Thailand: A report from property consultants JLL shows that serviced apartments in Thailand have fared better than their hotel counterparts during the pandemic.
JLL said it expects the pandemic to boost the growing trend for a mixed-use format offering hotel rooms and serviced apartments in a single development, as well as continuing interest from local and regional developers in developing standalone serviced apartments.
The study monitored international grade hotels and serviced apartments across Bangkok between January and April 2020. Findings from the study show that more than 80 per cent of the city’s serviced apartments remained open at the end of April, although the average occupancy rates declined by 30 per cent year-on-year. During the same period, the majority of hotels across the city were shut down and those that remained operational saw occupancies drop by nearly 50 per cent year on year, many into single-digit occupancies.
“While the ongoing tourism market slump has forced the majority of hotels across Thailand to close their doors to lower their fixed costs, most of the Bangkok’s serviced apartments remain open to serve long-stay guests,” said JLL Hotels and Hospitality Group vice president, investment sales Asia, Pimpanga Yomchinda.
“Tourists or short-stay guests represent a smaller demand source in Bangkok’s serviced apartment sector. Though we have seen serviced apartments shifting their guest acquisition strategies by increasing the portion of short-stay guests in recent years, long-stay guests, most of whom are expatriates, have remained their top source of demand. This explains why the serviced apartment sector has felt a relatively smaller impact from the Covid-19 pandemic than hotels that rely more on short-stay demand from tourists,” she added.
JLL’s study indicates that, historically, the average distribution between short- and long-stay guests in serviced apartments has been 25/75 with a gradual shift in recent years to 40/60.
Strategic advisory & asset management vice president Alex Sigeda said: “With core demand from the long-stay customer base, serviced apartments have proven to be more resilient than other hospitality segments in the time of crisis. A similar pattern was witnessed during past events had major effects on Thailand’s tourism industry, such as the Great Flood in 2011, political unrests in 2013-2014 and the Thai baht appreciation in 2019. As investment asset classes, serviced apartments and hotels have their respective advantages and disadvantages. The former generally offers a more efficient and stable operation that keeps the operator relatively safe in a down market. The latter generally offers more yielding opportunities during periods of high demand, given a more flexible inventory without long-stay offerings.”
To help bridge the gap between these two models, regional and global operators have been introducing a number of hybrid options into their brand stables, focusing on short-stay demand, while still preserving a portion of their room inventory for the long-stay segment, according to Pimpanga.
“We expect this trend to grow further as operators have realised the complementary advantages of the two accommodation types. Among the recent examples in Bangkok are Staybridge Suites Thonglor by IHG and the upcoming Lyf Sukhumvit 8 by Ascott.”
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