Where in the world is business travel going?
As the economic centre of gravity shifts from the West to emerging economies like South East Asia and Latin America, serviced apartment providers are seizing new opportunities to cater for the business travel and global mobility markets.
Business travellers turn to emerging economiesThe growing importance of emerging economies and technology hubs to UK-based business travellers was also highlighted in the American Express Global Business Travel Survey.In the 2015 report, New York continued to top the list of intercontinental destinations, but the survey also highlighted the attention being paid to 'new' economies."When it comes to international business travel, the US remains a key destination but emerging markets are making headway," it said.A number of countries that were previously largely closed to foreign investment are now opening up and taking steps to attract business from overseas. Relations between Cuba and the US have thawed markedly, and the two nations have recently signed a number of trade agreements that will see huge changes in the opportunities available to companies wanting to do business in Cuba.Two countries that have already seen remarkable economic growth as a result of foreign investment are Vietnam and Mexico. Although politically very different, they are both experiencing rapid economic expansion, and, for now at least, are relatively unfamiliar destinations for relocations.With a shortage of housing stock perceived as being suitable for expats, both countries are ripe for further development of the serviced apartments industry.
Vietnam: The new Silicon Valley?With costs for foreign manufacturers in China rising, a growing number of businesses are relocating their operations to Vietnam, David Sapsted reported at the beginning of February. In 2016, Vietnam appears poised to become a global hub for a number of industries, and along with its well-established textile exports, this South East Asian country has seen the rapid development of electronics.As electrical and electronic products become the country's top exports, Vietnam is even being touted as a possible rival to Silicon Valley.The Communist leadership is actively pursuing a policy of attracting hi-tech foreign investment into the country and the Saigon Hi-tech Park (SHTP), currently under construction outside Ho Chi Minh City, will soon see Samsung begin to operate a new $2 billion complex."These are continuing signs of an increase in the number of foreign-invested supporting industry companies and suppliers in Ho Chi Minh City and neighbouring provinces," reported Vietnam News recently.In 2015, the growth of hi-tech exports helped lift economic growth to 6.7 per cent – the fastest rate in eight years – and analysts at HSBC believe that the economy will expand at the same pace this year, led by a rise of more than 10 per cent in exports.The Nikkei Asian Review added, "The prospect of tariff-free access to the EU and TPP [Trans-Pacific Partnership] member states will drive foreign investment in Vietnam, after a record $23 billion in actual and pledged FDI flooded into the country in 2015."The same year, Vietnam cut restrictions on foreign ownership of businesses, another inducement to foreign investors keen to tap the country's youth bulge – 60 per cent of the 94 million population is under 35 – and low wages compared with China."According to PricewaterhouseCooper's UK Economic Outlook report, Hanoi and Ho Chi Minh City will top the list of the world's highest economic growth cities from 2008 to 2025.Reflecting this growth, in July 2015 Vietnam Airlines introduced daily direct flights between Heathrow and Vietnam, and Ho Chi Minh City has a burgeoning real-estate sector that's attracting property developers from all over the world.A number of major serviced accommodation providers, including The Ascott Limited, SilverDoor and Frasers Hospitality, have opened, or taken over the management of, serviced apartments in Vietnam's major cities, and other operators are eyeing the market.With 14 management contracts signed in South East Asia in 2015, Ascott has added over 2,700 serviced residence units in the region – more than triple the number added in the same region during the whole of 2014.Its CEO, Mr Lee Chee Koon, said, "We have ramped up our expansion in South East Asia, as we see strong growth potential in the long term. With more than 13,000 apartment units in 73 properties across eight countries in South East Asia, over 30 per cent of Ascott's global footprint is now concentrated in this fast-growing region."South East Asia is shaping up to be one of the most vibrant and attractive markets for foreign investors, with a young population driving domestic demand, growing export figures, and various economic policies in place to attract foreign capital."The upcoming ASEAN Economic Community will not only boost economic integration in the region, it will also transform South East Asia into an economic powerhouse with a population of more than 600 million."
Down Mexico WayMexico, the most visited country in the Americas, is attracting increasing numbers of business travellers and growing foreign investment. Despite crime statistics, PwC forecasts that Mexico City will have become the seventh-richest city in the world by 2025.In 2014, Mexico's energy industry was opened up to foreign investors for the first time for more than 75 years, and there has been increased overseas investment in tobacco and electronics. In addition, Mexico's major trading partners include the US, China and Japan.This increased wealth is expected to create more opportunities for the real-estate industry in the coming years. While the drop in oil prices and declination of the peso have caused challenges, Mexico's capital city is also experiencing a surge of growth in real estate.As foreign investment increases and more companies turn their attention to the city, the office market is also expanding. According to Knight Frank, 52 million square feet of modern office space is scheduled for delivery within the next three years.SilverDoor, BridgeStreet and Oakwood are relatively new players in Mexico, but Dominion Suites has provided corporate housing there since 1998. Among its properties is The Place Corporate Rentals, in the exclusive Lomas Altas area of Mexico City.Located within minutes of busy neighbourhoods such as Santa Fe, Bosques de las Lomas and Polanco, Lomas Altas is home to several major US corporations, including Microsoft, Unilever and Acuvue.Dominion Suites has long accommodated travelling executives. More recently, it has added two-bedroom and three-bedroom properties to its portfolio, to attract accompanying families. Amenities include a fully appointed kitchen and living-dining room, and service levels are high, with housekeeping, laundry, transport and grocery services available.Catering for families that are travelling to Mexico City or have relocated there, the developers have provided a range of recreation facilities, including a pool, a spa, a fitness centre, and a children's play area. In a further bid for the expat family market, pets are welcome.
Read more in the first edition of our new Serviced Apartments Ultra digital magazine that was launched in time for the 2016 Business Travel Show. Click here to read it online or here to download as an app.
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