Major metros and second tier cities in India are set to see the emergence of service apartments on the lines of the West. With the demand and supply gap for the five-star rooms growing, coupled with the limited availability of FSI (floor space index) for the hospitality industry, a host of companies, including major realtors, hospitality majors and global brands, are gearing up to enter the area in a big way.
The booming travel and tourism industry, growing demand from IT, ITeS, BPO and KPO sectors, and the manifold increase in the inflow of foreign and NRI tourists are said to be driving force behind the emergence of service apartments here, sources point out. With five-star room prices skyrocketing, these apartments are expected to fill the gap in the years to come, they say.
A service apartment is typically fully furnished, self-contained and has been designed for short-term and long-term stays with all the amenities and offers feel-home comfort.
According to initial estimates, the four major metros will absorb anywhere between 500 and 600 service apartments each at the moment. With each apartment costing around Rs 25-50 lakh, sources say they will attract an initial investment of Rs 2,000-3,000 crore. Second tier cities too will attract such apartments, though in a small way.
According to Ajay Bakaya, executive director, Sarovar Hotels and Resorts, ?The potential for this market is great in India. The growth will happen due to the services sector penetration not just in metros but also in second and third-tier cities.? Bakaya says expats on long business stay, medical tourists, NRIs on a family function or business visits and foreign tourists, apart from the usual IT, ITES and other knowledge service sector visitors are the targeted people for these apartments.
?We are developing a project of 140 service apartments in Bangalore and have plans to develop similar ones in Gurgaon and Hyderabad soon.? Says Hari Nageshwaran, executive vice-chairman, Hallmark Infrastructure Pvt Ltd, ?The uniqueness of the serviced apartments is that it offers home comfort for the working families and liberty to choose living and eating styles with well-maintained and well-furnished comforts for people on the move. These apartments are expected to cost half of that of a five-star hotel room.? Hallmark is setting up a 182-room service apartment near Chennai with a global brand with an estimated investment of Rs 90 crore.
?The key differences between service apartments and five-star hotels are proximity to work, cost advantage and homely atmosphere. They offer all the facilities of a hotel like lounges, swimming pools, spas, restaurants, housekeeping, business centres and recreational facilities,? says Shankar Naganathan, CEO, Marg Constructions Ltd, developing a 185-room project near Chennai with an estimated investment of Rs 125 crore.
