The serviced apartment sector is thriving, thanks to cost-conscious bosses overseas who avoid booking their staff into pricey hotels when they come here for work.
A Colliers report found that housing a project team together in a rented serviced apartment is usually cheaper as firms are typically charged on a monthly basis.
Putting staff up in separate hotel rooms that charge a daily rate would cost much more.
Colliers noted that the number of staff sent on long overseas business trips has been reduced, partly because firms have been tightening their belts since the global financial crisis in 2008 and 2009.
It is not just the corporate crowd that has opted for serviced apartments. More tourists are choosing them as well, especially those travelling with their families or in large groups.
Colliers added that more travellers are wired up to the Internet and are becoming aware of the convenience and cost savings of staying in a serviced apartment. "Indirectly, the greater ease of making travel arrangements via the Internet has also helped the hospitality industry, including the serviced apartment segment, to capture more corporate and leisure business," said the property consultancy.
Serviced apartments are self-contained units with kitchenettes, so tourists can save on dining out. They can also save on laundry by using the washing machines usually available in the units.
Expatriates and locals needing interim accommodation are also giving the serviced apartment segment a boost. This includes newly arrived expatriates looking for a permanent home, or even local residents renovating their homes.
Demand for serviced apartments in the city centre in the first half of the year was strong, with an estimated average occupancy rate of 79 per cent. This was despite a slight dip from 80 per cent in the second half of last year, mainly due to cost-cutting measures by companies.
More serviced apartments have also sprung up in the city fringes and suburbs, as the Government's decentralisation plans have taken new business and commercial zones out of the city centre.
For example, Far East Organization has the 116-unit Oasia West Residences in West Coast while Frasers Hospitality's 313-unit Capri in Changi Business Park has enjoyed average occupancy of 84 per cent since it opened in September last year.
About 65 per cent of serviced apartments - or 4,070 units - are in the city centre. Those in the city fringes account for 3 per cent and units in the suburbs make up 32 per cent.
Serviced apartment operators have also introduced a new hybrid of apartments which come with hotel licences, said Colliers. They have no restrictions on the minimum length of stay and can be leased on a daily basis, posing new competition for hotels and other serviced apartments.
Typically, hotel rooms are leased for about seven days while serviced apartments have a minimum-stay requirement of seven days.
There are three serviced apartment developments with hotel licences here: Ascott Raffles Place Singapore; Frasers Hospitality's Capri; and Pan Pacific Serviced Suites Beach Road.
Average rates for a serviced unit in the city centre range from $5,400 to $13,700 per month.