There was a time when service apartments meant unorganised players catering largely to the wedding market, families or those posted to a new town awaiting permanent accommodation. Now, branded hospitality players are making a strong play in this segment by expanding their portfolio, refurbishing their existing properties and introducing marketing campaigns.
While Indian Hotels Company Ltd (IHCL) is debuting its Taj Wellington Mews brand overseas with a 336 apartments’ project at Ras Al Khaimah in UAE, Singapore-based Ascott is expanding its presence in leisure across tier II locations in India. At present, Ascott runs seven service apartments in Bengaluru, Chennai, Goa, Gurugram, Hyderabad and Pune under various brands
“Ascott has a robust pipeline with 12 more properties adding over around 4,000 units to our India portfolio in the next five years,” said Hoshang Gariwala, Ascott Ltd’s Country General Manager (India). This includes upcoming projects in Faridabad, Lucknow and Tanjore.
Service apartments vary in size (from studio rooms to 3 BHK) and services offered. Along with the in-room amenities, these can also provide guests access to restaurants, gym, swimming pool and clubs in a hotel complex. While service apartments largely cater to companies handling employee relocations and long stay guests, the category is also seeing demand from meeting, incentives, conference and exhibition (MICE) tourism.
“The average length of stay in our serviced apartments is fourteen days or more. While it is uncommon, guests may opt for a serviced apartment for a shorter stay such as two or three days if the hotel is fully booked,” said Debarati Bose, Director of Sales & Marketing, St Regis, Mumbai. There are long term contracts with annual escalations and the hotel receives advance payments for long stay guests in its service apartments, she added.
IHCL forayed into the service apartment space when it opened Taj Wellington Mews in 2004. In 2021 it expanded to Chennai. Currently, the apartments in Chennai have an occupancy of 79 per cent and those in Mumbai clock upwards of 90 per cent. The properties have seen a rate increase of 10-12 per cent and deliver high margins. Overall long stays in hotels and service apartments contribute 3 per cent to IHCL’s room revenue.
“The occupancy levels are reflective of strong demand for this unique proposition of branded luxury residences with limited supply in the country,” said Parveen Chandra Kumar, Executive Vice President (commercial), IHCL.
“Demand for this format is more in select micro markets of large cities and such opportunities are evaluated on the basis of each market,” Kumar added in response to a query on expansion.
Property refresh and marketing campaigns
“We continue to invest in upgrades ranging from sophisticated room renovations, enhanced F&B experience, introduction of exclusive member-only clubs and globally recognised spa and wellness offerings,” said Anuraag Bhatnagar, CEO, The Leela Palace, Hotels & Resorts.
Service apartments in The Leela Ambience Hotel in Gurugram are being refurbished now and the project is expected to be complete by October.
“We continue to see a robust performance in our serviced residences portfolio. Our focus remains on optimising operational performance of these assets to maximise value for both guests and stakeholders,” Bhatnagar added.
Leela Hotels has also signed a management contract to run service apartments near the international airport in Mumbai. This will have 63 keys and will commence operations by 2026.
Alongside property refresh, brands are relying on marketing campaigns to boost business. In a limited period offer, Marriott International is offering 2000 bonus points, exclusive perks and discounts to its loyalty club members for staying in its executive apartments in Navi Mumbai.
Ascott runs Star Rewards loyalty programme and it has been expanded from last year with extra benefits such as full 24-hour stays from time of check in, milestone rewards and lounge access at airports. Also programme members get access to lifestyle and sporting events. This has fostered repeat business and strengthened brand loyalty, Garivala said.
