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The company, which is a subsidiary of real estate giant CapitaLand, recently secured contracts to manage five more properties comprising 1,000 apartment units in the cities of Yinchuan, Changsha, Shenyang and Xi’an. These take the company’s Chinese inventory to more than 12,000 serviced apartments, representing almost a third of its Asia Pacific total of 37,000 units.

Ascott serviced apartment in China

Citadines Xingqing Yinchuan and Somerset Xingqing Yinchuan will mark Ascott’s entry into the capital of northern China’s Ningxia region
Citadines Xingqing Yinchuan and Somerset Xingqing Yinchuan will mark Ascott’s entry into the capital of northern China’s Ningxia region
“China is Ascott’s fastest growing market. As the world’s second largest economy, it continues to present tremendous opportunities. Urbanisation, increasing business activities and rising domestic affluence in key Chinese cities fuel strong demand for our serviced residences,” explained Ascott’s CEO, Lee Chee Koon.

“Since bringing Ascott from our home base in Singapore to China in 1998, we have grown to become China’s largest international serviced residence owner-operator, with 69 properties across 23 cities. This year alone, we have added some 2,600 apartment units in China. Having crossed our target of 12,000 apartment units ahead of 2015, we are now aiming at 20,000 units in China by 2020,” he added.

By this time, Ascott’s Chinese collection is expected to account for a quarter of its targeted global inventory of 80,000 units.

The latest five additions of Ascott’s portfolio demonstrate the company’s increasing focus on emerging second tier Chinese cities. The 200-unit Citadines Xingqing Yinchuan, 150-unit Somerset Xingqing Yinchuan and 164-unit Somerset Riverside Changsha will mark Ascott’s entry into two new markets, Yinchuan and Changsha – the respective capitals of the Ningxia region and Hunan province.

All three properties are due to open in 2018, and the Yinchuan properties mark the first time Citadines- and Somerset-branded serviced residences have been co-located in the same development.

Ascott has also signed its second property in Shenyang, the 330-unit Somerset Olympic Centre Shenyang, and its fifth property in Xi’an, the 156-unit Somerset Xindicheng Xi’an. These serviced residences will open in 2015 and 2016 respectively.

Celebrating its 30th anniversary in 2014, Ascott now operates 24,000 serviced apartment units in Asia Pacific, with a further 12,000 in the pipeline.


CapitaLand’s serviced residence unit, The Ascott Limited (Ascott) – the world’s largest international serviced residence owner-operator, has entered into a strategic partnership with Quest Serviced Apartments (Quest) – the largest serviced apartment provider with 112 properties in Australia.

Ascott expects to invest up to AUD500 million (S$560 million) to acquire new properties that Quest will secure for its franchise in Australia over the next five years. Ascott will have a right of first refusal to acquire the properties sourced by Quest. Quest will then provide a lease for the properties, which will be operated under franchises using the Quest brand.

In addition, Ascott has signed an agreement to acquire a 20% stake in Quest for AUD28.8 million (S$32.3 million). As part of the agreement, Ascott has the option to increase its stake in Quest to 30%.

Ascott Reit Expands To Greater Sydney By Acquiring Three Serviced Residences For AUD83.0 Million

In a separate agreement, Ascott’s real estate investment trust, Ascott Residence Trust (Ascott Reit), will acquire three operating serviced residences in Greater Sydney from Quest for AUD83.0 million (approximately S$93.0 million). These are Ascott Reit’s maiden acquisitions in New South Wales.

Ascott logoQuest serviced apartment

The accretive acquisitions at an EBITDA yield of 7.7% are expected to increase Ascott Reit’s FY 2013 distribution per unit from 8.40 cents to 8.46 cents on a pro forma basis.

Ascott Reit will receive fixed rent by taking over the leases for the three serviced residences – Quest Sydney Olympic Park, Quest Campbelltown and Quest Mascot – and they will continue to be operated under franchises using the Quest brand.

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The Ascott Limited has secured its first franchise agreements in Vientiane, the capital city of Laos, for an operating serviced residence in the city that will be rebranded as a 116 unit Somerset Vientiane later this year and a 194 unit Citadines Kuta Beach Bali, scheduled to open in August.

The new franchise agreements mark a new milestone for Ascott and will be one of the company’s growth drivers for the future, allowing it to build rapidly in existing markets and expand into new ones.

