Source : Regional report 2013 of Apartment Service Worldwide :

The Travel & Tourism industry in Asia was worth $554 billion in 2011, generating $1.7 trillion in GDP, or 8.4% of Asia’s GDP.
Asia is often referred to as the powerhouse of world tourism, with outbound travel among Chinese and Japanese nationals leading the way. Outbound travel from China and Japan grew by 20% and 13.7% respectively in the first half of 2012 and is predicted to grow by 6% overall in 2013 (source: ITB World Travel Trends Report).

Across the region, China is the fastest growing market. In 2011 Chinese travelers made over 70 million international trips; this 22% growth over 2010 was fueled partly by the relaxation in visa regulations and is predicted to continue with a 12% growth in outbound travel during 2013. Much of that outbound travel will be to destinations within the Asia Pacific region. 20% of hoteliers in APAC expect the number of Chinese visitors to rise by over 40% (source: Hotels.com)

Like most other BRIC nations, one of the challenges facing China in the global travel market is the investment in business and commercial infrastructure required to service and drive business travel. China is more advanced than, say, Brazil in this respect, with significant investment made in regional airports as well as those servicing the main Chinese business hubs of Shanghai, Beijing and Guangzhou.

Demand
Hotels in the Asia/Pacific region experienced positive results in the three key performance metrics in 2012 according to data compiled by STR Global.
Hotel occupancy across Asia Pacific averaged 68.3%, up marginally on 2011. This slowing of growth rate is attributed to demand outpacing supply increases over the previous three years, although the region’s 2012 RevPAR of US$88.24 represents the highest achieved since 1998.
Regional occupancy increases were highest in Bangkok (up 11% to 70.5%) and Tokyo (up 10.4% to 82.5%). The biggest falls came in Ho Chi Minh City (down 5.4% to 63.7%) followed by Bali (down 4.1% to 69.8%). Three markets – Jakarta, Taipei and Tokyo saw double-digit increases in average daily rate.
Although the US is recognised as the birthplace of serviced apartments, the sector has been operating in Asia for over 30 years. The market comprises a combination of branded and independently operated serviced apartments, local furnished accommodations, villas, and guest houses.
Product consistency and quality vary considerably however. A reputable, trusted provider is considered essential in a market where secondary cities and remote locations have limited options for types of housing available.

China
There are more than 520 new hotels under construction in the Middle Kingdom. Tourism growth is primarily originated by foreign tourists: 294 million overnight stays were counted in 2011. Approximately 106 million hotel guests travel to and within China every year – 70 million come from abroad.
Beijing is the centre of China’s serviced apartments sector. There has been a remarkable price growth in the Beijing residential market in recent years, with capital values of high-end apartments tripling since 2001. The average rents of Beijing serviced apartments have increased by 30% over the last two years, with apartment owners and operators benefiting from a supply line stagnant after the 2008 Olympic Games.
Demand for Beijing’s high-end serviced apartments is partly due to the expanding presence of multi-national corporations, foreign senior managers and ex-pats overseeing new projects. Demand for corporate housing has also increased as Beijing attracts more workers from both overseas and the Chinese provinces.

Hong Kong
Serviced apartments first appeared in Hong Kong as ‘aparthotels’ in the 1980’s. Today, the local market services a substantial number of ex-pats working and an ever-increasing number of foreign nationals arriving to work or seeking investment from the world’s largest IPO market.
These business travellers come mainly from the US and Europe, but arrivals numbers from mainland China and South East Asia are growing too. Hong Kong is the gateway to China and this has been a contributory factor to serviced apartment occupancy levels averaging 90 – 95% in 2011.

Colliers International estimate that there are around 17,000 serviced apartments in Hong Kong, with the largest concentrations – and highest average rates – in the Central and Wan Chai districts. But with both local and international operators recognizing the value of serviced apartments, the supply landscape in Hong Kong is becoming more competitive, whilst apartment tenants are becoming more demanding in terms of service and quality.
A shortage of high quality office space in the prime areas and the expansion of Hong Kong’s infrastructure are driving new serviced apartments supply in the New Territories where rentals are comparatively lower. For example, CHI International aim to add another 400 serviced apartments to their existing 100-strong portfolio by 2015.

India
The tourism sector in India also experiences continued growth. in India there more than 295 new hotels planned and 2,900 up-market hotels operating at average 61% occupancy source: http://www.tophotelprojects.com).
The 1,000 existing first class and luxury hotels will be supplemented by 295 new properties and 48,000 hotel rooms.

