Almost Home

The Advent Of Service Apartments

Relocating to a new city and looking for a cost effective, comfortable and convenient accommodation? Sheetal Wadhwa Munshaw and Anindita Chattopadhyay have found you the perfect ‘home away from home’…

Paul Norman, employee of a consulate, has been living at a junior suite in a five-star hotel in Mumbai for three years and even though the hotel offers all the creature comforts he could ask for, it’s still far from the ‘home away from home’ he’s seeking…well, we’ve got the perfect solution.

Service apartments is the latest trend in accommodation for long staying guests, giving them the comfort and convenience of a home without the hassles of having to maintain or look after it. Ideally suited for medium to long staying guests, service apartments are a natural choice for corporate employees or expatriates relocating to a particular city. A service apartment offers the privacy, space and comfort of a house and at the same time gives you the services and amenities of a hotel.

Says Karen Wilson Kumar, manager - corporate communications, Grand Hyatt, Mumbai, “A service apartment provides clients with all the services and facilities that a hotel offers with a feel of home. It is suitable for people who come to India for short term projects ranging from three to four months as well as long term stays since they have the option of staying in a fully functional apartment as against being confined to a guest room.”

The concept of service apartments, though a recent phenomenon in India, is an established global concept. Villas in Spain, flats in the UK, apartment complexes in the US, have all created a vibrant and viable market for those wanting more than just a room in a hotel. Service apartments fulfil the needs of individuals and organisations (corporate and entrepreneurs) for a convenient and cost-effective alternative to ordinary accommodation options. Says Sanjay Tolia, senior manager, PricewaterhouseCoopers, “In service apartments, there is a cost advantage and a long term commitment, both from the service provider/receiver perspective. Further, it is a good idea for companies to retain such service apartments where there is a regular movement of personnel within the country. This is good in cases where the company does not want to maintain its own guesthouse. For short-term stays, a hotel is always the choice. One needs to work out the cost-benefit analysis and the permutations that match the company’s requirements.”

What Are Service Apartments

“It is best described as a suite with all the comforts of home including kitchen and laundry facilities. In addition, an apartment hotel offers all the luxuries and amenities that an exclusive hotel provides i.e. 24 hours room service, high speed internet access, gymnasium, pool etc,” says Rajiv Menon, general manager, Marriott Lakeside Chalet, Marriott Executive Apartments.

Another way to describe them are as fully furnished apartments of various configurations i.e. studio/one bedroom/ two bedroom etc, normally equipped with either a partially or a fully equipped kitchen. They also offer on-site management and in many cases a host of additional facilities such as a recreation centre, convenience store, coffee/snack bar, business centre etc.

Service apartments can be classified according to how they are housed. These could be:

• Stand-alone - Developments that are exclusively built for the purpose of being let out as service apartments. Very similar to private residential developments.
• Mixed Use - Apartments that are part of a larger development which could comprise of commercial and retail spaces.
• Hotel - Service apartments which are a component of a larger hotel development. They could be housed on separate floors or wings.

Types

The market has evolved over the last several years to cater to the needs of each user type. This has led to their classification into three distinct segments:

• Budget
• First class
• Luxury

Services Offered

Service apartments offer a range of facilities that guests can benefit from. Services in the nature of separate living and sleeping areas, a fully equipped kitchen and work station to mention a few. Most apartment hotels provide facilities which are at the disposal of the guests living in hotels, such as 24-hour room service, a multi-cuisine restaurant, 24-hour concierge and security, daily housekeeping, laundry, dry cleaning services, grocery delivery, fitness centre, swimming pool, internet access, DVD players with large televisions, functional work stations with access to broadband connectivity, two telephone lines with IDD and voice messaging facilities, spacious kitchens equipped with refrigerator, electric cook top and oven, microwave, toaster, coffee maker, electric kettle, dishwasher and personal washer and dryer, crockery and basic cooking utensils. Some also have a doctor on call, children’s play area, baby sitters, dedicated car parks. In some cases you could even find gift shops, business centres, preview theatres, banqueting facilities and a whole lot more.

Besides, most apartment hotels are strategically located in the city centre, mainly in the commercial and financial districts of metropolitan cities. A few hotels also have some rooms which are designed in the form of apartment hotels, where the guests can avail of all the facilities within the hotel premises.

Service Apartments Versus Hotels

According to Menon, service apartments are designed to meet the needs of the business executives planning to stay in an urban destination for 15 days or more. Living for a long period in a five-star hotel can be monotonous. The hotel room, which is basically four walls, can get claustrophobic whereas an apartment hotel gives you space with flexibility. The service apartment facility is typically targeted towards the corporate executives who work at a location distant from home for a long period of time.

