Mr. Chanont Ruangkritya, CEO of Ananda Development Public Company Limited, sees the potential in the service apartment market and has launched a Business Model to create a recurring income business through collaboration among three major companies: Ananda Development Public Company Limited, Mitsui Fudosan Group, and The Ascott Limited, the world's number one in the sector, which has become a Strategic Partner.

Chanont Ruangkritya, CEO of Ananda Development Public Company Limited

The five service apartment projects, totaling 1,809 units with a value of 12 billion baht, include:

  • Ascott Thonglor Bangkok project valued at 3.5 billion baht
  • Ascott Embassy Sathorn project valued at 3.4 billion baht
  • Summerset Rama 9 project valued at 2.5 billion baht
  • Lyf Sukhumvit 8 Bangkok project valued at 700 million baht
  • Summerset Pattaya project valued at 1.9 billion baht

Why choose service apartments over hotels?

During the COVID-19 pandemic, the overall occupancy rate of service apartments was around 50% - 55%, while hotels saw only about 27%. The higher occupancy rate of service apartments is attributed to the demand for long stays from expatriates, unlike hotels that primarily cater to short stays from tourists. This means that the COVID-19 crisis has had a lesser impact on the service apartment business compared to hotels, as service apartments share similarities with condominiums and align with the preferences of the new generation, who may prefer ownership or simply the right to use.

Overall, Ananda is seeking new Business Models to generate greater Recurring Income beyond just property development. Therefore, service apartments are a new strategy for revenue generation.

The service apartment market is interesting and well-suited to meet the needs of long-stay customers because:

  • It has a higher occupancy rate compared to hotels.
  • It offers comprehensive services in a hotel-like format but at a lower cost.
  • Rooms are larger, accommodating families.
  • Monthly rental prices may be higher than condominiums but are less expensive than hotels.

According to Mr. Brian Tan, Country General Manager of Ascott Limited in Thailand and Laos, Ascott Limited is part of Capitaland Investment (CLI), a leading property management and investment company with a strong presence in Asia.

Currently, Capitaland manages over 84 billion Singapore dollars in Funds Under Management (FUM) and more than 120 billion Singapore dollars in Real Estate Assets Under Management (RE AUM), with projects in over 35 countries across more than 200 cities, covering various property types including residential, commercial, business parks, logistics hubs, serviced residences, hotels, senior living, and co-living.

The company is among the Top 10 Real Estate Investment Managers in the world and has 7 REITs and 25 private equity funds under Capitaland Financial. Importantly, the company also serves as a Center of Excellence focusing on community development, innovation, customer service, sustainability, and digital innovation.

In terms of Global footprint, Ascott has 15 brands in over 35 countries across more than 200 cities, with over 128,000 units in more than 800 projects, including one trust, The Ascott Residence Trust in Singapore, and one private equity fund.

The 15 brands include 7 serviced residences, starting with the flagship brand Ascott, followed by The Crest Collection with 3 projects in Paris, which are unique and on par with The Ascott Residences, as well as Somerset Residences, Citadines Aparthotel, Quest Apartment Hotel, primarily in Australia. The Lyf brand represents co-living projects developed by the company, while Domitys is a Senior Living brand developed in a joint venture with the largest senior living provider in Europe.

Additionally, there are 8 hotel brands that are less well-known. The company entered the hotel business 2-3 years ago by acquiring Tauzia Hotel Management in Indonesia, which has over 120 hotel projects in the country. The PREFERENCE brand represents a unique lifestyle, similar to the Vertu hotel, while Citadines Hotels is part of the same group as Citadines Aparthotel. Harris Hotel and Fox Hotel are our standard brands, while Fox Lite, Yello, and POP! Hotel cater to the budget segment. This diverse brand portfolio allows the company to reach various customer segments and meet diverse needs.