“Since opening our first property in Singapore 30 years ago, Ascott has grown to be the world’s largest international serviced residence owner-operator and through franchise agreements, we have added two more cities to our portfolio to reach 85 cities worldwide,” Ascott chief executive officer Lee Chee Koon said.

“Together with investments, management contracts and strategic alliances, franchise will bring us closer to achieving our target of 40,000 apartment units globally by 2015.”

As Laos heads towards more economic reforms and creates more special economic zones across the country, the number of expatriates and business travellers to Vientiane is expected to increase, generating a significant demand for serviced residence in an area where there is currently a lack of international-class serviced residences.

Somerset Vientiane will be strategically located within the major commercial area of the new business and residential Sikhottabong district and is a five minute drive from the Chanthabouli business district and 15 minute drive from Wattay International Airport.

The four star residence features 116 units and modern business and recreational facilities such as tennis court, lap pool, gym, children’s playground, business centre and meeting room.

Meanwhile, Citadines Kuta Beach Bali offers a prime beachfront location in Kuta, and is within walking distance to the retail, dining and entertainment hub of Beachwalk shopping centre.

Featuring a choice of studios and two bedroom apartments, the property boasts panoramic ocean views, a rooftop swimming pool and bar, meeting room and business centre.

Singaporean serviced apartment chain The Ascott Limited has announced moves to expand into Myanmar and increase its presence in Germany and Asia on Thursday.
The wholly-owned unit of developer CapitaLand said yesterday that it has won a contract to operate a 153-unit mixed-use development in Yangon.
Somerset Kabar Aye Yangon
The property – Somerset Kabar Aye Yangon – is a 15-minute drive from downtown Yangon and 30 minutes from the airport. It is due to open in early 2018 and will be Ascott’s first outlet in Myanmar.
The firm also announced yesterday that it has won a contract to manage the Somerset Zhuankou Wuhan, in Hubei, China. The 245-unit property is projected to open in 2018 and will comprise commercial and residential components.
The Ascott Sentral Kuala Lumpur, which the firm is managing, will open on March 21 while the Ascott Midtown Suzhou in China should be operating by next month.
These announcements come on the heels of Ascott’s opening its first property in Frankfurt, Germany, on March 1.
Acquired for €28 million (US$38.8 million) while under construction in 2011, the 165-unit Citadines City Centre Frankfurt is Ascott’s third serviced residence in Germany, adding to those in Berlin and Munich.
Ascott chief executive Lee Chee Koon said the moves are part of the firm’s search for investment opportunities in key markets such as China, Germany and South-east Asian capitals.

Mr Lee Chee Koon, Ascott’s Chief Executive Officer, said: “As Ascott celebrates 30 years of successful business, we would like to thank all our customers for their unwavering support. In 2013 alone, we had over one million stays, of which a significant percentage was from repeat guests and we look forward to their continued support. To enable our guests to enjoy the comforts of home in more destinations, we plan to open 58 properties across 12 countries by 2018, of which about 20 properties are scheduled to open this year.”

mobile booking serviced apartment

Having unveiled its mobile-friendly website and online chat facility last year, Ascott opened up its global inventory to major OTAs through a web-based connection in April.

Meanwhile, Frasers Hospitality rolled out its mobile website in February, while Far East Hospitality’s (FEH) brand website went live late last year.

Pan Pacific Hotels Group is also intending to relaunch its website by June, targeted to drive more business for both its hotels and serviced residences.

Shifting importance
Frasers Hospitality group director sales and marketing, Joanne Ang, said: “Our shift towards online channels has been substantial over the past three years, and is expected to increase further in tandem with the industry.”

She revealed that among all channels, direct reservations currently rank first, contributing 35 per cent of Frasers’ business. However, website bookings are catching up, with a close 30 per cent. The GDS, which is utilised by travel consultants and TMCs, stands at 10 per cent.

“Using e-channels forms a big part of our marketing strategy, and we have benefited greatly from working with OTAs and our brand website,” said Ang, adding that the company also receives a handful of corporate bookings from travel agencies’ web portals, which have started to feature serviced apartments in packages.

“This will enable users of OTAs to view real-time availability of our serviced apartments and receive instant booking confirmation.
Our focus is to ensure customers can make bookings as conveniently as possible.” – Anthony Khoo, Ascott’s senior vice president, brand and marketing, on sharing inventory with OTAs

Ascott, on the other hand, declined to reveal percentage breakdowns. Its senior vice president of brand and marketing, Anthony Khoo, would only let on that the performance for each distribution channel differs according to market demand.

