Serviced Apartments: A Sector on the Constant Rise!
Jun 18 / admin@aplbc
The hospitality and travel industry was largely hit, when the covid-19 pandemic ran riot over the world, yet there was one particular sector that remained largely resilient when the hotel occupancy rates plummeted and crashed down.
The serviced apartments sector, stood rock solid amidst the ruins, this astonishing stand was largely attributed to the sector’s service model to meet the changing needs of the customers and the willingness to evolve naturally challenges and expectations. The serviced apartment brands like Oakwood, operating in Asia-Pacific, maintained a whopping 80 per cent occupancy rate even during the peak of the pandemic.
How Serviced Apartments, stood out from the rest of the sectors?
Dean Schreiber, CEO of Oakwood, explains that why this serviced apartment sector, has healthy returns for owners and investors alike in one of the most roughest and challenging years faced by hospitality and commercial real estate.
“By offering self-contained long-stay accommodation, the serviced apartment sector was well-positioned to offer quarantine contracts to various governments around their specific region and mitigate the lack of business and leisure travellers during the height of the pandemic,” Schreiber said.
He also added that the strict hygienic protocols maintained by the highly regulated and branded serviced apartments offer the guests and customers more safety and assurance than the Airbnb type of accommodation, which in turn helped the serviced apartments sector to outperform the regular mainstream hotels and many other accommodation platforms.
Serviced Apartments: A sublime sector?
Serviced Apartments are very versatile real estate asset allowing for easy conversion to various alternative uses such as apart-hotels, rental- apartments, multi-family, student accommodation, co-living and hotels.
Explaining this type of investment in APAC moving forward, Schreiber continues “ We expect as a result that underperforming assets will see revamped and vigorous investment and conversion to these alternative uses.”
“From a long-point investment standpoint, the operators of the serviced apartment took a long-term lease contract on the properties. This clearly weighed the operational and market risk to the operator which was great for investors wanting a long term yet a secure income.”
“However with the outbreak of the Covid-19 pandemic, many operators have changed the methodical approach and are returning hybrid lease or management agreements which removes the lease liability and shifts the risk back to the owner of the property.”
Oakwood: A seasoned serviced apartment’s veteran!
Oakwood, a brand that had trusted AP LBC as their hotel sales, marketing and solutions partner, remains one of the fastest-growing brands in South East Asia and mainland China. Oakwood’s CEO Dean Schreiber cited this quick growth to a strong investor appetite in the countries like Cambodia, Vietnam, Indonesia, Malaysia, the Philippines and Thailand.
Oakwood’s portfolio includes a balanced mix of properties ( Long and short-stay options under various brands, a business model that Schreiber believes in limiting the volatility in the occupancy rates across the typical cycles of lows and highs in the hospitality assets.
“This was particularly evident during the time of the outbreak of the Covid-19, where we have seen an unexpected closure of thousands of hotels in the world. However, in contrast, at Oakwood, except for few properties that had been temporarily shut as advised by the local authorities, all our properties have remained open and functioned well. Across our portfolio globally, our occupancy in the year 2020 was close to 70 per cent!”
It must also be noted that throughout the pandemic, Oakwood continued to grow its portfolio in the region opening its seventh property in Thailand, Oakwood hotel and Residence Bangkok on 9th May of 2021, with its fifth property in Singapore scheduled to open in June.
“This is followed by additional property openings in Vietnam, Thailand and Indonesia, in the second half of the year,” Schreiber said. “We also expect to make our brand debut in Cambodia by the end of 2021. We further plan to double our portfolio of managed properties by 2025.”
Schreiber notes a “Strong trend” of serviced apartments becoming a preferred form of accommodation over the traditional hotels.
“Unlike the traditional hotels, serviced apartments are designed for a residential lifestyle providing the luxury of bigger living spaces, well-appointed kitchens and amenities, as well as comfortable and generous workspaces that are hardly seen in typical hotels. With Bleisure and the trend of remote working here to stay forever, the offerings of the serviced apartments play into the requirements of a work environment with the comfort and ease of home.”
Serviced Apartments is by far one of the most successful sectors and with evolving trends, the sector is likely to soar in the coming days especially in the regions of South-East Asia and China. At AP LBC, we understand the market of South-East Asia, with cutting-edge expertise and strategy that could help you edge out your competitors in the market. Let not the pandemic limit your chances and the opportunities aplenty that you have in the massive Asian market.