Why do developers and Ananda choose to collaborate with Ascott? The reasons are compelling:

1. The company has a very strong Sales Driver with over 94,000 corporate clients and more than 1.8 million members.
2. Technology: There are over 15 technology packages that help manage operations and costs efficiently. The brand value of Ascott, Somerset, and Citadines is widely recognized globally, with 15 brands and over 128,000 rooms, receiving more than 28 awards in the past two years worldwide.
3. Being the first serviced residence owner-operator certified by Bureau Veritas ensures that properties are clean, safe, and sanitized for all guests.
4. The business is pandemic-resilient, as evidenced by a 7% increase in ADR, a 24% increase in occupancy, and a 38% increase in RevPAR.
5. An owner-centric perspective: We not only invite investments but also provide avenues for divestment, such as the Ascott Residence Trust and Ascott Serviced Residence Global Funds. We are also owners, which gives us insight into Asset Enhancement Initiatives (AEI) that can uplift ADR by up to 20%.

Mr. Brian Tan further stated that he is very pleased and proud to partner with Ananda as a Strategic Partner. In Thailand, the company has 24 projects and 5,000 rooms, with over 1,800 rooms belonging to Ananda, making Ananda the largest partner in Thailand for Ascott Limited and one of the top 5 partners in Southeast Asia.

Regarding the recovery from the pandemic, recovery efforts are already underway. In the past two months, Revenge Travel has begun to emerge, as evidenced by the increasing occupancy. Next year, we can expect a Rebound leading to rapid growth after the pandemic period of the past two years.

The brand image of Ascott is considered a high-end brand located in major cities, emphasizing timeless tradition in Singapore, Shenzhen, and Thonglor, Bangkok. The foundation of the Ascott brand is its status as an icon and landmark, paying attention to details that provide emotional value and a sense of sanctuary for guests. The Somerset brand represents inspired urban living.

MR. CHRISTOPHER CHANG, HEAD OF SERVICED APARTMENTS BUSINESS UNIT, ANANDA DEVELOPMENT, discussed the Identify Location of service apartments, focusing on key areas with a high expatriate population, starting with Sathorn, the eternal CBD, followed by Rama 9, which is becoming the New CBD with approximately 1,000,000 square meters of office space. Next is Sukhumvit 8, just 150 meters from Nana station, a central point for tourists from Europe and America before the COVID-19 pandemic, where the occupancy rate reached 90-100%. Finally, Thonglor is known as the Center of Luxury & Lifestyle for both Thais and expatriates, being one of the first service apartments on Sukhumvit Road in the Thonglor area. Lastly, in Pattaya, land has been acquired in the heart of Pattaya, opposite Central Festival Pattaya, an area that can recover quickly from any crisis and has the highest occupancy rate in Pattaya.

1. Ascott Thonglor Bangkok project, a 5-star brand with 451 rooms, is located to cater to Japanese, Korean, Chinese, American, and Southeast Asian clients, with a target market focusing on long stays at 50%.

2. Ascott Embassy Sathorn project, with 393 rooms, is situated in an office and business travel area opposite Convent Road, which has BNH Hospital, attracting medical tourism. It is no surprise that this location has a significant number of Chinese clients who fly to Thailand for medical treatment, with a highlight being the 360-degree view of the Chao Phraya River, Mahanakhon Tower, and Lumpini Park.

3. Summerset Rama 9 project, with 445 rooms, has an occupancy rate of about 90% and rental prices comparable to Sathorn. This will be the first hi-end service apartment on Rama 9, located on a major road, as this area has a significant number of Grade A offices, attracting clients from Europe, the USA, Japan, and then Chinese clients. The project is completed and set to officially launch in December 2021.

4. Lyf Sukhumvit 8 Bangkok project is a new concept brand featuring co-living spaces with smaller room sizes, emphasizing smart living and high-speed internet.

5. Summerset Pattaya project is a resort-style hotel targeting Thai customers, as families often need to book 2-3 hotel rooms for large gatherings. The advantage of being a service apartment is the availability of larger rooms with 2-3 bedrooms at a lower price than booking a hotel, making it suitable for family travel. This project features a water park on a building over 30 stories high, catering to Thai, Chinese, Russian, Indian, and South Korean clients.

