Tough economic times force operators to diversify their customer base
Operators of boutique serviced apartments in Hong Kong are rapidly rethinking their strategies as a result of the financial crisis hitting demand from the banking and finance sectors.
'Hong Kong is experiencing an oversupply of serviced apartments based on the present demand projection and under the overall macroenvironment. Because of the oversupply, competition is getting more intense,' said Alexander Bent, a managing partner of Kush Living, a serviced apartment operator, which entered the Hong Kong market three years ago and now manages three serviced apartment properties on Hong Kong Island.
The financial crisis has considerably changed the client mix of most serviced apartments, with an obvious drop in tenant numbers from the banking and finance sectors.
'Before the financial crisis last year, the majority of our clients were from banks and financial services companies, but now we have to refocus on multinationals, accounting firms and law firms,' said Mr Bent, adding that the crisis provided an opportunity to help the company diversify its client base.
'We have guests from a wider range of industries such as telecommunications, information technology solutions and wineries. We have adjusted the rents down 50 per cent and, in spite of that, we can still maintain a competitive occupancy level in the current climate.'
Pilar Morais, executive director of CHI International, said tighter budgets meant that companies now opted for boutique serviced apartments for their overseas staff as a more practical choice of accommodation than hotels. Understanding that clients' budgets have been dramatically reduced, the company now offers lower rates and shorter, flexible leasing terms for guests.