Competition on for hotels, serviced apartments

Competition on for hotels, serviced apartments

JAKARTA (JP): The operation of several serviced apartments is
likely to tighten the already fierce competition in the hotel
business. But there remain differing opinions on whether the two
similar businesses are competing in the same market segment.

Several hotel executive managers contacted by The Jakarta Post
acknowledged that to some extent, serviced apartments could snap
up hotels' long-term guests. However, they argued that there are
differences between the type of long-term guests that choose to
stay in hotels and those that choose serviced apartments.

They also claimed that hotels are in a better position to
attract long-term guests because hotels have more facilities than
serviced apartments.

"I think serviced apartments could take only 5 percent of
hotel guests. And I prefer to say that they are competing with
rental houses and not with hotels," Sahid Jaya Hotel's marketing
manager Hiro Ono said.

The marketing manager of Holiday Inn Hotel, Melvin Lim, noted
that hotels offer long-term guests more benefits than serviced
apartments.

Businesspeople and families find hotels more advantageous than
serviced apartments, Lim said.

He said Holiday Inn offers a competitive package for long-term
guests, including families, such as 25 percent discounts on food
and beverages, laundry and telephone services.

On the other side, executives of several apartments declared
they could provide the exact services as five-star hotels but at
a lower rate.

Indah Suparta, a director of the Ascott Jakarta -- one of the
city's best serviced apartments -- acknowledged that there is
obvious competition between hotels and serviced apartments in
attracting long-term guests.

"We do have some guests who came from hotels," she said.

Indah acknowledged that serviced apartments cannot offer full
services like hotels. However, she said there are certain
benefits to staying in serviced apartments.

"Long-term guests now have an alternative," Indah said.
"People feel like they are living in their homes when they stay
in serviced apartments."

Commenting on the competitive nature of the two businesses,
Richtter Pane, an analyst from property consulting company PT
Procon Indah, noted that the decision of whether to stay in
hotels or serviced apartments is not based purely on the length
of stay but on the attractiveness of the deal.

It is difficult to see a clear-cut difference between hotels
and serviced apartments because they provide similar services and
have similar facilities. Some serviced apartments even provide
daily rates, just like hotels.

Jeffry Anwar Sani, associate director for sales and marketing
at the newly opened Gran Melia Hotel, said that major concerns
for hotels in the competition with serviced apartments are
location and services provided by the latter, which are no
different than those provided by the former.

The Ascott Jakarta, for example, is close to several star-
rated hotels, including Hotel Indonesia, Grand Hyatt Jakarta and
Hotel Wisata in Central Jakarta, while another serviced apartment
building, Citra Regency, is situated in Kuningan golden triangle
where many apartment projects are now underway.

Another concern, according to Jeffry, is that several serviced
apartments have star-rated hotel facilities such as business
centers, swimming pools and tennis courts.

Jeffry, who previously worked at Shangri-La Hotel, said the
major strength of serviced apartments is their flexibility in
serving the needs of their tenants. For example, they can be used
as temporary offices by the tenants. "It is something that's
impossible in hotels," he noted.

Indah of Ascott agreed, saying that her apartments provide
office-related services which can be rented by individual
clients.

She said Ascott's tenants are mostly foreigners who work here
as business consultants, or who are doing feasibility studies or
work on other projects.

"They really need offices while here for three to four months.
But it's too expensive to rent office space on a yearly basis,"
she said.

In addition to businesspeople who come here for a few months
or more, their families would obviously be more comfortable in a
serviced apartment as they have more rooms and a kitchen.

Hotels and serviced apartments, however, should not
necessarily compete with each other because they have totally
different markets, said Michael Nigits, general manager of
Jakarta Hilton International Hotel and Hilton Residence serviced
apartments.

Hotels should focus on serving short-term guests, while
serviced apartments should only attract long-term guests, that is
those who look for accommodation for three months or more, he
said.

The fact that serviced apartments are a promising business has
prompted a number of hotels to operate serviced apartments. They
include Sahid Jaya Hotel, which will open its serviced apartments
in 1998, and the Conrad Jakarta International Hotel which is
currently being built on Jl. Sudirman in Jakarta's central
business district.

"It should imply that the serviced apartments business is
better viewed as a new market niche rather than hotels'
competitors," Ono of Sahid said.

Ono said there would be mutual benefits in co-owning and co-
operating hotels and serviced apartments. (alo)