He said: “For example, in Europe, where we have more guests on shorter stays, the bookings are mainly through OTAs and GDS. In Vietnam, however, where most of our guests are on long stays, bookings come mainly directly from the companies through phones or emails.”

At FEH, even though over 90 per cent of bookings come from email and phone enquiries, building awareness of its online sales channel remains a key initiative, shared COO, Raphael Saw.

He said: “The bigger online footprint has given rise to greater awareness of our serviced residences offerings. As a result, take-up rate through our website has grown noticeably.”

In addition, Saw pointed out that business had been coming in from OTAs too.

According to Andrew Donadel, general manager of Pan Pacific Serviced Suites Beach Road, the two Pan Pacific-branded serviced suites in Singapore receive more than half of bookings from corporates by phone and emails, 15 per cent from their websites and five to 10 per cent from OTAs and GDSs.

Despite the reliance on offline channels, he shared Saw’s sentiment. “The website is an important channel and we aim to drive more business through the website,” said Donadel.

On screen attraction
Cost, convenience and the opportunity to gain new markets were reasons cited for wanting to pursue a more aggressive online strategy.

Oakwood Asia-Pacific senior manager, revenue management, Maybelline Teo, found the brand website to be the most effective channel.

From 2011 to 2012, Oakwood’s website saw booking volume jump by 99 per cent. To boost traffic further, an interactive campaign was launched last month to offer online exclusives.

“Not only are distribution costs lower than other e-channels, the opportunities for branding, cross-selling and upselling are easier and within our control,” said Teo.

“Online channels appeal to transient leisure travellers and the more IT-savvy corporate bookers. We are able to enhance their experiences with us at a lower cost and with a wider reach.”

Similarly, FEH’s Saw noted that direct bookings through the website or through calls/emails “generated more in terms of revenue percentage” compared to other channels.

The ability to move sales round the clock is another draw of online. Said Ascott’s Khoo of the group’s tie-up with OTAs: “This will enable users of OTAs to view real-time availability of our serviced apartments and receive instant booking confirmation. Our focus is to ensure customers can make bookings as conveniently as possible.”

Frasers’ Ang added: “The market currently favours both brand websites and online travel portals as they are always available and have their own host of unique navigational experiences.”

In its early days
Despite the eagerness among brands to turn on the online tap, it seems the bulk of business still lies in offline for now.

FEH’s Saw explained: “As the duration of each stay is usually for an extended period, especially for longer-term stays which can be up to a few years, bookings are generally confirmed after enquiries are made over email or phone. Some clients will also need to view the serviced residences first.”

Donadel concurred. “Our focus is more on the longer-staying guests who can stay from one to three months and they tend to prefer contacting our sales managers first. GDSs and OTAs are mostly used by the travel (consultants) and FITs who are mostly short-stay guests.”

However, this situation is likely to evolve, given that more apartment operators are making inroads into the short-stay market and consumers are becoming more comfortable with web bookings.

When this happens, agencies with an online presence will be best suited to ride the wave, providing a comparison shopping option for residences.

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ascott ShangaiContinuing its rapid expansion in the country, the Singapore-based company has signed agreements to operate the 90-unit Ascott Heng Shan Shanghai, 250-unit Ascott Emerald City Suzhou and 194-unit Somerset Baitang Suzhou, which are scheduled to open in 2014, 2015 and 2017 respectively. These new properties will take Ascott’s portfolio in China to more than 8,000 apartment units across 46 properties in 17 cities.

“Strong foreign direct investment and growth in tourism and domestic travel continue to drive demand for quality accommodation in China,” said Lee Chee Koon, Ascott’s deputy CEO & managing director for North Asia. “With the latest additions, we now have more than 10 serviced residences in Shanghai and Suzhou. Deepening our presence in these two cities enables us to better tap the fast-growing demand for serviced residences and build economies of scale in our operations.”

Ascott Heng Shan Shanghai will offer a range of one- to three-bedroom units located in the city’s Xuhui district, close to foreign consulates and near the Shanghai Railway Station. The Ascott Emerald City Suzhou forms part of the Suzhou New district, which is home to many electronics, IT, biotechnology and pharmaceutical companies, while the Somerset Baitang Suzhou is located in the Suzhou Industrial Park, adjacent to the Jinji Lake East district.

