With the growth of Bangalore, Chennai and Hyderabad cities as IT Hubs of India and growth of bio-tech and electronics industries there has been a strong demand for long-stay accommodations. The serviced apartments segment has not really caught up with the demand. Now hospitality operators are beginning to understand the potential of this accommodation category, and supply is expected to increase significantly in the coming years.
Looking at installed capacity, industry experts estimate the current serviced apartment capacity to be a small proportion of the overall hotel room inventory. According to ‘The Global Serviced Apartments Industry Report 2011-12’ , with room supply growing at 15% a year, India is one of the few global serviced apartment markets where supply is expected to exceed demand in major Indian cities in 2012 to 2013.
Hotel rates have been forecast to fall as a result of increased competition from the serviced apartment and budget hotel sectors. As a result, companies are being advised not to commit more than 75% of their requirement of advance purchasing of room nights at discounted corporate rates. A large number Indian organizations have switched to serviced accommodation. In contrast to Europe and the US, booking of these apartments is left to individual travelers to arrange instead of being managed centrally.
Among prominent serviced apartment brands operating in India is Alcove Hospitality. Alcove Serviced Apartments is already present in Chennai, Hyderabad, Pune and Coorg. Alcove is on an expansion path and plans to add more cities to its network. It currently operates with 40 apartment units and is looking to quadruple the inventory by 2013.