Guus Bakker, Chief Operating Officer for Frasers Hospitality in Europe and the Middle East, talks to ABTN about the expansion of serviced apartments, and why they should not be confused with corporate housing.
With new serviced apartments in Bahrain, Doha, Dubai and Budapest, Frasers is rapidly expanding. Where else is the group aiming for?
We're also have confirmed openings in Osaka, Chengdu, Delhi, Kuala Lumpur, plus the four [already mentioned] in Europe and the middle east.
We are looking at a number of opportunities in the southern part of Europe - Spain and Portugal, where there are some opportunities in terms of real estate. We are looking at a number of properties, but nothing is set in stone.
And of course in the UK we continue to look at more properties. We already have two properties in the city of London, and we hope to add a third one soon, to have a bit more presence in the city.
We have currently 33 properties. We opened this year 16 properties, including four for the Modena brand - a four star brand being launched in China.
We still want to put forward the excellence in service.
Is there likely to be continued focus on a particular region?
As far as I'm concerned there is some focus oin the middle east. I'm in discussion with an investor to go into Saudi Arabia and Oman. Saudi Arabia is quite under developed in terms of hotels opening. It seems that the Saudi government has a few plans to create the infrastructure within the industry.
Serviced apartments in the middle east are particularly strong, also outbound. From experience, we know that with the middle eastern markets, in coming here to europe, in the summer season a huge amount of tourists come from that part of the world. To such a level that for hotels in London and Paris August has always been the slowest month in the year, but for us it has always been the biggest month.
What about Africa and the Americas?
Africa we have not looked at. We want to consolidate in the regions where we already have a presence. Trying to enter new markets with just one or two properties here and there is very difficult. It's hard just to establish your name.
The Americas are very similar. In particular, the US is a very established market, so there is not much room for growth. Although, with a growing brand I think there is always space. You have a bigger potential than somebody who is already existing, who has been there for a long long time.
However, we want to consolidate in Europe. We're still quite young. We only started 12 years ago, with the first properties in Singapore. Now we have 33. Even four years gao we had only 15 or 16.
How has the recession affected Frasers?
Not that much, but I would be lieing if I said it had not affected us at all.
Although, in paris they performed better in 2009 than 2008, but it has slowed down now. Paris is always a little bit later than London, traditionally. Paris slowed down a bit at the end of last year and the beginning of this year, but by March it was better than last year.
Our revenue has not dropped as much as we have seen in the same categories of hotels. RevPAR (revenue per available room) dropped by 20 or 25% it was reported, but for us it has been around 5%.
Why do you think that is?
I think it's because we are an up and coming brand, so it's got the strengths. It's also hard work.
In more difficult times, serviced apartments become a solution for corporates, because people don't have to spend as much. They can cook for themselves. It is the flexibility.
Do you see any new trends in the serviced apartment sector?
I think in Europe we still have problems with the transparency of what is being offered. Corporate housing is being labelled as serviced apartments.
Also, the trend at the momenti n the UK is that people are opening serviced apartments everywhere. In particular the developers, when they can't sell, they decide to turn the property into serviced apartments for a while, until the market comes back.
The properties are not supposed to be used as serviced apartments, so there is no infrastucture. It is coporate housing that these people are dong. They just jump in the bandwagon.
It doesn't help to make it very clear to the public what we are, and it's short term.
At Frasers we are creating something to stay. We are not properrty developers.
I think the market is confusing. There really is a difference between corporate housing and serviced apartments, particularly in terms of service. We are offering daily cleaning, 24-hour service. A lot of companies call themselves serviced apartments, but really it is short lets to companies, with a minimum service - once a week they are cleaned. It's an easy rent for them.
How can this be improved?
What we are looking into is a serviced apartment grading system, like a star rating system.
There is one on the UK, but very few properties are adherent to it. With the Association of Serviced Apartments we are trying to introduce more to that.
We also want to push it so that not only are properties rated in terms of equipment, size, quality and comfort, but also in terms of services.
For example, a four star serviced apartment should have a 24-hour manned reception.
Otherwise you can't tell if it is corporate housing or serviced apartment. It's not an easy task. Many providers in a way do both.