As hotel room prices rise, corporations are increasingly looking to service apartments to accommodate employees for extended stays. And Mumbai has emerged as the most expensive destination.
Demand has grown significantly for serviced apartments—fully furnished homes that frequently offer maid service—and they are becoming a popular choice for foreign business travellers and expatriates, according to a new report by property consultants Cushman & Wakefield.
Occupany rates for professionally-run service apartment complexes in Bangalore, for example, are 90% and the rates range from Rs45,000 a month for a one-bedroom or studio to more than Rs1.8 lakh for a three-bedroom apartment, the report said. In Delhi, rates are as low as Rs30,000 a month for a budget apartment and as much as Rs3 lakh a month for a luxury apartment.
In Mumbai, the monthly rate for a two-bedroom service apartment can range from Rs4.5 lakh to Rs7 lakh.
“It’s all to do with the demand-supply position of hotel rooms, which is having a positive impact on service apartments,” said Binaifer Jehani, a hotel analyst for Crisil Research in Mumbai. “When there’s a shortage of hotel rooms, obviously people move on to service apartments.”
Jehani said that in Hyderabad and Bangalore, where young people from all over India come for short stays to work in the booming information technology business, companies often see an advantage of putting up five or six people in one service apartment rather than paying for individual hotel rooms.
Venkatesh Rao, chief executive officer of The Signature Crest, which has a chain of 17 serviced locations which is expected to grow to 24 by next month, said the concept is at a nascent stage in India but the market has a big potential.
“The concept itself is a home away from home,” Rao said. “For a frequent flier who is away 15-20 nights a month, you have a 24-hour cook and 24-hour housekeeping attendent. If you want food, you can have hot food in your home.”
Hotel chains such as Royal Orchid and the Oberoi Hotels have moved into the market with high-end offerings. But smaller players ranging from individuals to those with a flat to spare are also converting them?into service apartments.