The relocation market is another primarysource market for serviced apartments,with business picking up again during2012 and expected to grow during 2013.According to Weichert RelocationResources’ 2012 Employee MobilitySurvey, 40% of companies expect theirrelocation activity to rise in 2013, whilstglobal relocation firm Cartus predicts a57% increase in relocations as skills gapswiden and recruitment becomesincreasingly competitive.However relocations are also takinglonger to complete, leading companiesto allow their employees to stay intemporary accommodation – oftenserviced apartments – for longer as partof extended overall relocation periods.The main challenges of relocationinclude family adjustment, children’seducation and location difficulties. As aresult, relocation companies recommendserviced apartments over hotels becausethey offer relocating individuals andfamily’s space, freedom and flexibility,allowing them to concentrate onadjusting to new surroundings, culturesand jobs.“Easy access to facilities with a choice ofrecreation amenities on the doorstep areall important considerations that gotowards promoting a happier andhealthier lifestyle for business executives”says Cherie Tan of Frasers Hospitality.57% of corporates reported that averagelength of stay increased in 2012 over2011, although 38% reported no change.In our 2010 survey, 30% of operatorsreported average length of stay hadincreased and 52% reported change overthe previous year, providing furtherevidence of growing market share.The serviced apartment experience is alsodriving demand as corporate travellersbecome advocates. “There’s a definiteincrease in requests from people whoactually stay in apartments rather thanthose who book them on their behalf”says Charles McCrow of The ApartmentService. “They know the true value of thecomfort and space apartments provide,so focussing purely on rate is not the wayto calculate the real return on investmentto the corporate.”The global regions in which Britishbusiness travellers stay in servicedapartments are Europe, Asia, the MiddleEast, North America and Australasia (seeFig 11). The top 4 cities for servicedapartment usage by British-basedcompanies are London, New York, Parisand Barcelona.The Apartment Service Global Serviced Apartments Industry Report 2013/1420
  21. 21. EuropeEurope77.8%77.8%33.3%33.3%27.8%27.8% 27.8%27.8%38.9%38.9%33.3%33.3%27.8%27.8%Middle EastMiddle East North America& CanadaNorth America& CanadaLatin &South AmericaLatin &South AmericaAfricaAfrica AsiaAsia Australasia(Australia &New Zealand)Australasia(Australia &New Zealand)Fig 12 Regions in which UK-based TMC clients are considering using serviced apartments(Source: The Apartment Service)Fig 12 Regions in which UK-based TMC clients are considering using serviced apartments(Source: The Apartment Service)Fraser Place, MelbourneIn association with Adagio, Frasers Hospitality, Quest Apartments 21
  22. 22. Serviced apartments vs. hotelsOur research shows that apartmentusage is growing as a percentage of totalhotel nights amongst 60% of UKcorporates, but the reasons offered bycorporates, TMCs and operators varyconsiderably.The key drivers of corporate apartmentusage are cost per night, length of stayand location (see Figures 13 and 14).Overall trip cost and ease of booking aresecondary factors. TMCs report length ofstay, location and price to be the keydrivers, but also highlight ease ofbooking as a major priority for 33% oftheir clients.According to serviced apartmentoperators surveyed, their clients’decisions to book are based onconvenience (72%), price/qualitycomparison (69%), cost (64%) andlocation (53%). In 2010, the prioritieswere space (81%), the opportunity tocook (74%) and price (66%).Steve Thorne of Jumeirah Living explainswhy. “As serviced apartments of anygrade start to become more assimilatedinto corporate hotel programmes, theintrinsic benefits, such as the ability tocook, begin to have less importance inthe buying process.”Corporates and TMCs alike assess thereturn on investment on servicedapartments using three main criteria.Most popular is rental paid (used by 43%of corporates and 40% of TMCs),followed by total cost of stay includingF&B (29% of corporates, 22% of TMCs)and traveller feedback (29% ofcorporates, 11% of TMCs). 39% ofcompanies don’t measure ROI onserviced apartment usage at all.Jumeirah Living World Trade Centre Residence, DubaiThe Apartment Service Global Serviced Apartments Industry Report 2013/1422
  23. 23. LocationLocation52.5%52.5%63.8%63.8%70%70%68.8%68.8%20.0%20.0%CostCost ConvenienceConvenience Price/QualitycomparisonPrice/QualitycomparisonOtherOtherFig 13 Influences on choices of accommodation - Corporates responses (Source: The Apartment Service)Fig 13 Influences on choices of accommodation - Corporates responses (Source: The Apartment Service)Fig 14 Influences on choice of accommodation - TMC responses (Source: The Apartment Service)Fig 14 Influences on choice of accommodation - TMC responses (Source: The Apartment Service)LocationLocationPricePriceEase of BookingEase of BookingLength of StayLength of StayOtherOther00 0.50.5 11 1.51.5 22 2.52.5 33 3.53.5112233445575.0%75.0%25.0%25.0%25.0%25.0%25.0%25.0%50.0%50.0%66.7%66.7%33.3%33.3%75.0%75.0%25.0%25.0%100.0%100.0%Most importantMost importantLeast importantLeast importantIn association with Adagio, Frasers Hospitality, Quest Apartments 23
  24. 24. Fig 15 Average rental rates achieved by serviced apartment operators (Source: The Apartment Service)Fig 15 Average rental rates achieved by serviced apartment operators (Source: The Apartment Service)I achievepublished ratesI achievepublished rates-5%-5%-10%-10%-15%-15%-20%-20%OtherOther00 55 1010 1515 2020 252525.6%25.6%16.7%16.7%17.9%17.9%15.4%15.4%14.1%14.1%10.3%10.3%apartment operators still offer discountedpricing structures for those who committo longer-stays and this is something thatstill doesn’t form a core part of aconventional hotel’s pricing structure.”“When the UK apartment market firsttook off in the late 1990’s our biggestUSP against hotels was initially the lowerrate which grabbed the buyer’sattention, followed by the space that wasoffered. This worked well for a time butwith more extended stay operatorsentering the market in the mid 2000’s,particularly in regional markets, servicebecame the new battleground and onethe buyers gravitated towards, perhapsafter having service issues at less service-focussed operators.”Global dealsGlobal deals between RelocationManagement Companies (RMCs), TMCs,corporates and serviced apartmentoperators remain the exception to therule. This is due in part to TMCs andspecialist HBAs favouring hotel suppliersable to offer coverage for transient stayseither globally or in the locationsrequired by their clients, bookable via theGDS systems used by front line staff.This means that new preferred partnersare only added where new demand orspecific requests arise. “Relocation andtravel management companies tend towork with specialist apartment providerslike us rather than try to accommodateapartments within their own servicedelivery teams” says Charles McCrow.