Serviced Apartments Increasingly Growing In Demand

The serviced apartment trend has started ever since the hotel rooms became unaffordable or unavailable. For companies involved in this business of running corporate guest-houses or serviced apartments – the business is growing at a minimum of 15 to 20% year on year. These figures come from Mr Sunil Nayak, CEO, Radha Krishna Hospitality Services (RKHS) who have been in the business for the last eight years.Mr. Nayak avers, “About five years ago the cost of hotels went up steeply. Concurrently there was a shortage of hotel rooms – in the region of 8000 to 10000 room nights countrywide; it was at this time this industry boomed. We are currently looking after over a thousand rooms pan India, where we service the guest-house to the extent of leisure activities too. Long-staying guests can get bored or cooped up in hotel rooms and this option works out well in terms of costs too. The savings can be anything between 30 to 50%. The availability is ensured, and service can be personalized.” Today, RKHS has Dell, TCS and HSBC on its client rolls.

In the exclusive serviced apartment field is new entrant Signature Crest, a chain of fully furnished service apartments across the country , a subsidiary of TravelOrg Holidays Pvt Ltd.

Mr Venkatesh K, CEO, TravelOrg says, “This industry has everything going for it. Talking to any corporate will give an accurate picture – today just one company has over a hundred people traveling every single working day. We started less than two years ago and today have 128 corporate clients.

We first tested the market in tier two cities like Indore, Pune and then ventured into metros like Mumbai. The demand has only risen, and we have now diversified into leisure destinations like Shimla and Mussoorie. These apartments are spread in eighteen destinations across India and abroad. We plan to add ten more locations to our profile by the end of this financial year” . He has also extended this concept at the global level with UK, USA, Middle East and Far East countries, with ‘Signature Crest’s plush Service Apartments’ .

The deal with the corporate house is worked out on an annual basis, leaving all the details to the service provider. All the guest has to do is to sign in. They provide incentives on the personal level like an exclusive Signature Card for frequent visitors, wherein they give a two-night stay at a leisure destination against twenty nights spent at any serviced apartment.

A comparative study states that a single hotel room of 250 square feet can be translated into an apartment of even 650 square feet, with lower costs incurred. The higher end is even better with a three-room suite of 750 square feet translating to an apartment of up to 2000 square feet.

Apart from this is the comfort of being able to step out for breakfast in nightclothes and even a customized late night meal, as against having to dress properly for the hotel buffet. Mr Nayak pointed out, “There are different ranges of such facilities provided, it is not all about luxury and pampering.

There are mid and low range facilities which are used for greater convenience” . The latter work well, especially in the case of factory premises, where the company has the option to build an extra structure for junior or mid level management to stay and work out of. Leasing it to a service provider makes business sense as they can then focus on their core business.

Travel to and from the workplace is another area where costs can be thus controlled. The number of companies stepping into the fray are growing with the organization of this sector. There will be a lot of multinationals coming into India in the near future, so branding is now gaining importance. For instance Patman & G, a well-known service provider, recently tied up with Aramark, one of the leading facility management companies worldwide . It is likely that one will hear about many such tie-ups , as the market grows.


  1. Posted June 24, 2008 at 3:40 am | Permalink

    The property market has boomed since India eased rules on inward investment in the construction industry in early 2005, partly fuelled by pledges by foreign investors that they will pump up to $20 billion into the country. But government figures show only about $2 billion has actually been spent in the last three years. Real estate prices have cooled in the last six months. Developers had piled into the top-end of the where profit margins are highest. Young people don’t have housing open to them. Developers are targeting the young workforce in a country where double-digit salary hikes are common in sectors such as real estate, information technology and financial services. What’s on the market so far isn’t satisfying demand .It was a rising market so people didn’t think. Developers have been overpaying for land, making the wrong product and not doing their research. Analysts say the strong supply of high-end apartments in many areas, including Bangalore and New Delhi, is likely to hit prices. Developers are giving away freebies to lure buyers, with one even including a car in the package. India’s biggest property firm DLF is changing its designs for apartment blocks in New Delhi’s suburb of Gurgaon to squeeze in more two-bedroom units, along with four-bedroom homes.Land prices have quadrupled in many areas over the last three years but many in the industry expect prices to drop anywhere between 15 percent and 50 percent in the coming year.Developers hope authorities will allow them to build taller blocks by raising a measure of building density called the floor space index (FSI). The Maharashtra state government made such a move last month to ease a housing shortage in Mumbai. Indian property investors are targeting lower- to mid-end house owners in the booming economy now that sales of plush apartments have slowed. With the number of families earning more than $5,000 a year set to double to around 20 million in the next two years, demand for small and simple apartments is set to mushroom. But there’s a need to reduce land costs, increase FSI, build infrastructure first.For more view-

  2. Posted July 3, 2008 at 4:35 am | Permalink

    Leading property developers are pulling out of proposed deals with hospitality majors, including Royal Orchid Hotels and Ramada Worldwide, as cash flows in the real estate sector are slowing. Realtors are reconsidering plans to go into the hospitality sector.
    In that case The serviced apartment trend has bright future.

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