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SCMP Reporter

Luxury hotels and serviced apartments compete for the same professional clients

The opening of Four Seasons Place is likely to intensify competition among operators of luxury serviced apartments and  hotels, according to industry players.

The upmarket  serviced apartment complex, due to open in Central's International Finance Centre (IFC) in September, will start leasing this week and its developers, Sun Hung Kai Properties (SHKP) and Henderson Land Development, expect all of its 519 suites to be occupied in 12 months.

'Demand for  serviced suites in Hong Kong has been rising steadily, with more multinationals setting up their bases in Hong Kong to tap into China,' said Iris Chiu Ching-shi, managing director of Signature Homes, a luxury residential leasing arm of SHKP.

'The rising number of expatriates has boosted the need for these apartments. They see it as hassle-free accommodation.'

She said Four Seasons would target professional singles and couples from foreign corporations - a segment    also sought after by other serviced apartment and hotel operators.

Four Seasons Place, adjacent to the 396-room Four Seasons Hotel, is situated in a prime location above the airport railway station in Central and is just a 10-minute walk to Lan Kwai Fong. Units range from studios to one-bedroom, two-bedroom and three-bedroom units  from 547 sq ft to 1,873 sq ft. There are also two duplex units of 2,800 and 3,600 sq ft. About 60 per cent of the units will have a panoramic sea view and the rest will have a view of The Peak.

Asking prices at Four Seasons Place are relatively competitive, between $50 and $60 per sqft, compared with the market average of $40 to $70 per sq ft, according to Henderson's deputy general manager of marketing Patrick Sit Pak-wing.

Tenancies range from one month to 12 months. Mr Sit said the apartments would secure some corporate client deals from both SHKP and Henderson.

Four Seasons is about to launch a major marketing campaign to grab market share. But existing operator Shama Group said it was not concerned about the growing competition as there was sufficient demand to fuel the market's growth.

'The Four Seasons is a lovely development and I hope it does well; but it's different to Shama. To us it feels more like a hotel than a home,' said Shama chief executive Elaine Young.

'Some of our tenants stay for two years because it really does become their home. I imagine that the Four Seasons will get shorter leases  because of this point.'

Nonetheless, Ms Young said Shama  was happy to see high-end operators coming in and helping to maintain standards and quality.

Stephen Chu, deputy general manager of leasing with Harbour Plaza Hotels and Resorts, a unit of blue chip Cheung Kong (Holdings), agreed, saying the emergence of new players such as Four Seasons would put Hong Kong in a higher league.

However, he expected Four Seasons Place to  take some market share  from luxury hotels.

'The Four Seasons Place will  compete head to head with the upcoming Landmark boutique hotel as well as other luxury hotels such as the Grand Hyatt,' Mr Chu said.

'There will be some market erosion for weekly stays or longer-term packages.'

CB Richard Ellis director of residential services Jane Garnett said luxury serviced suites could replace luxury hotels in certain aspects such as long-stay business travellers.

The Four Seasons is one of two new luxury hotels opening in Central. The 113-room Landmark Mandarin Oriental Hotel is due to open this summer.

However, a spokesman for Swire Properties, which runs the Parkside and The Atrium serviced suites at Pacific Place, said serviced apartments and hotels had co-existed happily in Hong Kong, citing the fact that its  Parkside and The Atrium shared the same building as the Conrad and JW Marriott Hotels respectively.

'Hotels and serviced apartments are offering two different types of products and are therefore not in competition with each other,' the spokesman said.

Arthur Kiong, The Peninsula's vice-president of sales and marketing in Asia, also said both luxury serviced apartments and hotels could co-exist well.

He said: 'Due to an increase in demand for hotel accommodation, hotels are now looking to dispense with discounted rates for long-staying guests.

'If clients are staying more than just a few nights, serviced apartments are an ideal solution.'

Occupancy rate for luxury hotels in Hong Kong stood  above 85 per cent in April and the average room rate had surged 15 per cent year on year, according to Mr Kiong.



Launch of Four Seasons heightens rivalry at top