“As well as the lack of productknowledge there’s also a differentmind-set required to source, negotiateand manage compliance issues inserviced apartments.”TMCs are not geared to managing highvolumes of relationships withindependent hotel (or apartment)operators and therefore prefer to haveone regional or global servicedapartment option in their requiredmarkets, or establish an alliance with aspecialist serviced apartments providerlike The Apartment Service.This is a major challenge for independentapartment operators because, as SteveThorne points out, “there is still not oneAchieved vs. published rental ratesServiced apartment rental rates are underincreasing pressure with discountsbecoming commonplace, although thesize of discounts on offer can vary.According to our research, 43% ofcorporates booking direct withapartments, and 56% of those bookingvia TMCs are achieving discounted rates,with 74% of operators saying thatachieved rental rates are lower than their2011 equivalents.As Figure 15 shows, discounts averagebetween 10 - 20%, so is the apartmentmarket harder or softer on rate thanhotels? Steve Thorne believes that someapartment operators have increased theirnightly rates to levels comparable withhotel competitors, but without matchingservice levels or convenience.“Apartment size becomes irrelevant for a1-2 night stay when same-day laundry isnot possible and there are no diningoptions in-house. What was once a well-priced option that could be forgiven forits hotel shortcomings is now, in somecases, perceived as an under-performinghotel alternative. However most servicedThe Apartment Service Global Serviced Apartments Industry Report 2013/1424
  25. 25. global apartment operator to match thecoverage of a major hotel chain. Whilstevery operator would love to have directrelationships with corporate clients it’simportant to recognise the client’sbuying process and the reason they needthe agent. No matter how big yourapartment brand, unless you are in everysingle major international city, you willnever fully bypass the TMC.”DistributionThe internet is the principal bookingchannel for serviced apartments. 80% ofcorporate bookings are made online, ofwhich 27% are via a self booking tool.75% of operators claim to be bookableonline with live inventory (see Fig 16).Although the dominance of the web as abooking channel is reflective of globaltravel trends, both business andconsumer, this also reflects the waningpower of GDS.Operators are increasingly frustrated bythe fundamental issues of identifying aserviced apartment within GDS, havingsufficient inventory to offer through thechannel, and the short-stay nature ofGDS bookings. As Figure 17 shows, 62%of operators are not represented on anyGDS platform, the same figure reportedin our 2010 survey.Of the remaining 38%, representation isspread equally amongst Sabre (28%),Galileo and Amadeus (both 25%) andWorldspan (24%). These results alsomirror those of the 2010 survey,although Sabre has increased marketshare.Serviced apartment operators continueto feel pressured to adopt conventionalhotel-centric booking processes to attracttransient corporate travellers viacorporate programmes or onlinechannels. However the fees inherent inboth GDS and online travel agencies(OTAs) are often prohibitive for smallerserviced apartment operators.75.0%75.0%25.0%25.0%Fig 16 Serviced apartments with live inventory, bookable online(Source: The Apartment Service)Fig 16 Serviced apartments with live inventory, bookable online(Source: The Apartment Service)Fig 17 Serviced apartments bookable via GDS (Source: The Apartment Service)Fig 17 Serviced apartments bookable via GDS (Source: The Apartment Service)WorldspanWorldspanAmadeusAmadeusGalileoGalileoSabreSabreOtherOtherN/AN/A00 1010 2020 3030 4040 505023.6%23.6%25.0%25.0%25.0%25.0%27.8%27.8%15.3%15.3%62.5%62.5%In association with Adagio, Frasers Hospitality, Quest Apartments 25
  26. 26. temporary home with all the benefitsthat a hotel could not offer. An increasingshift in the level of relocation contractsoffering shorter periods of housing, orcontracts requiring accommodation afew days at a time has encouraged moreEuropean operators to target the shorter-stay traveller and in doing so, forcingthem to compete head to head withconventional hotels.”“The disparity of service offering in themarket has made it difficult for thecorporate buyer to truly be sure of whatthey are contracting and so may haveavoided including apartment operatorsas a result unless, as the report concurs,operators’ locations played a part,particularly where hotel accommodationremains under-supplied.”Thorne believes that the biggest barrierto acceptance is trying to persuade travelmanagers to accept apartmentoperators. “Often the RFP processinstigated by the corporate buyer is notflexible enough to allow the apartmentconcept to shine, but if you talk to theright corporate buyers in HR or relocationthe vast majority are already dealing withapartments on a regular basis andunderstand the benefits.”The HBAA’s Ricky Kapoor says that thereis still a major education task facing theserviced apartment sector. “There are toomany myths about apartments. That youhave to sign a long lease, the securityBy contrast, the influence of social mediais growing. According to a 2012TripAdvisor survey, over 40% of travellersuse social media channels for travelplanning. A separate study byPhoCusWright showed that over 75% oftravellers turn to social networks to shopfor deals, and 30% specifically seek outtravel-related deals.With the number of social network usersworldwide predicted to increase by morethan 50% to 1.8 billion by 2014 (source:eMarketer), social media’s impact on thetravel and hospitality industry is alreadyprofound. No surprise then that servicedapartment operators are increasing theirpresence in the social media space.Barriers – extended stayCorporates who took part in our latestsurvey cited three principal barriers togreater use of serviced apartments fortransient business travel, assignment orrelocation purposes.The first is a shortage of apartments inrequired locations, second the sector’slimited online booking capability, andthird a lack of understanding about theserviced apartment product itself.Jumeirah Living’s Steve Thorne believesthat the latter is a perception rather thanreality. “The fundamental reason thesector developed was to accommodatethe extended-stay traveller wanting a“There are too many mythsabout apartments. Thatyou have to sign a longlease, the security aspect,or whether there issomeone at reception.There is such an array ofdifferent kinds ofapartments, I’m notsurprised corporates areoften confused.”Ricky Kapoor, HBAAPremier Apartments Limehouse LockThe Apartment Service Global Serviced Apartments Industry Report 2013/1426
