Frasers Hospitality is an international branded serviced residence management company with Gold Standard residences spanning Asia and Europe. New developments include the Middle East. CEO Choe Peng Sum gives an overview of how service apartments compare in China and the Middle East.
Q: Why did you choose to set up in the Middle East, in particular Bahrain?
A: We seek out places that will boom. I think the growth factor is just tremendous in the Middle East. We will start in Bahrain, but we are also developing in Dubai. There is an immense number of projects going up in Dubai. Our project will go up in 2009, right outside Sheikh Sayed road by Internet City just outside the Palms. A lot of expats actually stay in Bahrain and go to Saudi Arabia to work. But the place we are in sits on a luxurious wide expansion of the mall with views overlooking the gulf. We are very excited about the Middle East. We are looking at cities in Qatar, Kuwait, Oman, Abu Dhabi, Saudi Arabia.
Q: What is your Middle East base like?
A: Around about their summer months, I would say about June to August or September, we get a lot of guests from the Middle East going to properties in Europe. A lot of the time I think they come with their families and require bigger apartments. They stay three, four, sometimes five months, and many of them go for the penthouses and the bigger apartments.
Q: What are the challenges of setting up in the Middle East?
A: Finding the right construction companies, getting the costs in check, making sure the projects are on time because there are so many things that are going up – we have to pay ever more attention to the details of the buildings. If we are not careful costs can go up really quick.
Q: What trends are you noticing in the Middle East?
A: HR will become an issue in the Middle East. Most people who work there are foreign imports. So it is getting the right people to go over and the skilled labor and right candidates to do that as well. But the market is right, it is right for businesses taking off. It is attracting so many businesses that need a service apartment component. So I think we are well-placed in the Middle East in terms of growth.
Q: How do Middle East clients compare to Chinese clients?
A: For service apartments, we don’t have too many leisure markets like hotels. Service apartments have a lot more corporate guests, so we get quite a large number of top-level CEOs, vice presidents and presidents from China corporations. These tend to be shorter stays, taking the studios and one-bedrooms. Not as short as one or two days where it would probably be better to stay in a hotel, but something ranging from a week to two months.
Q: What are the challenges of setting up your operations in Asia?
A: In Asia, there are quite a few differences to mature markets. One of them is the property itself, the project quality. I think we are going to see the quality start to improve as time goes on. But there is one topic that is only starting to become an issue and that is sustainable green environmentally-friendly buildings. People are starting to become a lot more aware. In our specifications we have to put that we need double pane glass and windows with value pack in the middle to make sure the AC doesn’t seep out during the summer and the heat doesn’t get out during the winter. Just adding things cuts down on wasted energy.
Q: How has the hospitality industry evolved over the years?
A: I have seen tremendous growth. One of the fastest growing hospitality sectors is what I call the “extended stay market.” In Australia, service apartments rank neck and neck with hotels. In Asia, it is barely scratching the surface. The investments will come through in Asia and when that happens they will need more and more temporary housing. I am not talking about two or three days in a hotel. There is huge demand for service apartments in which people stay more than a week or a month – even up to a year or two. This is the case with many of our properties from China to Bangkok and Singapore to Seoul. In what we consider mature markets like Paris or London, a 90% occupancy rate is a niche market – barring any kind of world crisis of course.