Japan
There are 13 new up-scale hotels coming into an already saturated Japanese hotel market. The largest project is the 376-room Marriott Hotel in Osaka, due to open in spring 2014. 346 rooms will come on-stream when the new Hilton opens in Okinawa in early 2014.
Other projects in Japan include the Ritz-Carlton in Osaka (136 rooms, opening May 2014) and the boutique Andaz Hotel in Tokyo (164 rooms, opening early 2014).

Philippines
The second fastest growing economy in Asia and a stable political environment are combining to fuel a surging Manila hospitality market, particularly in the high end luxury sector, with escalating room rates and strong occupancies setting the stage for dramatic future growth for the sector.
With an economy growing at 7.1% – just a few points behind China – there is a strong pipeline of growth and investment in the hotel sector with 5,797 rooms opening over the next five years, growing supply by 37%. Research by C9 Hospitality predicts that average room rates of 6% and occupancy in luxury accommodation of 72%.
Manila is home to 15,567 hotel rooms, 57% of which are in the up-scale tier. The corporate transient and meetings markets account for 78% of total hotel room nights. The urban spread of Mega Manila is expected to create new markets for the apartments sector.

Singapore
The rising number of companies sending employees on short-term assignments has seen serviced apartment operators in Singapore encounter a surge in demand for short stays – especially if the assignee is accompanied by family members.
The Ascott Ltd reports that compared to an average assignment of two to three years, average stays now range from a few weeks to six months. 60% of residents in Oakwood properties in Singapore stay for less than one month up to a similar maximum.

Taiwan
Taiwan is one of the crucial transit hubs in Asia, as an important industrial and export partner for the United States and the European Union. Taiwan is part of the Four Asian Tigers, with Hong Kong, Singapore and South Korea and has been successfully transformed from a cheap labour-intensive manufacturing economy into a world leader in advanced technology.

In 2009, Taiwan was one of the worst-hit economies in the Asia Pacific region but bounced back in 2010 and 2011, registering 10.7% and 4.0% GDP growth respectively. Mainland Chinese residents from 13 cities can now travel independently in Taiwan.

Signs of rejuvenation have sparkled in Taiwan’s hotel market with the emergence of new hotels like the W Taipei and Le Meridien.
With a relatively low incoming supply of upscale hotels and high occupancy rates in both Taichung and Kaohsiung’s markets, hotel developers are receiving encouraging signals about future demand.
Limited high-end hotel supply in Taiwan coupled with a positive tourist arrivals outlook provide opportunities for Taiwan’s hotel market to bloom.
The strongest increase in visitor arrivals is still from mainland China. Since Taiwan has lifted the travel restrictions for mainland Chinese visitors, arrival statistics from mainland China has registered a CAGR of 55.3% from 2007 to 2011.

According to the Taiwan Tourism Bureau (TTB), total visitors to Taiwan are expected to reach 10 million by 2016.
Taiwan is also a major centre for exhibitions in Asia. In Taipei, Taipei World Trade Centre (TWTC) and Taipei World Trade Centre Nangang Exhibition Hall (TaipeiEx) are two of the major MICE facilities in Taipei that caters to both domestic and the international events.

Hotel room supply increased by 3.1% between 2006 and 2012. Standard tourist hotels form the bulk of lodgings, accounting for 73% of the total accommodation supply in June 2012. The overall supply growth rate spiked in 2010 at 3.6%.

Thailand
Thailand’s serviced apartments sector is centred on Bangkok, where Knight Frank put the number of serviced apartments at just under 16,000, an increase of 1.2% on 2011. 45% of that stock is located in Sukhumvit – home to a substantial proportion of the region’s 789,000 ex-pats.
The political unrest of 2009 -2011, demand and supply of serviced apartments is set to grow again in Thailand. Serviced apartment occupancy levels in 2012 were marginally above that of the hotel competitors, up 5% to 75.59%.

Vietnam
Despite the Vietnamese economy underperforming, Ho Chi Minh City (HCMC) has maintained a high GDP growth rate and considered as the most dynamic city in the country. And despite the real estate market being significantly affected in comparison to other industries, the serviced apartment sector is now attracting investors drawn by rising demand.

Around 60% of the 3,000 serviced apartments in HCMC are located in the central business district, with The Ascott Ltd and Frasers Hospitality amongst the major players locally. The market can also be subdivided by tenants’ nationalities. Residents of District 1 and 3 come from Japan, Singapore, and Malaysia, Central, Southern and Eastern Europe. Those in the new urban areas in District 7 such as Phu My Hung tend to be from Korean, China and Taiwan. Tenants from the US or UK are centred on District 2.