  27. 27. aspect, or whether there is someone atreception. There is such an array ofdifferent kinds of apartments, I’m notsurprised corporates are often confused.”“Product consistency is another issue,which is why we need a grading schemeto define what an apartment includes.For example, does it have a full kitchen?Some say they’ve got a kitchenette, butall they have is a microwave; others willhave a fridge freezer, microwave,washing machine and dishwasher.”Barriers – corporate housingIn the USA’s corporate housing sector,the barriers are a little different. Driven bythe economic and US housing crisis,demand for apartments has increaseddramatically whilst new supply has driedup due to the construction industrycoming to a virtual standstill.Securing inventory has become morechallenging, with operators chargingpremiums of 10%+ on short-term leases.Some properties have declined to workwith corporate housing providers oraccept short term leases.There has been continued pressure onrental rates within EMEA, APAC and theAmericas, with destinations such asLondon, Beijing, Shanghai, New York andWashington D.C. seeing substantial risesin the rents being quoted.Availability is particularly limited in theBRIC markets such as Delhi, Mumbai,Bangalore and across Brazil forapartments with more than twobedrooms /bathrooms. Meanwhile whatnew build is taking place lies in popularurban destinations where demand isdriving up prices. Seasonality and majorevents such as the Olympic Games alsoaffect corporate housing in terms ofpricing and availability.Global code of conduct for operatorsA recurring theme of each edition of thisreport has been the need (or otherwise)for a global code of conduct for servicedapartment operators.In this year’s survey 86% of businesstravellers and 72% of agents said thatthere should be a global Code ofConduct for serviced apartmentoperators. But whilst 74% of operatorsagree, 52% believe that this is notfeasible. These results mirror those of the2010 survey.There is also a feeling amongst largeroperators that a global code of conduct isnot necessary, arguing that if the aim is toensure a professional approach by theoperator, this is open to interpretationand should be governed by normalbusiness ethics of that country.Whilst some serviced apartmentoperators want to be seen asindependent of the hotel sector (but stillencroaching on it), any benchmarkingneeds to encompass all forms of theaccommodation industry. As SteveThorne puts it, “with such diversity in oursector – and rightly so – such a universalpoint of reference is a long way off.”Biggest challengesServiced apartment operators identified anumber of challenges in their businessesduring 2013/14. Apart from the Eurozonefinancial crisis and ever-rising utility costs,the biggest challenge facing operators isthat of big hotel brands coming intoserviced apartments sector, especially inthe extended stay segment.Here their experience, brand awarenessand access to transient booking channelscombine to deliver new business andmaintain market share that mightotherwise be lost to local apartmentoperators.This is most obvious in the establishedNorth American markets, some Asianand European cities where planningregulations together with marketdemand have enabled brands to establishthemselves in new locations. In Londonthe major hotel brands have yet to makean impact on the established mid-rangeserviced apartment operators.Increasing average length of stay andattracting more corporate guests is thethird-biggest challenge facing operatorsafter a couple of years in which operatorshave sought the higher average dailyrates from short stays or to fill gaps inoccupancy.Whilst it is relatively easy to turn on thetaps of the transient market with higherrates but also higher commissions, inunderperforming markets it can be veryhard indeed to turn them off, therebyshifting the market mix for the operatorfor the long-term to a far shorter stay.Online Travel Agents (OTAs) commissionrates are a relatively new challenge facingoperators. The channel – which demandscommission levels of up to twice that ofconventional TMCs/HBAs – can deliverhigh volumes of business, but is gearedtowards hotels. The threat here is toapartment pricing models, and theinherent dangers of raising expectationsin terms of guest services.In association with Adagio, Frasers Hospitality, Quest Apartments 27In this year’s survey 86% ofbusiness travellers and 72%of agents said that thereshould be a global Codeof Conduct for servicedapartment operators.
  28. 28. Business optimismAs Figures 18 & 19 show, the air ofoptimism that has pervaded the servicedapartments sector over the past five yearsshows little sign of abating.Only a quarter of operators are lessoptimistic about occupancy levels thanthey were two years ago, and even fewerare pessimistic about achieved rentalrates. However this is in stark contrast tothree years ago, when 90% of operatorswere optimistic for the future. But howmuch headroom remains for servicedapartments to take market share fromhotels?According to Savills’ there are anestimated 110,000 bedrooms acrossLondon’s hotels, B&Bs and servicedapartments of which 7,000 are servicedapartments – 6% of the availableaccommodation in London.The question is what type of business willgrow that market share. If operators seekto grow their volumes with transientcorporate business, they will have toaccept a higher level of head-oncompetition with hotels, includingmarket conditions, commission levels,market regulation and customerexpectations.One solution could lie in exploiting theleisure market, which accounts for 30%of customers using serviced apartments,according to the Association of ServicedApartment Providers (ASAP). To achievethis, however, the sector needs to addressthe fundamental issues of customerunderstanding, product consistency andmatching supply in locations with theappropriate demand.Settling on a single set of definitions andterminology for serviced apartmentswould be a good place to start.The Apartment Service Global Serviced Apartments Industry Report 2013/1428
  29. 29. Fig 18 Serviced apartment optimism - occupancy 2013 vs. 2011 (Source: The Apartment Service)Fig 18 Serviced apartment optimism - occupancy 2013 vs. 2011 (Source: The Apartment Service)More optimisticMore optimisticLess optimisticLess optimisticEqually optimisticEqually optimistic40.5%40.5%25.3%25.3%34.2%34.2%Fig 19 Serviced apartment optimism - achieved rental rate 2013 vs. 2011(Source: The Apartment Service)Fig 19 Serviced apartment optimism - achieved rental rate 2013 vs. 2011(Source: The Apartment Service)More optimisticMore optimisticLess optimisticLess optimisticEqually optimisticEqually optimistic38.0%38.0%21.5%21.5%40.5%40.5%In association with Adagio, Frasers Hospitality, Quest Apartments 29