Kailash Thadani, general manager, InterContinental The Grand, agrees, “A service apartment offers a guest more space, more privacy and a sense of belonging. Where else can you have your own kitchenette with a micro-wave oven and stocked packaged foods, a DVD player and more combined with the back end services that the hotel has to offer.”

Service apartments are particularly popular with business travellers, both mid-level and senior management level business executives. Other patrons include expatriates, non-resident Indians visiting the country for long spells, people renovating their homes and of course foreigners visiting the city for long durations.

Says Sunil Taneja, general manager, Taj Wellington Mews Luxury Residences, Mumbai, “Consulates are a big segment as they usually have dignitaries living for protracted periods and they tend to look for more plush and up-market residential buildings to lease apartments. With hotel chains such as our own foraying into the service apartment segment, they can now enjoy all the conveniences of a leased apartment without the logistics of actually leasing one.”

Since apartments are fully equipped with kitchen facilities, one can cook to suit one’s palate. There are a lot of vegetarian Indians and, for some, there are restrictions such as no garlic and onion in their food. A service apartment allows guests to live in the comfort of their homes and habits. Meals can be prepared in fully equipped kitchens in a service apartment, which is not the case in a hotel.

Prakash Wadia, CEO, Ascot Hotels, says, “A service apartment is more spacious and is equipped with amenities, which a long-staying guest needs. During our market research we found executives in India really do not want to cook but would like to fix an occasional breakfast, heat packaged food, and store food. So we provided a big refrigerator, microwave and toaster. Further, unlike a hotel, the guest can bring food from outside and eat it in the room, which not only gives variety, but saves money.”

It is also more cost effective to cook when one is staying in a city for months on end. Rajeev Chopra, managing director, The Residency Hotels Pvt Ltd, points out, “Self catering is not very popular with Indians as they have cooks to do it for them. Foreigners and expatriates on the other hand quite appreciate the concept and love to cook their own meals. I think it’s really about opening up a range of options to cater to a wider audience.”

Another prime benefit of an apartment is storage space, especially for documents like mailers, brochures, etc. Feels Chopra, “Service apartments are very convenient and in fact combine the best elements of a hotel and a home. While all the chores of maintaining a house are negated, there are the benefits of being serviced like in a hotel. It basically gives guests the choice of either doing it themselves or have it done by someone else.”

Are They Really More Cost Effective?

“Not necessarily. However the fact that hotel services like housekeeping, laundry and kitchen can be back-ended whenever a guest requires is reason enough for apartments to be cost effective,” says Kailash Thadani, general manager, InterContinental The Grand.

On an average, the difference in price between the hotel and the apartment hotel can vary as much as 15 to 30 per cent. For a one-bedroom apartment, the difference could be approximately 15 per cent and, for a two-bedroom apartment, the cost could range anywhere between 30 to 40 per cent.

Explains Menon, “The cost of an apartment hotel is approximately 20 per cent less than the cost of staying at an ordinary double room in a hotel of equivalent standard. For instance, guests staying at five-star hotels spend anything between Rs1500-Rs.2000 daily on meals whereas in the apartments the guests have the option of cooking their own meals. One can also save a bundle on laundry services. On an average, a guest staying at a five-star hotel pays Rs 400 for his laundry daily. In Marriott Executive Apartments each floor has a Laundromat, and the rooms are provided with an iron and ironing board. Thus, the apartment hotels are very economical from a long-term perspective.”

The cost saving is therefore not in the average rate of an apartment, it’s the savings of the incidentals that makes a service apartment more economically viable. Points out Wadia, “The room rate of a service apartment is equal to the rack rate of a single room in a five-star hotel. For instance, we are charging Rs 2,000 for guests staying for more than five months and 2,500 for guests staying between a week and five months. Compare the other costs and it will tell all. If a laundry charge of a shirt is Rs 75-100 in a five-star hotel, it will cost Rs 20 in a service apartment, a cup of coffee will cost Rs 20 instead of Rs 120. So it becomes value for money for long-staying guests from all aspects, not just room rent.”

Entertaining business associates and clients is also an expense corporates need to incur. If one is looking at a short stay then entertaining doesn’t pose a problem but for long staying guests, treating clients in five-star hotels is just not viable. In such cases, an apartment with a well furnished, spacious drawing room can be put to good use. In fact some hotel chains have even made banqueting provisions to cater to their expatriate and long staying guests. Wellington Mews of the Taj group has made provision for a banqueting facility as well. Says K Mohanchandran, resident manager, Taj Wellington Mews Luxury Residences, Mumbai, “We have provided for a lounge with a bar counter that would be able to host 50 to 70 guests at a time. Given that the target is corporates posted on long projects or consulate employees, we’re obviously looking at people moving with their families. The banquet area will make for a convenient space for guests to host parties or conferences within the complex, making it very convenient for them. Outside of this, if they do have larger requirements, we have three hotels within the city and two within the same vicinity.”