All three serviced residences will offer facilities such as swimming pools, spas, gymnasiums, business centres, meeting rooms and breakfast lounges.

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Serviced apartments in the Asia-Pacific region have been experiencing a reversal of fortunes since the global financial crisis (GFC) in late 2008 pummeled the sector.

Demand continued to rise last year and the uptrend is widely anticipated to spill into this year. Cheaper rates charged by serviced apartments – 15 to 20 per cent lower than before the GFC – are helping to fuel both business and leisure arrivals. Simultaneously, business travel, the core market for branded serviced operators, is growing at a robust pace within Asia as foreign direct investment continues to stream in and companies continue to extend their footprint in the region.

Frasers Hospitality’s group director of sales and marketing, Joanne Ang, forecasts that bookings for the group’s serviced apartments in Asia-Pacific will grow by 15 to 20 per cent by end-2012.

Jia En Teo, co-founder and COO of Roomorama, an online booking engine that specializes in non-hotel accommodation, expects to also “more than triple the number of travelers from Asia using our service in 2012”. Roomorama has 100 primarily unbranded serviced apartments in Asia-Pacific in its system.

“Awareness among Asians about the concept of serviced apartments and their brands is growing,” said Teo, attributing it to the presence of prominent players such as Ascott, Frasers Hospitality, Far East Hospitality and Oakwood Asia-Pacific, which have shaped the industry in the region.

“In Europe and the US, fewer brands occupy the serviced residences sector and, as such, the concept is not as well-known outside the major urban centres,” she said.

Market sources
China, Japan, South Korea, Australia, Singapore and Malaysia are the main source markets for serviced apartments in the Asia-Pacific region, according to industry members interviewed.

Housing staff who have been relocated or have been assigned short-term projects still constitutes the bulk of corporate business for branded serviced residences. However, according to a Global Serviced Apartment Report 2011-12 published by The Apartment Service Worldwide, serviced apartments in the region are being increasingly used by corporate clients for extended stays of over a week but under a month.

Ang said guests at Frasers’ properties in Asia-Pacific stay for three to six months on average and 80 per cent of bookings come from corporate firms, with the exception of properties which can accommodate shorter stays. However, Frasers also sees an increase in stays from guests working on projects, as well as leisure bookings.

The increase in leisure guests at serviced residences can be attributed chiefly to the premise that serviced apartment rates can be as much as 30 per cent lower than rates charged by hotels in a similar category. “More leisure travellers perceive them as good value-for-money alternatives, especially if they are staying for more than three or four days in a destination with a large group of friends or family,” said Roomorama’s Teo.

But while awareness of serviced apartments is rising as a whole, marketing intermediaries and corporate travel managers believe many multinational companies as well as small- and medium-sized enterprises based in North and South-east Asia are still deeply unaware of the advantages in using this accommodation. Many still use hotels to house employees for a month or more.

In fact, few firms in Asia issue clear guidelines on when serviced apartments should be used.

“When it comes to travel policy, I have not come across a clear definition of when (business) travellers should use serviced apartments versus hotels. Most clients who use both hotels and serviced properties tend to make their decisions based on which property offers the lowest logical rate at the time of booking, rather than other criteria,” said Mike Orchard, senior director, CWT Solutions Group, Asia-Pacific, Carlson Wagonlit Travel.

For serviced apartments to become a top-of-the-mind alternative for corporates seeking extended and long-term stay accommodation, Orchard advises operators to focus on certain industry sectors.

“Consulting, project-driven organisations, and firms in the mining and financing industries are prime targets as they tend to have a higher proportion of long stays,” he said.

Serviced apartments should also consider integrating their reservation systems with that of the GDSs to gain more traction with corporate clients, suggested Orchard, while highlighting areas of interest close to the serviced apartments such as facilities, activities and services in nearby areas.

He said: “It’s about getting the message across that serviced apartments offer more than a box standard (hotel) room.”

To nurture demand from the leisure market, serviced apartments have to focus on educating consumers, said Teo. “Highlight the innate advantages that serviced apartments bring within the marketing collateral – for instance their ability to offer travellers a ‘home away from home’, and the opportunity to experience living like a local,” she said.