  30. 30. Partner PerspectivesThe brand Aparthotels Adagio is providing urban accommodation solutions forextended stays in major European cities. The brand has the largest network in Europewith 90 properties and 10.000 apartments.As the No 1 network in Europe, it offers different geographical locations to meet theneeds of the extended stay travellers, providing two product ranges:• Adagio: positioned on the midscale segment and located in prime locations of keyinternational gateway destinations, offering modern and spacious apartments.• Adagio access: positioned on the economy segment and located on businessdistricts of major cities, providing convenient and functional apartments.Both product ranges provide an ergonomic room concept designed for extendedstays, with fully equipped kitchen and modular furniture. Tiered pricing from 4thnight onwards, a 24/7 reception desk and optional services such as breakfast are keyelements of the brand.Aparthotels Adagio benefits from the operational knowhow, distribution channels andquality standards of its two shareholders, the Accor Group, the world’s leading hoteloperator, and the Pierre & Vacances Center Parcs Group, the European leaderofholiday apartments.Aparthotels Adagio operates across 7 European countries and plans to open 60properties in the coming 4 years. The UK is set to become one of the key growthterritories in Europe, besides France and Germany. The brand is entering the Brazilianmarket in late 2013 as well as the Middle East with its first opening in Abu Dhabi.Adagio Basel CityAdagio Access BrusselsAdagio MunichThe Apartment Service Global Serviced Apartments Industry Report 2013/1430
  31. 31. Quest is the largest and fastest growing serviced apartment operator in Australasiawith more than 150 properties located across Australia, New Zealand and Fiji.The company’s growth has been achieved through its commitment to meeting theaccommodation needs of the extended stay business traveller, which has consistentlycomprised its largely blue chip client base for over 25 years.HistoryBeginning in the suburbs of Melbourne in the late 1980’s, Founder and Chairman ofQuest Paul Constantinou, opened the first Quest business at Royal Gardens in Fitzroy,in response to a specific extended-stay market.TodayToday, over 25 years on and the Quest Brand remains firmly committed to that samecorporate extended-stay serviced apartment market that its success was founded on.Quest’s long-standing involvement with the evolution of the corporate extended-staymarket in Australia and business format franchise system has placed it at the forefrontof this growing market segment in Australia.OurcustomersQuest focuses on the corporate traveller market. Our most valued customers comefrom industries including banking, telecommunications, mining and insurance. Thiskind of customer base makes our business revenue particularly stable. Contrast thiswith serviced apartments based in leisure locations, where occupancy and returns areaffected by seasonality and market cycles. Across the industry as a whole, businesstravellers comprise around 60% of total room demand – at Quest they account forover 80%.Quest is used by 90% of Australia’s Top 500 companies and has a CBD, suburban andregional presence across every state and territory in Australia. These relationshipsprovide Quest franchise businesses with an opportunity to participate in nationaltenders via the central coordination of the Quest National Account Managementfunction.MarketshareAs a pioneer of the Serviced Apartment concept in Australia in the late 1980’s, theQuest Serviced Apartments Group has grown to become the market leader within asegment of the accommodation industry which has grown its share from 15% to 21%since 2000.BusinessmodelThe Quest Business Model is to establish and franchise Serviced Apartment Businessesin locations where our customers want to be. Quest then manage the national brandactivities, establish, grow and maintain relationships with national clients and supportthe franchise network that operates under the Quest Brand.GrowthQuest Serviced Apartments has grown since the opening of its first property at RoyalGardens in 1988, to over 150 locations across Australia, New Zealand and Fiji. Indoing so, Quest has delivered a consistent and sustainable return for the benefit of allstakeholders for 25 years.In fact, Quest has opened between 4 and 10 new businesses in Australia every yearsince 1998. This expansion has been achieved irrespective of economic or propertycycles and almost entirely organically, largely as a result of the strength of thebusiness model.Quest SOP buildingQuest on Franklin StreetIn association with Adagio, Frasers Hospitality, Quest Apartments 31
  32. 32. Partner PerspectivesA world leader in serviced apartments and premier residences, Frasers Hospitality PteLtd (Frasers) has risen to the forefront of the global premium corporate housingmarket within a short span of 15 years. It is now one of the fastest growing industryplayers worldwide, with plans to increase its portfolio to 77 properties in 41 keygateway cities across Europe, Middle East, North Asia, Southeast Asia and Australiawithin the next three years.Frasers’ product offerings cater to the different lifestyle needs of a wide spectrum ofbusiness travellers in the various markets: Frasers Gold-Standard premier servicedresidences; Modena 4-star serviced residences; and, Capri by Fraser, the latest brandaddition to the group’s portfolio, an urban inspired, high tech and intuitive hotelresidence that brings together the extensive range of facilities and services of a smarthotel with the comfort and convenience of a full serviced residence to meet the 24x7lifestyle of the tech-forward e-generation traveller.Frasers is unwavering in its focus on service excellence and innovation to meet theevolving needs of the corporate traveller. This has included the introduction ofunlimited free 24x7 high speed Internet access across all its properties worldwide andthe launch of a mobile website (www.frasershospitality.com), which allows travellersto make reservations, modify bookings and have instant access to propertyinformation, special offers and promotions, via their smartphones while on the go.Frasers’ intrinsic understanding of the importance of quality service and appreciationof the unique needs of business travellers is evidenced by the numerous industryawards that it has garnered over the years. The most recent wins include theCorporate Housing Provider