Professional Documents
Culture Documents
Summary:
• Global Trend
• Asian Market
• Indian S.A Market
o Bangalore
o Case of Holy Cities S.A (News Item)
Limitation:
Global Scenario: The serviced apartment market has evolved dramatically from its
origin in the US in the early 1980s and nowadays across the world is considered as an
alternative accommodation concept, especially for those who do not want to stay in
hotels or commit themselves
lves to private property rentals. Globally about 30% of the
space is offered by service apartments while hotels account for 70% of the room
rooms.
S.A Rooms
30%
Hotel Rooms
70%
Asia & Australia: The market in Asia is booming, largely at the expense of the
traditional hotel industry, with one decisive factor contributing to their success and
growing popularity: cost effectiveness. Serviced apartments are generally much
cheaper than hotel rooms and, when you consider how much more space a guest is
getting, they offer excellent value for money. With increasing cross border business
investments and trade, and a growing number of corporate executives traveling on
assignments over the last decade, new global business patterns are driving the growth
of the serviced apartment business. There is also an increasing trend of business
travelers choosing serviced apartments as accommodation option over hotels. These
business travelers, although on transient stays, prefer the bigger space, tighter sec
security
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and exclusiveness, as well as greater value for money, all of which serviced apartments
endeavor to offer.
Indian Story: Home away from home. The tagline promoting an eclectic staying option
had always appeared catchy. The tentativeness of a sunrise industry's logo has given
way to confidence, and the verdict is lucid. The niche option of checking into serviced
three- or five-star apartment "homes" instead of hotels has enough takers to make
service apartments one of the fastest growing segments of the Indian hospitality
business.
In cities like Mumbai, Delhi and Bangalore service apartments help avoid the tiresome
transactions required to lease flats. Says Sunil Mantri, joint secretary, Maharashtra
Chamber of Housing Industry (MCHI): "The municipal taxes in Mumbai are probably the
highest in the world and the new lease and license agreement rules have made it
almost impossible to lease out flats here for less than 11 months."
In the past few years, there has been a significant increase in the number of
international business travelers to India, many of whom come for long stays, ranging
from one month to a year. And this in turn has resulted in a huge demand for service
apartments, especially in IT hubs like Bangalore, Pune, Chennai, Hyderabad and
Gurgaon. The market is currently pegged at Rs 1500 crore and growing at a fast 200
per cent per annum.1
1
Publication: Hindustan Times Provider: HT Media Ltd Date: April 13, 2008A Home Away From Home April 12 by
Manoj Sharma
4
Tier I cities
IT Hubs
Figure 3: IT Destination
Bangalore2
Located on the southern Deccan Mysore plateau, Bangalore is the nerve centre of the
IT industry in India and is the world's fourth largest technology hub. Population-wise it is
the fifth largest city of India. It has a fairly diverse portfolio of activities with firms
manufacturing machine tools, electronic products and auto-components, besides the IT
sector. It is also a favored biotechnology destination. All these activities have led to a
phenomenal demand in the hospitality sector.
Bangalore has a host of reputed hotel chains ranging from deluxe hotels, heritage
hotels, airport hotels to budget hotels. However, given the current levels of available
rooms in the city, only 60 per cent of actual room requirements are being catered to
leaving a substantial demand-supply mismatch.
Current scenario
Bangalore accounts for 51 per cent of foreign business travelers visiting India annually.
International corporate travelers occupy almost 90 per cent of the hotel rooms here.
Over the last couple of years, the city's booming IT/ITES sectors have been responsible
for nearly 45-50 per cent of the overall demand for rooms in the city.
There has been no significant change in the domestic and foreign business clientele in
the five-star category hotels owing to shortage of supply of rooms. However, there has
been a sharp decline in the number of leisure travelers visiting Bangalore. According to
Knight Frank Research, since 2004 there has been a slight shift in room demand from
the premium segment to the budget segment due to the increase in room rates.
