DEMAND for serviced apartments in Singapore seems to be holding up during the Covid-19 pandemic due to their focus on corporate travellers. At the same time, they also appeal to short-term guests who prefer them to hotels for the bigger space.
Typically, serviced apartments serve corporate travellers but during this period, some short-term guests are switching from hotels to these bigger spaces, which are also more affordable for longer-term stays.
“It’s better to stay in a serviced apartment than in a hotel room. You would go crazy,” said W Cheng, who has been living with her husband since late-March at a studio apartment in Citadines Mount Sophia.
The couple had stayed in a hotel in Orchard Road for several days before moving to Citadines Mount Sophia where they pay S$4,800 a month. She reckons they will stay at least until the end of June, as travel restrictions are unlikely to be lifted anytime soon.
The 28 square metre (sq m) room at the Orchard Road hotel costs over S$200 per night, while the studio apartment is larger at 36 sq m and includes a small kitchen plus a thrice-weekly cleaning service.
The global hospitality sector has been badly hit by the pandemic with the vast majority of people staying home due to travel restrictions, but the serviced apartment segment is proving to be more resilient due to their contracts with corporate clients.
Singapore’s visitor arrivals were still up 3.9 per cent year-on-year in January, but were down 51.1 per cent in February, and fell 84.7 per cent in March.
The year-to-date figure for arrivals is 2.7 million, down 43.3 per cent year-on-year. Singapore has banned all short-term visitors since 11.59pm on March 23.
The Ascott Ltd, which is part of real estate giant CapitaLand, runs Citadines. Ascott has nine operating serviced residences, with about 1,700 units in Singapore.
“With countries under lockdown due to Covid-19, our guests appreciate the privacy of their own rooms within our spacious apartments where they can live and work,” an Ascott spokesperson said.
Guests can cook in the fully-equipped kitchen that has a fridge. Some units also have washing machines.
Asked if rates have changed during this period, the spokesperson said the company is focused on ensuring the well-being and safety of its employees and guests.
“We continue to adapt our business and leverage our lodging expertise to contribute to the global communities impacted by Covid-19,” he said.
In addition to its regular guests, Ascott has also stepped up to provide a home away from home for healthcare workers, returning nationals, guests who are affected by border closures or city lockdowns, migrant workers and others who have been stranded due to Covid-19.
Frasers Hospitality said serviced apartments appeal to both leisure and corporate travellers.
“As travel priorities evolve, we recognise that the blend of personalised service and private space offered by serviced apartments and residences will appeal to a wider range of travellers,” said a spokesperson.
“Based not only on what we have seen in the last few months of Covid-19, but also on our experience during Sars in 2003, our strong corporate base of long-stay customers has provided stability during such situations,” she said.
“The safety of well-equipped, spacious accommodation, the flexibility of our leases and our global brand presence give our corporate clients a level of comfort and familiarity,” she added.
“We have also seen an uptick in interest in our properties from leisure travellers who prefer to stay in serviced apartments with home comforts that make travelling more comfortable,” she said.
“Another clear benefit is that they have larger spaces, with separate living rooms, dining rooms and bedrooms and fewer social spaces, which our guests find reassuring from a health and safety perspective.”
In Singapore, Frasers has four serviced apartments housing 606 units, and another two hotel residences with 617 rooms.
Even as serviced apartments compete with hotels, hotel operator Millenium Hotels and Resorts told The Business Times that it is not cutting rates to boost occupancy.
As countries around the world move cautiously out of their respective lockdowns, it will take some time for the global hospitality sector to recover, said Clarence Tan, the group CEO of Millennium & Copthorne Hotels.
Wholly owned by City Developments Ltd (CDL), Millennium Hotels and Resorts will adopt a heightened commercial approach and operational standards in meeting customer and guest expectations in the “new normal”, he said.
In its Q1 2020 operational update, CDL said its Singapore hotels have seen a 30 per cent fall in occupancy rate. All 10 of its Singapore hotels remain operational but revenue per available room declined 28.8 per cent due to lower occupancy.
CDL said its Singapore hotels focused on corporate and public-sector businesses to mitigate the impact of low occupancy.
Several of its hotels are being used to house those affected by recent events such as Malaysia’s border closure, and Singapore residents returning from overseas to serve their 14-day stay-home notice period.
“These initiatives have helped to sustain occupancy rates in Singapore, allowing hotels to maintain a breakeven position in April. We will continue to right-size our hotels and workforce in tandem with demand,” said Mr Tan.
“While it is easiest to lower room rates to boost occupancy, this will only prolong the recovery phase. Unlike a single hotel operator, we have the advantage of economies of scale,” he said.
“This enables us to avoid a rate war and restore market confidence through innovative offerings focused on experience,” he said.
CDL is also using this period of slower demand to retrain hotel colleagues and maximise the training opportunities that various government agencies like the Employment and Employability Institute (e2i) have provided.
Grand Copthorne Waterfront is one such hotel that has been working closely with e2i on redesigning jobs to enhance the prospects of its employees.
Some receive on-the-job training from experienced mentors while others are seconded to sectors with a strong hiring demand, such as the Singapore Food Agency, to be social distancing ambassadors.
CDL has 10 hotels in Singapore with over 4,100 rooms. This includes Novotel Singapore Clarke Quay, which is expected to cease operations in early July this year following its divestment.
Millennium Hotels and Resorts operates six of these hotels – Orchard Hotel, Grand Copthorne Waterfront, M Hotel, Copthorne King’s Hotel, Studio M and M Social Singapore.