of the Year 2012 at the Asian Expatriate Management andMobility Awards (EMMA), World’s Leading Serviced Apartment Brand at the WorldTravel Awards, Best Serviced Apartments Company in the Middle East 2012 byBusiness Traveller and Best Serviced Apartment Brand of China 2012 by China HotelStarlight Awards.Over 90% of Frasers’ residents are business executives from Fortune 500 companiesincluding industries such as banking and finance, law, oil and gas, pharmaceutical,business consulting, IT and entertainment, whose retention rates average from 3 to 6months, up to 10 years. This impressive track record coupled by the positive feedbackgenerated from guest surveys, are testaments to the impeccable service and valueFrasers provides, earning it the trust of most local and international relocationagencies.Cementing its status as one of the fastest growing industry players worldwide, thegroup is focussed on continuing to drive the Frasers brand towards further globalgrowth, while remaining grounded in its heritage and core values as a world leaderin serviced apartments and premier residences.THEFRASERCOLLECTIONBAHRAIN BANGALORE BANGKOK BEIJING BUDAPEST CHENGDU DOHA DUBAIEDINBURGH GLASGOW GUANGZHOU GURGAON HANOI HO CHI MINH CITY HONGKONG ISTANBUL JAKARTA KUALA LUMPUR LONDON MANILA MELBOURNE NANJINGNEW DELHI OSAKA PARIS PERTH SEOUL SHANGHAI SHENZHEN SINGAPORE SUZHOUSYDNEY TIANJIN WUHAN CHANGZHOU (2016) CHENNAI (2014) JOHOR (2015)FRANKFURT (2014) RIYADH (2015) WUXI (2014)Fraser Suites, SuzhouThe Apartment Service Global Serviced Apartments Industry Report 2013/1432
  33. 33. Fraser Suites, SukhumvitFraser Place, Anthill, IstanbulFraser Residence, ShanghaiFraser Suites, DubaiIn association with Adagio, Frasers Hospitality, Quest Apartments 33
  34. 34. Regional rates comparisonOn the opposite page is a comparison of rate ranges for studio, one bedroom and two bedroom apartments in the seven regionscovered by this report. The figures are given in both the local currency and, for ease of comparison, in US$.This data reveals a huge variance in average rates between regions but also in length of stay. For example a studio apartment inAfrica in 2013 costs between US$71 – 306 for stays of less than one week, rising, compared to the Middle East where the samestay costs between US$82 - 545.Interestingly, the primary serviced apartment markets of the US and Europe are comparable rate-wise with less developedmarkets. Australasia emerges as the most expensive regional in which to stay in a serviced apartment, with the studio apartmentstarting at US$114 a night. However at the upper end of the pricing scale a studio apartment in the Middle East can cost up toUS$545 – six times the equivalent in India.Regional ReportsThe Apartment Service Global Serviced Apartments Industry Report 2013/1434Grosvenor House Apartments by Jumeirah Living
  35. 35. RaterangesbyGlobalRegion(lowtohighpricerange)Theseratesareaverageratesandmayvaryperlocation,timeofyear,regionalpromotionsandspecificklengthsofstay.Ratesquotedarebasdonanaerage4starextenedstayprepertyandexcludetaxes.ExchangeratesusedMarch2013.StudioOneBedroomTwobedroom2010averageratesLocalCurrency2012averageratesLocalCurrencyUS$VarianceY-o-Y12/102010averageratesLocalCurrency2012averageratesLocalCurrencyUS$VarianceY-o-Y12/102010averageratesLocalCurrency2012averageratesLocalCurrencyUS$VarianceY-o-Y12/10LowHighLowHighLowHighLowHighLowHighLowHighLowHighLowHighLowHighAfrica(ZAR)1-6nights(nightlyrate)6302,5006502,80071-3063%12%6453,7006553,90072-4272%5%9004,6009004,60098-5030%0%7nights+(nightlyrate)5302,4005602,60061-2856%8%6003,6006053,70066-4051%3%8004,8008254,55090-4983%-5%1month+(monthlyrate)14,00060,00015,20061,5001,664-6,7319%3%16,00077,50016,20078,0001,773-8,5371%1%22,50075,00022,00074,5002,407-8,149-2%-1%Asia(USD)1-6nights(nightlyrate)80250852756%10%1703001703250%8%2154302154350%1%7nights+(nightlyrate)70230752457%7%1502701552803%4%2004002004000%0%1month+(monthlyrate)2,0004,5002,2004,70010%4%2,7254,6002,8004,7003%2%3,5005,0003,6005,0003%0%IndianSubContinent(INR)1-6nights(nightlyrate)2,3504,5002,5004,75046-886%6%2,9009,0003,1009,20057-1707%2%4,00016,0004,05016,10075-2981%1%7nights+(nightlyrate)2,2004,7502,4004,75044-889%0%2,7007,4502,7507,70051-1422%3%3,50013,0003,70013,20068-2446%2%1month+(monthlyrate)50,00072,50052,00075,000962-1,3884%3%60,000116,00059,500117,0001,101-2,165-1%1%61,000110,00060,000113,0001,110-2,091-2%3%Australasia/NewZealand(AUD)1-6nights(nightlyrate)100190110215114-22210%13%140245145260150-2694%6%180300180325186-3360%8%7nights+(nightlyrate)801708520088-2076%18%125230128240132-2482%4%165265165275170-2840%4%1month+(monthlyrate)2,1254,4502,3004,7502,376-4,9088%7%3,0005,0003,1005,2003,203-5,3723%4%3,1005,5003,1506,0003,253-6,1962%9%Europe(EUR)1-6nights(nightlyrate)652757028591-3728%4%9040090425118-5550%6%135550135560176-7320%2%7nights+(nightlyrate)552806030078-3929%7%8037582385107-5033%3%9055095550124-7196%0%1month+(monthlyrate)1,3004,5001,4004,6001,829-6,0118%2%2,0005,0002,0505,3002,679-6,9263%6%2,5005,5002,6005,5003,397-7,1864%0%MiddleEast(AED)1-6nights(nightlyrate)2801,8003002,00082-5457%11%5002,0005002,500136-6810%25%6002,4006152,500167-6813%4%7nights+(nightlyrate)2651,6002751,80075-4904%12%4501,6504751,800129-4906%9%5502,2005502,300150-6260%5%1month+(monthlyrate)8,00042,5009,00045,0002,450-12,25212%6%7,75044,0008,00045,0002,178-12,2523%2%8,50060,0008,00059,5002,178-16,200-6%-1%NorthAmerica/Canada(USD)1-6nights(nightlyrate)85200852100%5%1303501354004%14%175450170475-3%6%7nights+(nightlyrate)70205752007%-2%130330125360-4%9%170400160395-6%-1%1month+(monthlyrate)1,7503,2001,8003,3003%3%1,8504,0001,8504,3000%8%2,2504,7502,0004,500-11%-5%CentralSouthAmerica(USD)1-6nights(nightlyrate)60160601800%12%9019085210-6%11%1303001353254%8%7nights+(nightlyrate)55145551500%3%80180852006%11%1203501253754%7%1month+(monthlyrate)1,6502,3251,7002,4003%3%1,6503,1251,7003,2003%2%2,0004,0002,0504,1503%4%Disclaimer:Theseratesareaverageratesandmayvaryperlocation,timeofyear,regionalpromotionsandspecificlengthsofstaysFig20Raterangesbyglobalregion(Source:TheApartmentService)
