FRASERS Hospitality yesterday launched Modena – a new line of service residences which cater to a budget-conscious and highly mobile group of business travellers.
Room rates at Modena will be around 20 per cent lower than those at properties under the existing Fraser brands. Some 1,000 apartments across five Modena properties will come on-stream in the next three years.
The launch is timely ‘because companies are really looking at cost-cutting measures’ and Modena will be ‘a lot more palatable’ for them, said Frasers Hospitality CEO Choe Peng Sum, who was in Tianjin, China yesterday to launch the brand. He heads the hospitality arm of Frasers Centrepoint, which is part of local conglomerate Fraser and Neave.
Apartments at Modena will be smaller than those under the Fraser brands. But Modena properties will have various facilities catering to ‘road warriors’ on the go, such as lobbies supplied with food and groceries, and 24-hour play rooms with gymnasiums and electronic game machines.
The first Modena property, with 272 units, will open its doors in Tianjin towards the end of this year or early next year. The second will be in Shanghai and another two will be in Suzhou. Frasers Hospitality will run them through management contracts.
The fifth Modena property – and also the flagship – will be ready in Singapore’s Changi Business Park in Q1 2012. Frasers Hospitality will own and manage the 300-unit Modena Singapore, which is under construction at a cost of $124 million.
Guests could come from the business park, Singapore Expo and the fourth university which is under development at Changi.
Modena Singapore will be part of a 4.7 ha integrated business and lifestyle development – a $500 million joint venture between Frasers Centrepoint and Ascendas.
The economic downturn has not curbed Frasers Hospitality’s ambitions for Modena. Negotiations are underway to expand the brand in Asia and Europe, and countries that it is interested in include India, France, the UK and Qatar.
Frasers Hospitality has also set itself a target of managing around 8,000 service apartments by 2010 and perhaps 10,000 apartments by 2012.
‘In this economic downturn, we have a very contrarian view – we see this as an opportunity for step-up,’ said Mr Choe. Modena for instance, may appeal to companies tightening their budgets, he explained.
Nonetheless, the picture for the service residences industry is not all rosy. In China and Singapore for instance, the economic downturn has pushed rates at Frasers Hospitality’s apartments down by 15-20 per cent. Occupancy rates have remained relatively stable, in the 80-90 per cent range.
Frasers Hospitality has also shelved plans to set up a real estate investment trust for ‘a few years’ until the ‘market is a lot more conducive’, Mr Choe said. For similar reasons, it has postponed plans to set up private equity funds to invest in service residences.
Source : Business Times – 17 Jul 2009