New Delhi: The emerging serviced apartments sector is lapping up the business that hotels aren't able to cater to and they are doing so in style.
It's meant to have the comforts of home with all the services of a hotel. Serviced apartments are fast emerging as the economical alternative to a hotel, especially for business travelers on longer trips.
Serviced apartments are normally priced 20 per cent lower than hotels in the same star category and the price becomes even more attractive if you stay longer.
The only thing holding the sector back is the lack of credibility that national hotels chains currently have.
The ministry of tourism began rating and classifying serviced apartments only a year ago based on the quality of the property and the services offered. The property has been rated four star, investors in the sector hope the classification will give the sector the credibility it desperately needs.
The ministry has so far classified 14 serviced apartments across the country, with only 2547 keys in total. Its no wonder then, that serviced apartments in the NCR region currently enjoy occupancy rates of 97 per cent all year round. But industry experts argue this does not necessarily mean the option is popular.
Cushman Weikfield South Asia EMD, Sanjay Verma says, “Service apartments in Bangalore are popular because there aren't enough hotel rooms in the city to meet the demand right now. That might not mean the idea of serviced apartments in necessarily popular.”
Never the less India will soon have properties from international brands like Oak Wood, Fraser, Home Stead, Halcyon, Qutab and Savoy suites. Its not just demand, its also the lower operational costs that make sense to investors.
Ascot MD and CEO Prakash Wadia says, “Because of the style of delivery at the service apartments catering only to residents the staff required are much lower we don't to extensive banqueting and we don't have restraints so staffing levels are lower and profitability is high compared to hotels."
Serviced apartments operators are also zeroing in on mixed-use developments to keep their real estate costs down. Retail outlets take up the prime space and the serviced apartments are based in the cheaper areas, like the top floors.
Industry experts expect new serviced apartments to break even at least three years before hotels in the same star category.
CNN-IBN