  36. 36. spreading to other African countries,especially the coastal regions of sub-Saharan Africa, where the number ofhotel developments rose by 54% in 2012.In our 2011 report, research by theW Hospitality Group showed that 20 ofAfrica’s largest hotel operators plannedto increase their portfolios by 30,000rooms before 2010. The Carlson RezidorHotel Group has already announcedplans to have 50 hotels across Africa bythe end of 2015, focussing on Angola,Nigeria, Ethiopia, Mozambique, Rwanda,Tanzania, DRC, Ghana and Zambia.The situation is somewhat different inNorthern Africa, where the politicaluncertainty and civil wars that followed2011’s Arab Spring have discouragedforeign investors. But even this has notprevented the pipeline of new hotelsincreasing by 4% in 2012 to 75 newhotels.South AfricaSouth Africa has traditionally been theprimary business travel market in theregion, attracting business travel eventsworth over US$ 28.5 million in 2011(source: Johannesburg TourismCompany) and accounting for 45% of allhotel transactions in the continent since2008 (source: Real Capital Analytics).Johannesburg is still recognised as thebusiness and commercial capital of theAfrican continent. 55 internationalairlines fly to Johannesburg; 75% ofSouth African corporate headquarters arebased in the city.However research by HRG highlightsstrong demand for other countries.Ghana recorded 14% growth in businessvisitors in 2012, whilst Kenya and Nigeriaboth saw significant increases in traffic.Africa1,6001,6001,4001,4001,2001,2001,0001,00080080060060040040020020000ManufacturingofchemicalsManufacturingofchemicals$USbillion(2011prices)$USbillion(2011prices)AutomotivemanufacturingAutomotivemanufacturingCommunicationservicesCommunicationservicesTravelTourismTravelTourismEducationEducationFinancialservicesFinancialservicesMiningMiningFig 21 Africa direct GDP by industry(Source: World Tourism Travel CouncilFig 21 Africa direct GDP by industry(Source: World Tourism Travel Councilbe supplied by sub-Saharan Africa ratherthan the Middle East (source: CarlsonRezidor Hotel Group).Economic growth across Africa isincreasing demand for business travelacross the region, with African carrierscutting cross-continental routes toaccommodate more flights to Kenya,Nigeria and Ghana.The region is increasingly attractive tohoteliers too. Whereas interest waspreviously concentrated on South Africaand the main leisure destinations alongthe North Africa coast, investment is nowTravel Tourism direct GDP in Africareached $69 billion in 2011 exceedingthe GDP of Africa’s Chemicals,Manufacturing, Automotive, andCommunications sectors.With 8 million direct employees in Africa,Travel Tourism is one of the leadingemployers in the region, generating andsustaining 19 million jobs overall - nearly1 in 14 jobs in Africa.Over the last 10 years, six of the world’s10 fastest-growing economies have beenin sub-Saharan Africa. It is estimated that,by 2015, 25% of North American oil willThe Apartment Service Global Serviced Apartments Industry Report 2013/1436
  37. 37. NigeriaNigeria, one of the world’s top tenpetroleum exporters, has 26 hotels underconstruction and 17 others indevelopment in Lagos, the capital Nairobiand Mombassa.The Tamarind Group operates servicedapartments in the latter two cities,servicing a primarily ex-pat assignmentworker market in both locations. Thereare around 100 serviced apartmentbuildings in Nairobi, most of which areindependently operated having beenintended as, or converted from residentialstock.In Mombasa there has been a significantnumber of serviced apartmentsdeveloped in the past two years howeveroccupancy levels are low; below 40% inmany cases compared to 75%+ inNairobi.Tanzania othersTanzania is set to challenge both Kenyaand Nigeria in burgeoning business traveltraffic thanks to the increasingimportance of Dar es Salaam as abusiness destination. The commercialcapital of Tanzania is the third fastestgrowing city in Africa after Lagos inNigeria and Bamako in Mali and the ninthfastest in the world.However growth rates vary vastly fromcountry to country. For example,Namibia’s business travel was describedin 2012 as very immature, but by nomeans clueless by Monique Swart,founder of the African Business TravelAssociation.KenyaBusiness travel in Kenya has grownparticularly in the financial services andindustrial markets as Kenyan companiessuch as Kenya Commercial Bank, EquityBank and UAP invest in the South Sudanregion. Exports from Kenya to the regionhave more than doubled, generatingadditional air travel between Juba andNairobi.The serviced apartments community isgrowing too, having been pioneeredlocally by the luxury, aparthotel-themedPalacina Residence. Serviced apartmentsare seen as a viable alternative to hotelsfor business travel, due partly to the highrates charged by established hotels.Amongst the new serviced apartments toopen are Batians Peak Apartments andHeri Heights, with 28 and 46 fully-furnished apartments respectively. InKenya, January - June and September -November are the busiest periods forbusiness travel, with leisure bookingsfilled this gap in July, August andDecember when the expatriates tend togo home.The Tamarind Group predicts that theserviced apartment sector in Kenya willincrease by 500 – 800 units in the nexttwo years and plans to roll out twobranded serviced apartment concepts -Tamarind Tree Residence and TamarindTree Extended Stay - in the four and threestar segments.Tamarind see a gap in the market for 2 - 3star accommodation and envisage apossible decrease in 4 - 5 staroccupancies and rates due to the increasein 3 star product. Although it is difficultto say how this will affect the servicedapartment segment, many operators willhave to improve both their products andservice levels to maintain competitiveedge.More new management companies arealso trying to get into the East Africanmarket by signing management contractsfor smaller serviced apartmentdevelopments. The principal challengesfacing local operators are not beinggeared to handle short stays letreservations and bookings, and a lack ofbrand awareness.“Roads are being built,airports upgraded, hotelsare springing up everywhereand internet andtelecommunicationconnectivity is improving.All the signs are that Africa isbeginning to realise its hugeand undoubted potential asa major businessdestination.”Chris Schuitmaker - HRGBatians Peak Apartments, KenyaIn association with Adagio, Frasers Hospitality, Quest Apartments 37
  38. 38. SupplyOur research has highlighted 4,634serviced apartments in 76 locations inAfrica. Based on our estimates of theworld’s total supply of servicedapartments, Africa accounts for just0.714% of the global serviced apartmentsmarket in 0.86% of the world’s servicedapartment locations.Protea Hotel Centurion, PretoriaThe major operators in the region are as followsProtea HotelsSouthern Sun ResortsCourtyard Apartments (South Africa)OtherExecutive Apartments and HotelsVillage and LifeSuite NovotelRelais HotelsAmbassador Hotel Executive SuitesThree Cities Urban Park Hotel Spa -UhmlangaPremiere Classe Serviced ApartmentsExecutive SuitesHome From Home HospitalityYAYA CentrePrime Executive Apartments - NairobiResidence Casablanca AparthotelHeri Heights Serviced Apartments (Nairobi-Kenya)Meltonia Luxury SuitesThree Cities Bantry Bay - Cape TownGem Suites - NairobiPalmeraie Village (Marrakech)Reata Serviced Apartments - NairobiBatians Peak - NairobiHermitage Gardens Resort (Lagos-Nigeria)Prime Apartments - GhanaPalacina ApartmentsSandton - RSAwww.threecities.co.zawww.threecities.co.za1946656141141412111111111111,520610451396305221126116979280757570585046443834302928171511The Apartment Service Global Serviced Apartments Industry Report 2013/1438
