Service Apartments mushrooming all over the metros

serviceapartmentBy Accommodation Times News Services

According to the guidelines laid down by the Department of Tourism, serviced apartments are categorized into four segments: 3-Star, 4-Star, 5-Star, and 5-Star Deluxe. However, given the small presence of serviced apartments in India, and the virtual absence of branded extended stay accommodation, it is difficult to classify the existing properties into these categories. Most large and small cities in India have a proliferation of guest houses of all types, many of which have fashioned themselves into serviced apartments. The random manner in which existing extended stay properties have developed has made it quite impossible to define the correct average rates and occupancy levels for market area analysis. A number of unbranded serviced apartments have mushroomed in cities and towns. Unlike Singapore, where a minimum seven-day requirement is mandatory for a property to be classified as a serviced apartment, the rule of length of stay is non-existent in India, and it is possible to stay in many serviced apartments on a daily basis. It is understood that the current availability of good quality service apartments is around 2,000.

The number of hotels have gone up from 1,333 in 2001 to 1,942 in 2005 and the room strength increased from 73,462 to 103,973 during the same period. The 3-star category witnessed the maximum growth of over 75 percent during the five-year span. The compound annual growth rate during the five-year period was around ten percent.

Average Tariff Range (Rs.) in 250 Locations
Category/Rooms Single Double Suite
5-Star Deluxe 7119 9759 7629 11081 14541 55834
5-Star 4519 7757 5551 7998 8115 14566
4-Star 2634 3812 3225 4438 4761 8124
3-Star 1553 2849 1985 3485 3271 6361
2-Star 947 1330 1022 2025 1942 3976
I-Star 708 1207 940 1433 1191 2440
Others 794 1998 1007 2362 1828 5186
Note: AL: Average Low; AH: Average High Source: Sample Survey of Hotels in 275 Cities and Towns

The sectors generating demand are IT, ITes, BPO, KPO, biotechnology and to some extent manufacturing; particularly during new setups, consulting and financial services,’ infrastructure and telecom.

Serviced apartments are also known as service apartments, corporate housing, apart-hotels, apartment hotels, temporary rentals, interim housing, short-term accommodation, business rentals, and so on. The Oxford English Dictionary uses the term “service flats” for “a flat [apartment] in which domestic service and other facilities are provided at a charge included in the rent.” An Internet search shows that both “serviced” and “service” are now used as the adjective before such a flat or apartment. In western countries and Australia, the name “serviced apartment” is popular. All these are names for the same service: an exclusive, fully furnished and equipped apartment or executive home that is ready to move into. It is an apartment with maid service, plus a range of facilities and services depending upon each property. For reservations, of longer than one month, reductions are normally available. According to the guideline from the Department of Tourism, Government of India, an apartment hotel is meant for temporary stay not exceeding 90 days.

Simply put, a serviced apartment is a hybrid of hotel and residential apartments/condominiums. By definition, an apartment is a complete living unit, with private cooking facilities, that is not a separate structure. That is, an apartment is a complete housekeeping unit consisting ofbedroom(s), living room(s), kitchen, and toilet facilities. It is not intended that individual rooms be specifically identified within the apartment, but only that the total interior space be included. Generally, a service apartment will be an air-conditioned and furnished flat with equipped kitchen, TV, fridge, washing machine, landline, Internet, power back up, fire safety & security, and some even provide a locker. However, apartment service facilities (laundry, linen, security, health club, maintenance, etc) may be located in a separate building that serves an apartment complex. Apartments need not be located in a residential building. A duplex unit should be classified as an apartment because it is not a separate, freestanding structure.