Most of the five-star category hotels like Windsor Manor, Le Meridien and Grand Ashok
are concentrated along the Golf Course Road while four-star hotels like Oberoi and Taj
2
Publication: Express Hospitality
Provider: Indian Express Newspapers (Bombay) Ltd.
Date: June 30, 2007
6
Residency are located in the CBD of MG Road. Few three- and two-star hotels are
located near the railway station catering to the domestic travelers. However, most of the
new hotels are coming up in the peripheral locations of Outer Ring Road and Whitefield
with a view to cater to the needs of the corporate locating in the new business locations
of the city.
The ARR in premium category hotels in Bangalore has recorded a growth of 18.5 per
cent at Rs 13,366 for the nine-month period (April to December 2006) against Rs
11,280 in the corresponding period last year. Significantly, the occupancy rate of hotels
in Bangalore, currently at 75 per cent, has been observed to have declined marginally in
the recent years.
The development of the new international airport project has attracted a number of hotel
chains such as Radisson, Hilton and JW Marriott to the city. This is with the anticipation
that the number of international travelers to the city will increase with the
commencement of the new airport. Knight Frank Research estimates that around 3,075
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rooms in the premium category and the service apartment segment is likely to be added
to the city over the next five years.
The current limited hotel room inventory and a booming commercial market has driven
existing hotels like the ITC, the Taj, Oberoi, and the Capitol to come up with more
properties along the Whitefield Road and Outer Ring Road. Also, international hotel
chains like Hilton in joint venture with DLF, Accor with Emaar MGF and Wyndham with
Royal Orchid Hotel are also venturing into Bangalore's hospitality sector.
Outlook
In spite of a large amount of investment taking place in the city in the real estate sector,
infrastructure still has a long way to go. The increase in the number of long-stay
business travelers and limited number of hotels has lured business travelers to service
apartments both in terms of cost and comfort. Service apartments such as Brigade
Homestead on Lavelle Road and Prestige Oakwood in UB City on Vittal Mallya Road
offer stop-gap cost-effective facilities for extended stay.
The occupancy level in service apartments ranges between 80-90 per cent. Companies
like Infosys have set up an in-house 500-room hotel complex for its clients and other
visitors coming to Bangalore. International groups like Oakwood, Marriott and Shangri-
La have already tied up with local players to set up service apartments in the city.
Thus, based on current macro-economic trends and the business outlook, Bangalore
will continue to witness a stable trend in consumption, influenced by higher disposable
income. The emergence of relatively new markets and consistent demand for quality
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accommodation across most business destinations from niche markets, such as the
extended-stay segment, will ensure that the hotels in Bangalore have a required base
demand. Besides, foreign tourist inflow will enhance the popular leisure destinations in
the city by readily absorbing future hotel developments, thus enabling a continuation in
the present trend of value appreciation.
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Kochi, Sep 17 (PTI) A Kerala-based private company has proposed to set up a chain of
service apartments at the major pilgrim centers in South India with the debut project
coming up at the temple town of Guruvayur. With a target of Rs 500 crore turnover in
three years, the apartment projects are being planned in Palani, Velakanni, Tirupati and
Puttaparthi, Sudhir Gopi, Chairman and Managing Director of Sudhir Gopi Holdings
(SGH), pioneers in the field of higher education told a press meet here. In Guruvayur,
the Sudhir Gopi Developers Pvt Ltd (SGDPL), the real estate arm of SGH, is coming up
with 12-storeyed 76 fully-furnished and airconditioned apartments--'Vaikundam Retreat',
costing between Rs 60 lakh and Rs 70 lakh. The two-bedroom apartments would have
a built-in area of 1400 square feet and would be completed by April 14, 2009, he said.
Gopi said he was expecting a Rs 50 crore turnover from the Guruvayur project.
The method mentioned in this news item can be used in promoting the Shirdi Real
Estate business, a chain of S.A all over Maharashtra’s holy cities.
References
http://www.financialexpress.com/news/Service-apartments-the-new-hospitality-
buzzword/119795/ (June 18, 2008)