  39. 39. Fig22Cityratesanalysis(Source:TheApartmentService)RatesThere is a significant disparity betweenthe average rental rates for a studioapartment in the primary South Africanmarket and the emerging Kenyan market.An apartment costing EUR 55 per night inNairobi for stays of up to one week willcost EUR 83 in Cape Town.Internationally, serviced apartments inAfrica cost, on average, less thananywhere else in the world except theIndian sub-continent.AFRICASTUDIOONEBEDROOMTWOBEDROOM2010/11rate2012/13rateYoYvariance2010/11rate2012/13rateYoYvariance2010/11rate2012/13rateYoYvarianceLocalcurrencyLocalcurrencyUS$Euro%LocalcurrencyLocalcurrencyUS$Euro%LocalcurrencyLocalcurrencyUS$Euro%CapeTown1-6nights(nightlyrate)ZAR872ZAR1,000USD108.41EUR83.8815%ZAR898ZAR1,050USD113.14EUR87.4217%ZAR1,510ZAR1,600USD173.41EUR134.236%7nights+(weeklyrate)ZAR5,371ZAR6,440USD697.92EUR540.0520%ZAR5,657ZAR6,350USD688.36EUR532.7012%ZAR9,513ZAR9,875USD1,070.28EUR828.474%Onemonth+(monthlyrate)ZAR13,350ZAR14,275USD1,547.02EUR1,197.037%ZAR12,700ZAR12,975USD1,406.53EUR1,088.482%ZAR16,800ZAR17,500USD1,896.70EUR1,468.184%3month+(monthlyrate)ZAR11,800ZAR12,500USD1,354.66EUR1,048.596%ZAR12,450ZAR12,500USD1,354.78EUR1,048.701%ZAR16,050ZAR16,350USD1,771.77EUR1,371.312%Nairobi1-6nights(nightlyrate)KES5,300KES6,100USD71.21EUR55.1215%KES8,000KES9,000USD105.07EUR81.3113%KES9,900KES10,850USD126.66EUR98.0210%7nights+(weeklyrate)KES33,000KES32,500USD379.41EUR293.66-1%KES54,500KES57,200USD668.04EUR516.185%KES62,200KES63,000USD734.69EUR569.391%Onemonth+(monthlyrate)KES120,000KES115,000USD1,342.52EUR1,039.12-4%KES180,000KES170,000USD1,984.59EUR1,535.36-6%KES205,000KES208,000USD2,425.66EUR1,879.881%3month+(monthlyrate)KES111,500KES110,000USD1,284.15EUR993.94-1%KES175,000KES160,000USD1,867.85EUR1,445.42-9%KES192,900KES196,000USD2,285.71EUR1,771.352%RatesinkeycitiesTheseratesareaverageratesandmayvaryperlocation,timeofyear,regionalpromotionsandspecificklengthsofstay.Ratesquotedarebasdonanaerage4starextenedstayprepertyandexcludetaxes.ExchangeratesusedMarch2013.Southern Sun The Cullinan, Cape Town39
  40. 40. 1,6001,6001,4001,4001,2001,2001,0001,00080080060060040040020020000ManufacturingofchemicalsManufacturingofchemicals$USbillion(2011prices)$USbillion(2011prices)AutomotivemanufacturingAutomotivemanufacturingCommunicationservicesCommunicationservicesTravelTourismTravelTourismEducationEducationFinancialservicesFinancialservicesMiningMiningFig 23 Asia direct GDP by industry(Source: World Tourism Travel Council)Fig 23 Asia direct GDP by industry(Source: World Tourism Travel Council)Hotel occupancy across Asia Pacificaveraged 68.3%, up marginally on 2011.This slowing of growth rate is attributedto demand outpacing supply increasesover the previous three years, althoughthe region’s 2012 RevPAR of US$88.24represents the highest achieved since1998.Regional occupancy increases werehighest in Bangkok (up 11% to 70.5%)and Tokyo (up 10.4% to 82.5%). Thebiggest falls came in Ho Chi Minh City(down 5.4% to 63.7%) followed by Bali(down 4.1% to 69.8%). Three markets –Jakarta, Taipei and Tokyo saw double-digit increases in average daily rate.The Travel Tourism industry in Asiawas worth $554 billion in 2011,generating $1.7 trillion in GDP, or 8.4%of Asia’s GDP.Asia is often referred to as thepowerhouse of world tourism, withoutbound travel amongst Chinese andJapanese nationals leading the way.Outbound travel from China and Japangrew by 20% and 13.7% respectively inthe first half of 2012 and is predicted togrow by 6% overall in 2013 (source: ITBWorld Travel Trends Report).Across the region, China is the fastestgrowing market. In 2011 Chinesetravellers made over 70 millioninternational trips; this 22% growth over2010 was fuelled partly by the relaxationin visa regulations and is predicted tocontinue with a 12% growth in outboundtravel during 2013. Much of thatoutbound travel will be to destinationswithin the Asia Pacific region. 20% ofhoteliers in APAC expect the number ofChinese visitors to rise by over 40%(source: Hotels.com)Like most other BRIC nations, one of thechallenges facing China in the globaltravel market is the investment inbusiness and commercial infrastructurerequired to service and drive businesstravel. China is more advanced than, say,Brazil in this respect, with significantinvestment made in regional airports aswell as those servicing the main Chinesebusiness hubs of Shanghai, Beijing andGuangzhou.DemandHotels in the Asia/Pacific regionexperienced positive results in the threekey performance metrics in 2012,according to data compiled by STRGlobal.AsiaAlthough the US is recognised as thebirthplace of serviced apartments, thesector has been operating in Asia for over30 years. The market comprises acombination of branded andindependently operated servicedapartments, local furnishedaccommodations, villas, and guesthouses.Product consistency and quality varyconsiderably however. A reputable,trusted provider is considered essential ina market where secondary cities andremote locations have limited options fortypes of housing available.The Apartment Service Global Serviced Apartments Industry Report 2013/1440
  41. 41. Hong KongServiced apartments first appeared inHong Kong as ‘aparthotels’ in the 1980’s.Today, the local market services asubstantial number of ex-pats workingand an ever-increasing number of foreignnationals arriving to work or seekinginvestment from the world’s largest IPOmarket.These business travellers come mainlyfrom the US and Europe, but arrivalsnumbers from mainland China and SouthEast Asia are growing too. Hong Kong isthe gateway to China and this has been acontributory factor to serviced apartmentoccupancy levels averaging 90 – 95% in2011.Colliers International estimate that thereare around 17,000 serviced apartments inHong Kong, with the largestconcentrations – and highest averagerates - in the Central and Wan Chaidistricts. But with both local andinternational operators recognising thevalue of serviced apartments, the supplylandscape in Hong Kong is becomingmore competitive, whilst apartmenttenants are becoming more demandingin terms of service and quality.ChinaThere are more than 520 new hotelsunder construction in the MiddleKingdom.Tourism growth is primarily originated byforeign tourists: 294 million overnightstays were counted in 2011.Approximately 106 million hotel gueststravel to and within China every year - 70million come from abroad.Beijing is the centre of China’s servicedapartments sector. There has been aremarkable price growth in the Beijingresidential market in recent years, withcapital values of high-end apartmentstripling