By 2015 an additional 20 serviced apartment projects providing 5,200 units will take the total supply to nearly 9,000 apartments. The new projects will be concentrated in District 4 and Tan Binh District.

Market Perspective

Boom Time for Serviced Apartments in Asia
By Tony Soh, Chief Corporate Officer, The Ascott Limited

Asia is the fastest growing region in the world today. Many companies are expanding in Asia to tap on the region’s growth opportunities.
According to a 2012 talent mobility study by global professional services firm, Towers Watson and workforce mobility association, Worldwide ERC, 45% of companies worldwide projected an increase in cross-border expatriate assignments till 2014, with 65% of the respondents identifying Asia as the most frequent destination for such assignments. Among Asian corporations, an overwhelming 85% cite the region itself as their primary destination for cross-border assignments.

This increased talent mobility creates strong demand for quality accommodation including serviced apartments in Asia.
Serviced apartments are gaining popularity as more companies recognize the benefits that serviced apartments can provide for their executives’ relocation or project assignments.

Serviced apartments bridge the gap between hotels which cater mainly to short stays and the traditional rental market. In addition to services and facilities typically found in hotels, serviced apartments offer more space, comfort and privacy, much like a normal apartment. With a fully equipped kitchen, separate living area, home entertainment system and broadband and wireless Internet connectivity, serviced apartments combine the convenience of hotel services and the unique feeling of staying in a spacious home away from home.

Furthermore, residents’ programmes like local city tours and cultural workshops offered at serviced residences such as Ascott’s help expatriates and business travelers assimilate quickly into their new environment.

Compared with booking multiple rooms in a hotel, companies are able to enjoy greater value by housing their executives in a larger serviced apartment where each executive can still enjoy the privacy of individual bedrooms. Companies can also have the flexibility to adjust the duration of the leases in serviced apartments, should there be changes in the duration of projects or assignments.

According to The Apartment Service’s Global Serviced Apartments Industry Report 2011-2012, the serviced apartment industry has grown 34% in units in just two years, between 2010 and 2012.
The strong demand for serviced residences is also reflected in the Global Serviced Apartment Market Review published by Savills in 2012. Occupancy data for key global financial centres points to an average occupancy of 87.9% for Q2 2012, ranging from 85% in Singapore to 91.6% in Hong Kong.

Looking ahead, the serviced apartment industry is poised for further growth in Asia given the region’s strong economic fundamentals, which will continue to attract foreign direct investments, relocating expatriates and business travelers on project assignments.

Ascott, being the largest international serviced residence owner-operator, currently has a portfolio of over 120 operating properties in Asia, with another 40 properties under development. We see strong potential for further growth in this region.

China, in particular, will continue to be our fastest growing market. It is the world’s second largest economy and a top destination for overseas assignments. Besides gateway cities such as Beijing and Shanghai, there is increasing demand in high growth cities such as Chengdu, Wuhan and Xiamen. These cities have been attracting foreign direct investments due to their rapid urbanization and strong infrastructure. Ascott currently has over 8,000 apartment units in China. In the next few years, we target to expand to 12,000 apartment units and open nearly 20 new properties in cities such as Beijing, Chengdu, Foshan, Guangzhou, Hangzhou, Hong Kong SAR, Macau, Shanghai, Shenzhen, Suzhou, Xiamen, Xi’an and Wuhan.

Ascott is also looking to expand in Singapore, where demand remains strong, driven by the inflow of foreign investment and various government initiatives to reinvent Singapore as an exciting business and leisure destination.
Elsewhere in Asia, we expect to open over 20 properties in India, Indonesia, Malaysia, Vietnam and the Philippines where sustained foreign investment will continue to generate significant demand for quality accommodation.
With more growth opportunities for serviced apartments, we can also expect competition for the extended-stay market to become stiffer. Serviced apartment operators will need to be adaptable to market needs, stay ahead of the trends, innovate and enhance quality as we grow. Ascott intends to leverage its global presence to achieve economies of scale and will continue to focus on improving guest experience through refurbishment programmes and other customer service initiatives.

Supply
Our research has highlighted 49,480 serviced apartments in 419 locations across the Asia region. Based on our estimates of the world’s total supply of serviced apartments, Asia accounts for 7.54% of the global serviced apartments market and in 4.76% of the world’s serviced apartment locations.
Based on these figures, regional supply has therefore increased by 16.8% since 2011.
The major operators in the region are as follows.

asia major operators

asia major operators cont

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