The idea is to create a comfort zone for someone who’s living away from home. It’s not about constructing glitzy complexes but about recreating a sense of belonging with the efficacy of managing a hotel. Feels Anshuman Magazine, managing director, CB Richard Ellis, “Service apartments are based on a ‘lesser frills’ accommodation concept positioned to provide the ambience of a home away from a home. Thus, they are designed to be larger and more spacious to give the feel of an apartment as compared to a luxury hotel room. In addition, they are less intensively ‘serviced’ i.e. the employees to room ratio would be lesser for a service apartment as compared to a hotel. Thus, they are typically priced lower as compared to hotel rooms to attract the long stay market (with lesser overheads). The tariff in a service apartment is on a per unit basis, whereas in a hotel it is on a per person basis. So the service apartment would work out much cheaper on a per person basis e.g. if the tariff for a hotel room is, say, USD 80 per double occupancy, the tariff for a two-bedroom unit in a service apartment would be USD 80. Assuming the number of persons in the two bedroom unit as four, per person cost would be approximately USD 20, whereas in the hotel it would be USD 40.”

Service Apartments In India

Hotels chains alone are developing a large number of apartment complexes in and around Mumbai and Delhi to cater to the fast maturing business travel segment in India.

The first purpose-built complex opened in 2000 - The Marriott Executive Apartments in Powai, Mumbai. Since then, various developments have been announced around the country. The trend has only just begun and has gained immense popularity with the Indian corporate segment. Says Menon, “The response to service apartments in major cities has been very encouraging. In Mumbai per se, the occupancy by December 2003 would be an average of 88-90 per cent. The key reason I identify for this response has been the aspect of convenience. Here in Mumbai we have our corporate clientele that block apartments for anywhere between a month to three years.”

Mumbai alone will witness an influx of service apartments in the near future. Indian hotel brands such as Taj and Lotus Suites of Concept Hospitality have already entered this segment. Taj is developing a 96 unit complex in south Mumbai and it is also very likely that some floors at the recently acquired Taj Lands End in north Mumbai will be dedicated to service apartments. Lotus Suites operate a mixed-use hotel and service apartment property in close proximity to the international airport in Mumbai. And international brands Grand Hyatt Residences and InterContinental Grand’s apartment complex projects are already underway.

In the north of India, the emerging suburbs of the capital, Gurgaon and Noida have practically become the base of commercial activities and this development has prompted a flurry of activities in the service apartment sector in Delhi. While Ascot has already opened a service apartment, other big names in the fray are CB Richard Ellis, Hans Plaza, DLF Gymkhana and Select Hotels. The Gupta-Jain owned Clarion Luxor in New Delhi and The Orchid Park Plaza in Bangalore will also include service apartments. The service apartments at The International Convention Centre in Pune will be a part of a mixed-use commercial, retail and hotel development. Already operational is Savoy Suites in Noida, targeted only at the specific requirements of middle and senior level business personnel travelling for a period of stay typically exceeding a week. It is a 44-unit apartment complex, enjoy a generous living area, kitchenette, bedroom and spacious bathroom.

Hans Plaza is planning to enter the service apartment segment with an international brand and is currently negotiating with international chain Oakwood. “We propose to provide an apartment in Gurgaon having 100-plus rooms and the segments we are looking at are executives new in town seeking accommodation, touring executives and families working in various MNCs in Gurgaon,” said Rita Shah, director sales & marketing, Hans Plaza.

(With inputs from Mihir Thacker, head - leisure & hospitality advisory services, Knight Frank India Pvt Ltd)

Facilities Provided in different apartment categories:
BUDGET	FIRST CLASS	LUXURY
Weekly housekeeping	Bi-weekly	Daily housekeeping
Coffee makers	housekeeping	Coffee makers
Irons	Coffee makers	Washing machine
Refrigerators	Laundromat	Dryers
TV	Irons	Irons
Microwave	Mini kitchenette	Full kitchen
Safe deposit lockers	TV	TV
	Safes	Music system
	Snack / coffee bar	Internet connectivity
	Gym	Safes
	Business services	On site restaurant
	DVD Players	Room service
		Business centre
		Health club
		Gym
		Recreation centre
		Crèche