Service units cater to needs of executives at multinational corporations
Although China's thrift campaign has taken a bite out of the luxury hotel industry, there is a niche residential market that has scarcely been touched.
That is serviced apartments for expatriates, which are in demand because multinational corporations are still starting or expanding operations in China, particularly in inland cities.
Frasers Hospitality Pte Ltd, a Singapore-based global hospitality asset management and operations group, last week opened another residence under one of its brands: Modena, in the central city of Wuhan, Hubei province, a move that underscored its ambitions in the mainland market.
Wu Jiang, sales and managing director at Frasers China, declined to offer specific data on the company's growth in China but said it greatly outperformed its peers in ordinary hotel industry.
"We have a business performance that ordinary hotel operators could only envy of, both in terms of investment returns and occupancy rates. Our revenue is steadily growing much faster than theirs," he said.
The average occupancy rate at several of Frasers' projects in China exceeds 90 percent and in other projects the rates are more than 80 percent, he said.
Frasers, a group with properties across Europe, North Asia, Southeast Asia, the Middle East and Australia, operates 14 serviced residences in 10 cities in China. Most of those cities have a heavy concentration of foreign businesses.
These cities are: Beijing, Shanghai, Chengdu, Guangzhou, Nanjing, Shenzhen, Suzhou, Tianjin, Wuxi and Wuhan.
Wu said there is careful and often prolonged due diligence before the company's entry into any market. The city that it selects has to have a sizable expatriate community and strong growth outlook.
Frasers also carefully selects partners in each market. The latest project, for example, is a co-project between Frasers and China Vanke Co Ltd, the largest residential developer in China.
In Wuhan's case, the newly opened Modena Zhuankou is centrally located within the Wuhan Economic and Technological Development Zone, a national-level industrial zone. It is close to global enterprises including giant vehicle producers Peugeot, Citroen and Renault.
Huang Qing, general manager of Modena Zhuankou, said Wuhan is home to more than 1,000 foreign-invested companies and more than 6,000 expatriates. The Wuhan Economic and Technological Development Zone is where they are mostly concentrated.
Justina Balen, director of the company's branding and communication, said unlike hotels, most of a serviced apartment's customers are long-term residents. Catering to their special demands is key for the company.
"When we started in Singapore back in 1998, we offered desktop computers in rooms. We were the first to do that. But technology changed so fast that offering desktop computers now can hardly attract customers," she said.
Frasers realized that offering different products and services is critical for its survival. Nowadays, kitchens, all-day restaurants, game rooms, gyms and Wi-Fi access have become standard offerings in Frasers' brands. But service is more important, Balen said, such as introductions to the city, baby sitters, hairdressers and shuttle bus services.
"Housewives can do their nails or get a massage while their children play in the game room. It can ease their minds," she said.
"Our policy is stay relevant. It is easy to create things that nobody uses. That's not what we want. We learned our lessons in the past," she said.
Nathalie Folorence Conzelmann agreed. Her husband works for Renault's Wuhan plant. She has just moved from France. But she found life here is not difficult as she had imagined.
"My daughter's international school is just a five-minute drive from here. The grocery store is close. And I found the food here quite pleasant," she said.
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