Mr. Brian Tan added that since serviced residences almost all have hotel operation licenses, the focus is not only on the serviced residence market but also on the hotel market.

As we know, the COVID-19 pandemic has severely impacted the hotel business. Before the pandemic, the company saw significant growth in tourist numbers, reaching 30 million in 2015, and in just four years, this number increased to 40 million, indicating substantial growth. Thailand is also one of the top tourist destinations in the world.

From this perspective, the hotel market in Thailand has great potential for growth. However, the COVID-19 pandemic has disrupted this industry's growth, with the occupancy rate dropping from 79% in 2018 to 77% in 2019, and further down to 23% in 2020. This year, the occupancy rate is at its lowest, at 21% in Bangkok. Nevertheless, the company still sees the potential for being pandemic-resilient, as last year the average occupancy rate was 23%, while the company's rate was between 35-55%, significantly higher than the average.

For long-stay residents, clients remained with us throughout the COVID-19 period, as they had businesses to manage or reasons to stay. Credit goes to the marketing team, agents, and partners who managed to keep clients engaged with the projects and maintain positive business performance despite the absence of tourists. Few can achieve this, and this year, as the market begins to recover, even with the Delta variant, the business remains stable. In Q4, we are seeing positive growth signals, and we expect even better results next year, with a positive outlook but remaining cautious.

What is the future direction of the serviced apartment market?
Mr. Brian Tan discussed the market direction concerning demand and supply. One opportunity in the serviced apartment market is that it remains underserved compared to the hotel market. The term underserved means that supply aligns with demand, and demand is consistent with supply. Looking at market statistics from five years ago, there were 15,000 rooms, increasing to 17,500 rooms in 2019, reflecting normal growth of about 3% in supply. The number of expatriates in Bangkok and other provinces has grown from 135,000 to 230,000 in four years, a growth of 14% in demand. Thus, it is evident that demand still exceeds supply in this market. However, in Bangkok, demand is around 3%, which is close to the growth of supply. Therefore, this market is still promising and has significant growth opportunities.

Currently, the number of expatriates in Bangkok is at 90,000 in 2019, and over the past two years, this figure has decreased to 80,000, but it remains relatively stable, as the number was also around 80,000 before 2017. Everyone loves Thailand, as it offers everything for people of all levels and backgrounds, making Bangkok a top destination for expatriates.

Future collaboration plans between Ananda and Ascott for other projects are also in the works, as the parent company, Capitaland, has expertise in various businesses such as business parks and logistics hubs, and is open to exploring opportunities for collaboration in other sectors.

Despite the Omicron variant, there are positive signs. Although Omicron spreads easily, its symptoms are not as severe as Delta. In countries where Omicron has been detected, there have been no significant outbreaks. It is too early to draw conclusions about Omicron. Even though news about Omicron has led to cancellations of hotel bookings, our two-year experience with this virus has led many countries to choose to coexist with it, referred to as endemic, accepting and living with it, as seen in Norway, which has classified it at the same level as the flu. We have begun to learn to live with it, and most people are now immune, whether through vaccination or previous infections. We are witnessing gatherings in places like sports stadiums in Europe and shopping malls in Thailand, indicating that we are ready to coexist with the virus and must continue to live our lives.

Examples of room rates at Ascott Thonglor Bangkok, priced similarly to condominiums but with hotel services:
- Standard room at 3,500 baht per day and 65,000 baht per month
- Studio (+kitchen) at 4,000-4,500 baht per day and 75,000-80,000 baht per month
- 1B room at 5,000-5,500 baht per day and 85,000-90,000 baht per month
- 2B room at 7,500-9,000 baht per day and 95,000-100,000 baht per month
- 3B room, with only 3 units available, at 12,000-15,000 baht per day and 130,000-150,000 baht per month.