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FRASERS Hospitality chief executive Choe Peng Sum didn't invent the concept of a serviced apartment or residence. But he arguably took the concept much further than perhaps, the late Michael Fam, former Fraser & Neave chairman, envisioned when he was hired in 1996 with the blessing to "go start a business and make a lot of money". Today, Frasers Hospitality is firmly entrenched among the world's largest and most renowned providers of luxury-serviced residences.
Mr Choe started with two projects - Fraser Suites and Fraser Place - launching them in 1998 in Singapore when Asia was famously caught in the grip of a financial crisis. Today, the portfolio spans about 150 properties in 80 cities - roughly 24,000 keys. Hence, the irony and challenge were not lost on Mr Choe when his daughter chose to stay in Airbnb, largely eschewing the more conventional hotels that they can well afford.
"My daughter said 'it's cheaper than Fraser', so I had nothing to say. She went to Greece, the host picked them up at the airport, made breakfast for them, and took them back to the airport at the end … They want the experience, just as we don't want to create cookie-cutter residences.
"We can't be static. It will be foolish to keep using a formula when the market is changing. To ignore it, we'd be a dinosaur and die."
Serviced apartments are now so ubiquitous that it is easy to forget the concept that Mr Choe unleashed on the market in 1998 - a full-service residence for long-stay executives - was something of a niche area and largely shunned by the big players of the time. "It was a tough market. To start a hospitality business we had to fight the American big boys - the likes of Hyatt, Hilton and Westin. To me, the extended or long-stay market was a niche field that a lot of hotels weren't interested in. When we went overseas, no one knew what a serviced apartment was. But that was the opportunity. It was such a great market that no one wanted to get into."
The opportunity was not something that they stumbled on by chance. A survey of 500 expatriates helped the firm to crystallise a need that was unmet in the market then, that expats new to Asia and the emerging markets needed an offering that would alleviate a pain point - that of helping executives with their families in tow to settle into new long-term assignments and homes.
That deceptively simple playbook of meeting a need is one that would stand Frasers in good stead, as economic challenges and a veritable tech revolution have profoundly changed the way companies deployed their executives, and the way people choose to travel and live. These shifts have gathered pace since the 2008 financial crisis.
"Close to around 10 years ago, many companies were cutting costs. The number of very long-term expats were all cut back. They're still here but mainly in the emerging markets. But in developed markets, companies sent out what I call 'road warriors'. They're young but willing to travel. They get the work done and fly back. These road warriors have changed the landscape of our market."
In the past, an expat could frequent a Frasers property for a very long-term of between nine and 10 years. "Now they stay four to five, or even three to four, months. They get sent here to set up a business and fly back, maybe with spouse, but not so much with children. There is no big requirement for three to four bedrooms."
Frasers' offerings have evolved, from their signature Fraser Suites, Fraser Place and Fraser Residence. There is also Capri by Fraser, conceived for a digital generation as a "hotel residence" with the amenities that tech-savvy clientele has come to expect, such as iPad activated check-in, e-concierge and all-day dining. There is Modena by Fraser located near business zones or tech parks, where free high-speed Internet is a given, of course, and amenities include a "clique corner" for surfing. In 2015, the group acquired Malmaison and Hotel du Vin, a collection of boutique lifestyle hotels in the UK, that the group plans to take to Asia.
"Our whole emphasis as we grew in the last 10 years is that there must be a need for our offering. As long as we find a need, we have a reason for our existence. We don't just build something and hope people will use it, it's the other way around. When we started Fraser for the long-stay market, there was a long-stay market. We moved to Capri when the market told us that stays were shorter but guests still needed a kitchen, for example.
"Then there is another market for road warriors. They say I like Fraser and Capri but maybe I can't afford it. Do you have a mid-scale project with the same home feel? And we did. We didn't cheapen service or scale back on concierge services, but instead of marble, we used tiles. Instead of chandelier, there is LED lighting. We brought the cost of construction down. Once that comes down the pressure on yield drops and we can charge better pricing."
Another demographic that marketers are taking seriously is the millennials, broadly defined as those born in the 1980s and mid-1990s. "Millennials want something different. They've had enough of established hotels, they're almost anti-establishment. We saw this coming… They look for value for money and will not over-pay."
Hence, the acquisition of Malmaison and Hotel Du Vin, which are in the variant of what is now commonly termed "affordable luxury".
"It's getting harder. For millennials, brand loyalty is furthest from their mind. When I say that I shoot my own feet. They look not so much to a brand, not even an ego trip. To me, they look for a community, a personalised experience, something that works fast and well. They'll go to anyone who can satisfy their need. We have to continually retool and change."
Profit margins may come under pressure, but Mr Choe is sanguine.
"It's true that serviced apartments make more money than hotels. A guest who stays longer may not want daily service, so our profit margin can be as high as 65 to 70 per cent. But it will be foolish to keep using that formula when the market is changing. The profit margin isn't the only thing that totally determines our growth. It's what the guest needs and wants.
"We have to be clever. When we started Fraser Suite Singapore with 22,000 sq m, we fit in 255 apartments of one to three bedrooms. If we move forward now with 22,000 sq m, I can probably put in about 500 rooms, and the price psm will go up, but I'd have a lot of mingling space. No huge ballroom like hotels, but I'd definitely have a lot of community space… People like to mingle, get billiard and ping pong tables… And mega-speed wifi because people are into mobile and speed. So the yield on the space goes up. If I can build 500 rooms compared to 255 previously, I've already doubled my returns. But I may not have restaurants; I'll have lifestyle bars, something like an airline lounge - a self-service honour system lounge in the living room. It's a lifestyle."
The group is harnessing technology to enhance the experience further for guests, and to eke out efficiencies for staff. For instance, when Capri by Fraser opens at China Square Central, it will use RFID (radio frequency identification) to sort dirty linen. "We used to spend so many hours with many staff, counting dirty linen, putting bedsheets on one side, pillowcases on another. We'll have RFID to sort all sheets and towels, everything goes from chute into trolley into washers. No human handling, no unhygienic ways."
The group is also exploring an app to greet and enable guests to check-in from the moment they touchdown at the airport. "In a year or two we would not even have a front desk. We're looking into an app with a payment gateway system. You key in your reservation from your mobile when you arrive at Changi. It says welcome… When you enter the hotel, your mobile becomes your room key."
Mr Choe's headstart in the hospitality industry was thanks to a Shangri-La scholarship for a degree at Cornell University. He was one among some 400 applicants vying for two scholarships. "There were five interviews in front of a panel of about six people from Shangri-La and the Kuok group, and they were very fierce. They asked - have you worked in a hotel before? I said no, I read a book on hotels. It was so exciting and it drew me to the hotel industry. I guess they accepted that."
He was inspired by tycoon Robert Kuok who founded Shangri-La. "Because of him I went to Cornell… What I learnt when he came to the property - he remembered people by name, the pool attendant, receptionist. The guy is rich, he has so many businesses, and (for him) even the work of an individual is important."
He adds: "People make a difference if they care for the business as if it's their own. They won't want the company to fail." W