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Realty cos check into service apartments, add keys

Rebound in corporate bookings has put a raft of service apartments back in green after a meltdown season.

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Good times have rolled in for globe-trotting executives. As business travel is picking up, the hospitality sector is back on its feet after a hiatus. The rebound in corporate bookings has put a raft of service apartments back in green. A clutch of realty players in Bangalore are looking to add more keys cashing in on this demand.

According to real estate consultancy Cushman & Wakefield’s hospitality report, service apartments are 20% cheaper vis-à-vis hotels for long stays.

Mumbai-based real estate major Sunil Mantri Group plans to enter management contracts with 4-star and 5-star hotels to launch service apartments across the country. This is included in the Rs 2,000 crore tranche the group has lined up for the current year. It also wants to set up 3-star service apartments under its own banner. The firm plans to have an inventory of 750 rooms across Mumbai, Goa, Ahmedabad and Pune. The projects will be rolled out by 2010-11. Param Desai, a research analyst with Mumbai-based Angel Broking, said there is a demand for service apartments in cities like Delhi, which has a large base of non-IT clients. He also added that Bangalore and Kochi would take a while to see a revival in demand.

Average market occupancies for the serviced apartment market are likely to grow from an estimated 55% in 2009 to approximately 72% by 2010. The room inventory would increase from 1,995,000 rooms in 2009 to 2,485,000 in 2010, stated the report.

Global hospitality chain Accor had entered a management contract with the city-based Brigade Group to launch its mid-scale brand Mercure Homestead Residences. The 126 suite service apartment will be managed by Accor and owned by Brigade, which has invested Rs 100 crore in the venture. Kailash Advani, CEO of the group, said, “With a revival in the economy, I am bullish on the demand for service apartments.”

Hospitality major Royal Orchid Hotel (ROH) has tied up with realty player Vaswani Group to manage its service apartments in Bangalore. ROH has already lined up a Rs 500-crore blueprint to kick off its hotel and service apartment projects.

Chender Baljee, chairman and MD of ROH, in an earlier interaction with DNA Money said, “The growth of service apartments has bridged the demand gap for hotels rooms in India. This will be one of our key growth drivers.” While the organised sector is likely to witness an average of 55% occupancy in the current year, the unorganised sector’s performance is still lower. Pankaj Singh, director JMJ Hospitality, which manages Brunton Aster, said “

During the downturn, we had slashed the rates by 25%. However, we are slowly also planning to cutback huge discounts that
we offered during the tough times.”

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