Oakwood Asia Pacific, a division of Oakwood Worldwide, the world’s largest provider of serviced apartments with 20,000 rooms under management, launched its first Indian property in the western city of Pune and said it has signed up with local partners to open seven additional properties in the country over the next 18-24 months.
Oakwood joins the long list of a global firms, including Marriott International Inc., Starwood Hotels and Resorts Worldwide Inc. and Ascott Group, that are tying up with Indian real estate developers to tap the burgeoning need for long-stay apartments across Indian cities, the result of an economy that expanded by 9.4% last year and will grow at over 8% this year.
“India and China are two of the most important markets for the group in the Asia-Pacific region, as both these countries see a continuous influx of global visitors from multinationals which are seeking to either set up businesses there or expand existing operations,” said Frank Foster, vice-president, marketing and sales, Oakwood Asia Pacific. Last week, the company opened its first property in China.
In India, the surge in demand for serviced apartments has been significant in cities such as Bangalore, Pune, Mumbai and Hyderabad, fuelled by rapid growth in the IT, business process outsourcing, biotechnology, and banking and financial services sectors. As hundreds of business visitors arrive in the country for projects that keep them here for between three months and a year, companies are finding that it makes economic sense to put them up in serviced apartments, which offer more space and home-style conveniences and cost much less than hotels.
Hotel rooms in cities such as Bangalore can cost up to $500 (Rs20,000) a night, which is comparable with tariffs in New York and California. In tier-II cities such as Pune, good rooms cost around $250, but the availability is woefully inadequate. “With no rooms available in Pune, if they are not booked at least three months in advance, I am frequently forced to have my visitors stay in Mumbai and drive them down during unplanned visits,” said a Pune-based auto component vendor.
Companies, both local and foreign, have been quick to spot the opportunity and have launched serviced apartments. Room rates for these range from Rs10,000 (for a one-bedroom apartment fitted with top-of-the-line fittings) to over Rs14,000 (for a two-bedroom apartment), but most companies insist on a minimum stay of three nights. For companies that constantly have large groups of executives travelling on projects, the costs work out better as the stay gets longer.
Oakwood is bringing in its Residence brand of serviced apartments, typically one-bedroom units, to cater to the middle- to senior-level executives. These will serve as alternatives to four-star hotels. And its Premier brand will come up in upscale locations and target CEOs and international travellers and be alternatives to five-star hotels.
“We plan to launch three premier properties in Mumbai, Bangalore and Pune and five Residence properties in Hyderabad, Bangalore, New Delhi, Chennai and Gurgaon in the next 18-24 months,” said Foster. “The serviced apartment business is in its infancy in India and with the rate at which industrial growth is happening and the economy is growing, only the sky is the limit,” he added.