By design, the rooms will have homely look and is propped with everything a home would need, from home appliance to kitchen needs, bathroom and toilet accessories. The apartment is made to look and feel exactly like a home. Every unit is furnished with a television set, music set, microwave, and other electronic goods. Moreover some apartments also provide magazine and shoe racks. Cleaning is done daily. Guests can cook and eat and live the style they want. They are even provided with a maid/manservant who will get the groceries or any other requirement, making it just the way it would be at home.
The major differentiating features are the following:
– Occupancy will be higher and stable because of long-staying guests.
As compared to hotels, serviced apartments have lower fixed costs, lower manpower deployment, lower administrative and general expenses, and lower marketing and sales expenses. Therefore, the operating cost will be lower
– Food and beverages (F&B) revenue will be lower because guests are provided with kitchenette.
– Banquet, conference income may not be there.
– Service apartments need not be located in prime locations where land costs are high.
Broadly, what the long stay guests (LSG) need are the following:
– Greater privacy
– Homely atmosphere: larger spaces and service whenever required by guests
– Variety of home delivered food Kitchenette
– Internet connectivity No frequent tipping
– Reasonable rates for ancillary services such as bar and laundry Convenience store
– Relocation services for those settling in the city
– . Lower tariff as compared to star hotels of similar categories

The customers of serviced apartments are Indian businessmen and professionals, Indian immigrants, Indian nationals visiting India on vacation, and foreign nationals. Indian businessmen and professionals who have to stay in a distant city for official purposes opt for serviced apartments because of the homely appeal. Indian immigrants who come to India to settle prefer to stay in serviced apartments as an interim stay as they hunt for a new house so that they do not have to compromise on their lifestyle or go through the hassles of shifting to a rented home with zilch amenities. Indians visiting India on long vacation increasingly prefer service apartments because of the homely ambience, privacy, and comforts offered by serviced apartments. Major customers of serviced apartments the world over are foreign nationals who travel to other countries. The main reason is the difference in the cuisine among the countries. For example, Indians can hardly appreciate a Japanese menu and the vice versa. Serviced apartments give them the choice to cook own food and live the way they want.

Government Guidelines
Tourism related industry includes travel agencies, tour operating agencies and tourist transport operating agencies, units providing facilities for cultural, adventure and wild life experience to tourists, surface, air and water transport facilities to tourists, leisure, entertainment, amusement, sports, and health units for tourists, and convention/seminar units and organizations. As per the Department of Industrial Policy and Promotion under the Ministry of Commerce and Industry, the term hotels include restaurants, beach resorts, and other tourist complexes providing accommodation and/or catering and food facilities to tourists. Tourism related industry includes travel agencies; tour operating agencies; tourist transport operating agencies; units providing facilities for cultural, adventure and wild life experience to tourists; surface, air, and water transport facilities to tourists; leisure, entertainment, amusement, sports, and health units for tourists; and convention/seminar units. Apart from the above-mentioned basic definition, hotels are classified as commercial hotels, budget hotels, airport hotels, beach resorts, health resorts, forest hotels, convention hotels,
floatels, heritage hotels, apartment hotels, and so on.

Commercial hotels are hotels owned and managed by individual entrepreneurs or private
companies catering mostly to business people, executives and foreign tourists. These hotels may belong to the approved, non-approved or star category. Budget Hotels are commercial hotels that provide clean accommodation and food at reasonable rates. These cater to the budget conscious middle class traveling for leisure, pilgrimage or business purposes. Star hotels represent the most flamboyant segment of the commercial hotels in the country. The focus of this report is serviced apartments of 5-Star and 3-Star categories.

Guidelines for Classification of Service Apartments
Apartment hotels are becoming increasingly popular with business travelers who visit India on assignments, on family holiday, etc. that stretch for couple of months sometimes. According to the guideline from the Department of Tourism, Government of India, an apartment hotel is meant for temporary stay not exceeding 90 days. In no circumstances, apartments in an apartment hotel will be sold individually for residential or any other
purpose. The Department has introduced a VOLUNTARY scheme for classification of apartment hotels as 5-Star Deluxe, 5-Star, 4-Star, or 3-Star categories.

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