Serviced apartments up pressure on hotels

Anissa S. Febrina, The Jakarta Post, Jakarta

For Jakarta's hoteliers, competition these days comes not only in the form of other hotels, but also from serviced apartments.

"The serviced-apartment sector has become a serious competitor for hotels as such apartments offer the same services, or more, at similar prices," property consultant Procon Indah senior manager Arief N. Rahardjo said Thursday.

Unlike ordinary apartments, serviced apartments provide full hotel services, ranging from room service to broadband internet connection.

As of the end of June, there were 2,054 serviced apartments available in Jakarta.

Colliers International Indonesia estimates that between 2005 and 2007, the number of leased and serviced apartments will increase by 7.3 percent, which would bring the total stock to more than 7,500 units by 2007.

"By that time, serviced apartments offering hotel services will dominate the leased and serviced market at around 53 percent," the firm says.

"As we have seen during the last school-holiday season, families from out of town have become an additional market for serviced apartments," Arief said.

As a result, the occupancy rate for serviced apartments increased 0.7 percent to 78.4 percent in the second quarter.

"A family can enjoy the benefit of having two rooms in a unit they rent daily," he added. "This poses new competition to the hotel sector."

Serviced-apartment developments, or condominium hotels, as they are also known, offer flexibility for the duration of the stay. Customers can choose to rent by the day, week or month. And, it costs less than staying in a four or five-star hotel.

They also offer more spacious rooms with fully equipped kitchens.

Most serviced-apartment developments are targeted at professional expatriates, Ascott International Management sales manager Dewi Susanti said. Ascott itself booked an average occupancy level of up to 95 percent.

Currently, competition within the hotel sector itself is also heating up, with some 319 new rooms coming on the market, mostly from two new four-star hotels -- the Manhattan Hotel in Kuningan and the Golden Boutique Hotel in Melawai.

The new rooms bring the total number of hotel rooms in Jakarta to more than 22,000, with the average occupancy rate currently standing at only 58 percent.

Procon estimates that there will be a further 735 new rooms available by the end of 2007.

"The tightest competition will be between three-star and four-star hotels, plus the serviced apartments," Arief added.

If the new rooms mean more competition for the hotels, potential guests see them as creating more options, and, hopefully, better services at lower prices.

There is a vast range of choice available in the serviced apartment market itself, from relatively low-priced rooms to much more expensive apartments.

Serviced apartments are found across Jakarta, include the Ascott Jakarta in Tanah Abang, Central Jakarta, the Citra Somerset in Mega Kuningan, South Jakarta, and the Aston Rasuna, also in South Jakarta.

The average monthly rental for a serviced apartment ranges from US$60 to more than $175 a day. Meanwhile, hotel rooms range in price from $35 to $200 a night.

As purpose-built leased and serviced apartments are primarily aimed at expatriates, who mostly prefer to live in the CBD and South Jakarta, the development of such apartments has been concentrated in these locations.

With 2,850 serviced apartments from a total of 25 projects, the CBD leads the market, followed by South Jakarta on 2,130 units from 30 projects.

I-box Jakarta Hotel Market
Total supply 22,887 rooms

3-star 6,180 rooms

4-star 8,010 rooms

5-star 8,697 rooms Average occupancy rate 58 percent

3-star 71 percent

4-star 63 percent

5-star 51 percent Average room rate (US$/night)

3-star 34.6

4-star 42.1

5-star 72.9

Jakarta Serviced-Apartment Market
Current supply 2,054 units Average occupancy rate 78.4 percent Average rental cost (US$/sqm/month) 22.59

Source: Procon Indah
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