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Video:Lure of the serviced apartments in Kenya

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When the ground breaking for Batians Peak Apartments was done, the storey building was to house apartment units that were to be sold to individuals.

Upon their completion, however, the owners of the building saw a different option of turning them into furnished and serviced apartments in order to cash in on the real estate business.

Now housing 28 fully-furnished and serviced apartments, 10 of which are one-bedroom deluxes, and one-bedroom standard with the remaining eight being two-bed roomed, the apartment block serves as a home away from home for its business travellers.

When starting off in the industry, the luxury high-end Palacina Residence, off Dennis Pritt road was one of the pioneers in the ‘hotel residence’ sector. This was a concept where they offered apartments with similar amenities to a hotel.

Selling the idea which was fairly new to the market, Tony Sawe, general manager, spent three days a week explaining the concept to potential clients. Now, business is so brisk that the residence is expanding to have more apartments to meet the demand.

Heri Heights Serviced Apartments, off Arboretum road, are fairly new in the business. Reopened just over a year ago, the business which was originally furnished apartments was remodelled and now hosts 46 fully-furnished and serviced apartments.

With Nairobi growing as a business hub and conference tourism destination, the existing hotel space and bed capacity is not adequate to cater for the ever increasing demand for accommodation.

With expatriates coming into the country for business for months at a time, they seek the comforts of a home without having to go through the hassle of house hunting, furnishing and all other things that come with having a home.

“At Palacina, we offer a home away from home for our guests,” says Sawe “we have all the amenities one would have in their home and once you pay rent, you do not have to worry about power, water or even cable TV,” he adds.

Unlike furnished apartments, the added advantage of a serviced apartment is that they provide housekeeping services and most have restaurants on the premises, business centres, round-the-clock internet connections and other amenities that would usually be found in a hotel. In the end, such a guests ends up with the best of both worlds.

Long-term

According to William Ndoto, the general manager of Heri Heights, serviced apartments are aimed at making the guest’s stay as comfortable as possible. Some corporates rent the apartments on long-term basis while others on take them when they are expecting expats. The apartments can be rented on weekly, monthly or daily basis.

“We have people who have stayed with us for more than a year,” says Sawe.

The kind of arrangement we offer is especially suited to diplomats or expatriates. As a diplomat in a foreign country, one appreciates the amenities and security provided at a serviced apartment compared to what they would get in a hotel room.

In such an apartment, guests also have more flexibility than they’d have in a hotel. When it’s time to return to their country of origin or to move to the next assignment, such a person does not have to worry about disposing of household stuff and furniture.

The most popular of the apartments are usually the one and two-bedroomed apartments for those who live alone.” says Sawe. However, the two-bedroomed apartments cater for people on long stays, especially to accommodate their visiting families during the holiday season.

According to Wacuka Ngari, the assistant general manager at Batian’s Peak, the clientele, usually aged between 40 and 60, prefer the deluxe one-bedroom apartments.

With January to June and September to November being the high season for the business traveller, the months of July, August and December have more families coming in for the holiday and Christmas season.

“Our larger apartments were fully booked when families living abroad came home to spend their holidays with family. We had people coming in from Uganda, US and UK staying with us,” explains Ndoto.

“The expatriates,” says Ngari, tend to go home in July and August but some hold the apartments in anticipation of their return. The bookings at Batian’s usually run either from January or July which are the beginnings of financial quotas for most corporates.

Investors

The serviced apartment industry is one that comes in to complement the hotel industry. At Palacina, the Suites and the apartments cater for the two types of clients.

According to Sawe, those who come into the suites come in for short stays or when in transit. The needs of the two sets of clients differ hence the apartments cannot be considered as a direct competitor to the hotels.

With the increasing number of serviced apartments cropping up, the investors say they are not worried about the market becoming flooded.

As Nairobi becomes a business hub with multinationals setting up shop, the demand is bound to grow. “As it is, Nairobi does not have nearly enough bed space to cater for the frequent visitors, and as the hotel industry grows we are also growing with them,” says Ndoto.

The need for additional bed space is one that Sawe agrees with. If the construction site within the compound is anything to go by, the expanding market requires the boutique property to expand.

“We are adding an exclusive bar for our residents and a restaurant on one side.The other is additional one-bedroomed apartments,” he says.

Banking on repeat clients and establishing a pool of corporate, diplomatic and Non-governmental organisation clients, the different facilities compete with each other to offer health and fitness clubs, spas, swimming pools, room service and other amenities in order to stand out.

Unlike hotels which have check-ins and check outs on a daily, the apartments, usually hired on a monthly basis have a lower turnover.

“The marketing needed is also much less as once you have a satisfied client, they will keep coming back and usually stay for months,” says Ndoto.

Cheaper than high-end hotel rooms in the city which usually range from Sh20,000 per person for a night at a four or five star facility, the costs for these apartments range from Sh12,000 for a unit per day onwards.

Usually charged per apartment rather than per person, the cost can go up to Sh500,000 per month for three or four-bedroom apartments which can house up to eight people.

The biggest challenge for the owners and management of furnished apartments is catering for the cost of utilities. The electricity needs, even during blackouts, and water needs chew into the profits.

“We have had to acquire two back-up generators which are diesel-powered, and dig our own borehole, “says Sawe.

Ndoto agrees that the rising cost of power is also a major issue for them.

-Business Daily

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