since 2001. The average rents ofBeijing serviced apartments haveincreased by 30% over the last two years,with apartment owners and operatorsbenefiting from a supply line stagnantafter the 2008 Olympic Games.Demand for Beijing’s high-end servicedapartments is partly due to theexpanding presence of multi-nationalcorporations, foreign senior managersand ex-pats overseeing new projects.Demand for corporate housing has alsoincreased as Beijing attracts moreworkers from both overseas and theChinese provinces.A shortage of high quality office space inthe prime areas and the expansion ofHong Kong’s infrastructure are drivingnew serviced apartments supply in theNew Territories where rentals arecomparatively lower. For example, CHIInternational aim to add another 400serviced apartments to their existing100-strong portfolio by 2015.IndiaIn India there are more than 295 newhotels planned and 2,900 up-markethotels operating at average 61%occupancy. (source:www.tophotelprojects.com).The tourism sector in India alsoexperiences continued growth. The 1,000existing first class and luxury hotels willbe supplemented by 295 new propertiesand 48,000 hotel rooms.In association with Adagio, Frasers Hospitality, Quest Apartments 41Shama Century City, Shanghai
  42. 42. JapanThere are 13 new up-scale hotels cominginto an already saturated Japanese hotelmarket. The largest project is the 376-room Marriott Hotel in Osaka, due toopen in spring 2014. 346 rooms willcome on-stream when the new Hiltonopens in Okinawa in early 2014.Other projects in Japan include theRitz-Carlton in Osaka (136 rooms,opening May 2014) and the boutiqueAndaz Hotel in Tokyo (164 rooms,opening early 2014).PhilippinesThe second fastest growing economy inAsia and a stable political environmentare combining to fuel a surging Manilahospitality market, particularly in thehigh end luxury sector, with escalatingroom rates and strong occupanciessetting the stage for dramatic futuregrowth for the sector.With an economy growing at 7.1% - justa few points behind China - there is astrong pipeline of growth and investmentin the hotel sector with 5,797 roomsopening over the next five years, growingsupply by 37%. Research by C9Hospitality predicts that average roomrates of 6% and occupancy in luxuryaccommodation of 72%.Manila is home to 15,567 hotel rooms,57% of which are in the up-scale tier. Thecorporate transient and meetings marketsaccount for 78% of total hotel roomnights. The urban spread of MegaManila is expected to create new marketsfor the apartments sector.SingaporeThe rising number of companies sendingemployees on short-term assignmentshas seen serviced apartment operators inSingapore encounter a surge in demandfor short stays – especially if the assigneeis accompanied by family members.The Ascott Ltd reports that compared toan average assignment of two to threeyears, average stays now range from afew weeks to six months. 60% ofresidents in Oakwood properties inSingapore stay for less than one monthup to a similar maximum.Citadines Tokyo ShinjukuDiscovery Suites, PasigStudio Residence, 8 on Claymore, SingaporeThe Apartment Service Global Serviced Apartments Industry Report 2013/1442
  43. 43. TaiwanTaiwan is one of the crucial transit hubsin Asia, as an important industrial andexport partner for the United States andthe European Union. Taiwan is part ofthe Four Asian Tigers, with Hong Kong,Singapore and South Korea in the 1990sand has been successfully transformedfrom a cheap labour-intensivemanufacturing economy into a worldleader in advanced technology.In 2009, Taiwan was one of the worst-hiteconomies in the Asia Pacific region butbounced back in 2010 and 2011,registering 10.7% and 4.0% GDP growth,respectively. Mainland Chinese residentsfrom 13 cities can now travelindependently in Taiwan.Signs of rejuvenation have sparkled inTaiwan’s hotel market with theemergence of new hotels like the WTaipei and Le Meridien.With a relatively low incoming supply ofupscale hotels and high occupancy ratesin both Taichung and Kaohsiung’smarkets, hotel developers are receivingencouraging signals about futuredemand.Limited high-end hotel supply in Taiwancoupled with a positive tourist arrivalsoutlook provide opportunities forTaiwan’s hotel market to bloom.The strongest increase in visitor arrivals isstill from mainland China. Since Taiwanhas lifted the travel restrictions formainland Chinese visitors, arrivalstatistics from mainland China hasregistered a CAGR of 55.3% from 2007 to2011. According to the Taiwan TourismBureau (TTB), total visitors to Taiwan areexpected to reach 10 million by 2016.Taiwan is also a major centre forexhibitions in Asia. In Taipei, Taipei WorldTrade Centre (TWTC) and Taipei WorldTrade Centre Nangang Exhibition Hall(TaipeiEx) are two of the major MICEfacilities in Taipei that caters to bothdomestic and the international events.Hotel room supply increased by 3.1%between 2006 and 2012. Standardtourist hotels form the bulk of lodgings,accounting for 73% of the totalaccommodation supply in June 2012. Theoverall supply growth rate spiked in 2010at 3.6%.ThailandThailand’s serviced apartments sector iscentred on Bangkok, where Knight Frankput the number of serviced apartmentsat just under 16,000, an increase of 1.2%on 2011. 45% of that stock is located inSukhumvit - home to a substantialproportion of the region’s 789,000ex-pats.Following the political unrest of 2009 –2011, demand and supply of servicedapartments is set to grow again inThailand. Serviced apartment occupancylevels in 2012 were marginally above thatof the hotel competitors, up 5% to75.59%.VietnamDespite the Vietnamese economyunderperforming, Ho Chi Minh City(HCMC) has maintained a high GDPgrowth rate and considered as the mostdynamic city in the country. And despitethe real estate market being significantlyaffected in comparison to otherindustries, the serviced apartment sectoris now attracting investors drawn byrising demand.Around 60% of the 3,000 servicedapartments in HCMC are located in thecentral business district, with The AscottLtd and Frasers Hospitality amongst themajor players locally. The market can alsobe subdivided by tenants’ nationalities.Residents of District 1 and 3 come fromJapan, Singapore, and Malaysia, Central,Southern and Eastern Europe. Those inthe new urban areas in District 7 such asPhu My Hung tend to be from Korean,China and Taiwan. Tenants from the USor UK are centred on District 2.By 2015 an additional 20 servicedapartment projects providing 5,200 unitswill take the total supply to nearly 9,000apartments. The new projects will beconcentrated in District 4 and Tan BinhDistrict.Oakwood Residence, Bangna, BangkokSomerset West Lake, HanoiIn association with Adagio, Frasers Hospitality, Quest Apartments 43

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