Building blocks

More units are opening and operators are stepping up their game to win over more guests to serviced apartments

Serviced apartment operators are intent on widening their presence across Asia-Pacific as the region continues to prosper amid a global economic slowdown.

Optimism among operators remains high, as demand from the corporate sector, the core market for serviced residences, continues to climb (see above), and as more leisure travellers use this accommodation in place of hotels.

Robert Hecker, managing director, Horwath HTL Asia-Pacific, said: “There is still room for growth and lots of opportunities in the Asia-Pacific serviced apartment sector, especially out of Australia.”

“There are lots of intra-regional business activity, and more individuals and businesses now view serviced units as an alternative to hotels. Demand should remain strong, and this will continue to power the growth in supply.”

Singapore-based Ascott, the largest branded serviced apartment operator globally, plans to open more than 40 serviced residences with over 8,300 apartment units in first- and second-tier cities in China, alongside major urban centres such as Jakarta and Kuala Lumpur.

Ultimately, the chain hopes to achieve 40,000 apartment units worldwide by 2015, effectively doubling the size of its current portfolio. Over 70 per cent of these are expected to be based in the Asia-Pacific region.

Tony Soh, Ascott’s chief corporate officer, said: “In China, which we have earmarked for aggressive expansion, besides expatriates and foreign tourists, a rising number of domestic business travellers are staying at our serviced residences.”

“In India, the shortage of international-class accommodation presents opportunities for Ascott to tap unmet demand from both foreign and domestic tourists.”

“Singapore, Vietnam, Indonesia, Malaysia and the Philippines also have significant potential for serviced residences due to increasing foreign direct investment and tourist arrivals.”

Frasers Hospitality, another game changer in the Asia-Pacific serviced residences sector, currently operates 35 properties in Asia-Pacific. This year, the firm intends to open properties in Guangzhou, Shanghai, Wuhan, Beijing, Gurgaon (New Delhi), Melbourne and Perth.

Plans are also underway to determine the feasibility of opening further properties in Vietnam and Indonesia, as well as in emerging destinations including Cambodia and Myanmar.

“Frasers is taking calculated and strategic steps to ensure that we expand our footprint across Asia and the Pacific in a sustainable manner as we capitalise on current trends, such as the growth in demand for serviced suites, while developing a better understanding of our current and potential customers, and developing new ways to engage them,” said Jastina Balen, director of group branding and communications, Frasers Hospitality.

Oakwood Asia-Pacific, a smaller branded player in the region, has several projects in the pipeline, chiefly in China and India. By the end of the first quarter, the chain is scheduled to open Oakwood Premier Guangzhou, its sixth property in China and also its first luxury brand in the country.

In China, with the opening of Oakwood Premier Guangzhou, Oakwood will offer almost 1,500 serviced apartments in six key cities, namely Beijing, Chengdu, Guangzhou, Hangzhou, Shanghai and Hong Kong.

“China’s economic development has led to an increase in business activities and corporate expansion of many multinational and large-scale domestic companies, generating an increasing demand for serviced apartments especially to accommodate senior executives,” said Caroline Leong, marketing director, Oakwood Asia-Pacific.

In addition, the company hopes to manage nine more properties in India by 2014 in major urban centres including New Delhi and Hyderabad. Currently, the company manages 25 properties in China, India, Thailand, Indonesia, the Philippines and Japan.

One of the main priorities for serviced residence operators expanding in the region is ensuring that service standards remain consistent. A way to achieve this is to step up employee training, something operators said they were focusing on.

“Operations-wise, we endeavour to live up to our promise of offering the Oakwood Gold Standard of service by placing a priority on training our people – motivating and empowering them to fulfil our residents’ and clients’ needs,” said Leong.

Rising affluence and a broader range of travel experiences mean Asians are now more discerning than ever. Serviced operators have acknowledged this attitudinal shift, and are adapting to meet the evolving needs and desires of Asian travellers.

Ascott, for example, will be rolling out a series of consumer-centric initiatives designed to make guests feel more at home. “We want to redesign the experience guests have while staying in Ascott properties through the insights gained from our improved reservation and property management systems,” said Soh.

Frasers is adopting a similar strategy. Balen said: “Based on data gleaned from our customer relationship management system, Frasers is hoping to roll out customer-centric programmes and products that will better meet the needs and desires of our existing and potential clients in the near future.”