Final

Economic Value Estimation On Service Apartments

Service Apartments • A serviced apartment is a type of furnished, self-contained apartment designed for short-term stays, which provides amenities for daily use.

What efficiencies does the serviced apartments model bring in 1. Increasing number of multinationals coming into India has seen a number of professionals entering the cities on account of business for short- to medium-term stays. 2. They are a cost effective alternative to extended-stay hotel accommodation. 3. They also work out cheaper than quality unfurnished or furnished accommodation that companies need to provide to their expatriate employees.

4.

Lower-rated extended-stay products often find themselves competing with operators of conventional limited-service hotels, while higher rated extended-stay products often compete with allsuite hotels or the high-end category of rooms in luxury hotels. Sometimes, the hotels succeed, as the strong investment in the guestroom offerings present a strong price-value perception for guests.

5.

Serviced apartments can be less expensive than equivalent hotel rooms. Company budgets have been squeezed and since when staying in a hotel one is paying for facilities such as restaurants and bars which are often not needed, many companies have switched their accommodation budgets to serviced apartments.

6.

Target-market for serviced apartments •

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Middle to senior management positions in many international or foreign companies are held by expatriate employees, requiring medium- to long-term accommodation. IT and ITeS-based companies also generate huge demand for serviced apartments. Single female travellers to the Indian sub-continent travelling for business and this could form a strong target-market for serviced apartments. Management and consulting companies, including accountancy and legal firms, bring in employees from other offices on temporary assignments. Embassies and foreign trade commissions tend to generate demand for serviced apartment accommodation as the consular and other senior members of staff may require medium- to long-term accommodation.

Seasons Service Apartments… a place to stay for all Seasons!

STEPS IN ECONOMIC VALUE ESTIMATION Step-1 Cost of the competitive product ,as the best alternative Step-2 Differentiating factors of both the products Step-3 Value to customers for these differentiating factors Step-4 Calculation of total economic value .

Step-1

Cost of the competitive product ,as the best alternative

Competitive product: Lemon Tree Hotel, Hinjewadi Pune

Step-2

Differentiating factors • Location Aundh-15 minutes away from IT Park i.e.. Target customers. • Home away from home. • More distinctiveness. • All Basic amenities under one roof. • Meeting Facilities • Recreations

Step-3

Step-3 Value to customers for these differentiating factors In terms of extra benefits achieved for a given cost General Amenities Complimentary Services Kitchen Amenities Entertainment and Recreation Business Amenities Guest Services Time out Sports Bar The Galaxy Grill

Total economic value

Step-4 • Total economic value (*tax 10%) General Amenities Complimentary Services Kitchen Amenities Entertainment and Recreation Business Amenities Guest Services Time out Sports Bar The Galaxy Grill

Rs. 16000/-*

Executive suite Lemon Tree Hotel

9 kms from Hinewadi

Total Economic Value =13500/15500*

Positive differential value • • • • • • • • •

Complimentary Services- Rs.1500 Kitchen Amenities- Rs. 500 + 50 Entertainment and Recreation- Rs. 500 Laundry( 2 garments a day)- Rs. 100 Leisure lounge – Rs. 600 Time out Sports Bar (at least 15% discount)- Rs.150 The Galaxy Grill (at least 20% discount) – Rs. 250 Status Quo – Rs.1000 The location…Aundh- 500

Negative differential value • 18 kms to and fro (Hinjewadi-Aundh)Rs.300 • Mental fatigue- Rs. 200 • Miscellaneous- Rs.200

• Price to capture the share = positive differential value- negative differential value = 5150-700 = 4450

Lemon tree Room category

Single

Double

Superior

8000

NA

Single bed compact

Deluxe

9000

NA

Single bed

Executive

10000

11000

Large room twin beds &electronic safe

Studio

12000

13000

Extra large room, king beds, microwaves, bath tub, electronic safe

Executive suite

16000

16000

Separate sitting room, microwaves, bath tub, electronic safe, airport pick up.

* Extra bed at Rs. 1000

Type of room

Seasons Service Apartment Apartment type Elite (Rs)

Royal (Rs)

Executive

8500

9500

Studio

9500

11500

One bed room

11500

13500

Two bed room

13500

15500

Extra bed

1500

1500

Seasons service Apartment • Elite – Fully furnished kitchen – Ozonized drinking water – Complimentary usage of fitness station – Welcome gourmet arrival for long stage – Self service Laundromat

• Royal Guest – Complimentary car wash – Complimentary breakfast – Complimentary utensil wash – Complimentary airport transport on departure – Complimentary laundry

Special Offers • Seasons – 3 days and 2 night offer in Pune at Rs. 32000.

• Lemon Tree – Chill out in Goa For 3 nights/4 days at Rs. 39,990 to Rs.42990.

Pricing the product • Price offered by the Lemon tree for the services they are offering =16000/day • Seasons is providing extra amenities at the price = 15500 less than that of a 4 Star hotel in the same city • Total cost value received by consumer is equivalent to cost of competitor + the additional services offered by service apartment. • That is= 16,000+4,450 • =20,450 so consumers are getting the percived value of Rs 20,450 at the price of Rs.15,500