Hospitality sector set for a rebound; serviced apartment segment to lead

The global hospitality sector is set to make a come back next year after several sluggish quarters.

Observers told an industry seminar in Singapore that the serviced apartment segment in Asia will emerge the strongest.

But hotels may struggle with fewer business travellers and an oversupply of hotel rooms.

The hospitality sector has seen sluggish times since the start of the global downturn.

But according to STR Global, a rebound could come in a few months, as the recovery begins to pick up steam.

Elizabeth Randal, managing director, STR Global, said: “We’re looking at growth picking up in Q2 and Q3 of 2010 looking at occupancy growth first followed by rates. Reason for the lag is new supply to the market place. New supply puts a greater strain on the existing supply and slows the recovery. But on a positive note, the new supply is coming in at a lower rate than it has in previous downturns.”

The serviced apartments segment is likely to lead the growth.

But industry players said companies increasingly will want more flexibility in their leases.

Instead of a two-year lease for their expatriate staff, multi-national companies are opting for shorter term leases provided by serviced apartments which they can renew month to month.

Choe Peng Sum, CEO, Frasers Hospitality, said: “A lot of corporate companies, are not really sending the three to four year expatriates as much. They are sending in project groups, task force groups, with many coming from the oil and gas groups, shipping and telcos. And they are doing projects that take maybe one month to eight months.”

Observers also said that serviced apartments will likely avoid the problem of oversupply driving down rates with many new hotel rooms expected to become available in Asia over the next few quarters.

In Singapore, the hotel industry saw its revenue per available room or RevPAR drop by almost 40 per cent since the start of the financial crisis last year.

But the serviced apartments segment has remained resilient with just a 15 per cent dip in RevPAR over the same period.

Source: Channel News Asia, 20 Oct 2009