Decoding the Enigma: Why many Serviced Apartment- Hotels in Ho Chi Minh City Fail to Meet Profit Expectations ?

The majority of operational serviced apartments fail to achieve the occupancy rates and revenue initially anticipated. This isn't just a subjective observation; it's a meticulously analyzed truth derived from hundreds of cases within the industry.

At CityHouse Apartment, with our experience in acquiring and "diagnosing" over 170 projects that have faced these "stalled wave" scenarios, we've identified three core, strategic, and operational reasons leading to this underperformance.

I. Flawed Positioning from the Initial Market Research Phase

One of the most common, and indeed most damaging, mistakes is the lack of in-depth market research and incorrect positioning of the target customer segment from the outset of the investment.

• The Problem:
  • Many investors approach the serviced apartment model based on intuition or by simply replicating successful models from other locations without properly assessing the specific characteristics of their own property's area. For instance, an apartment in District 1 might be suitable for short-term tourists, but could be optimized for long-term business travelers if equipped with appropriate amenities. Failing to clearly analyze the potential customer base, consumption behavior, and reasonable spending levels for each specific location leads to misguided decisions regarding pricing, amenities, and marketing strategy.
• The Consequences:
  • Uncompetitive Pricing: The apartment is priced too high compared to its true value or direct competitors in the same segment, resulting in low occupancy rates.
  • Misdirected Channels: Marketing efforts fail to reach the correct audience, leading to wasted resources and time.
  • Missed Revenue Optimization Opportunities: The prime location advantage isn't leveraged to attract the customer segment that would yield the highest profits.

II. Lacking of Practicality and Customer Experience Focus in Design

An apartment furnished with expensive, "luxurious" interiors doesn't automatically guarantee a superior living experience. Spatial design that lacks practicality, fails to optimize functionality, and overlooks customer psychology is a significant barrier to tenant retention.

• The Problem: Many serviced apartments prioritize superficial aesthetics while neglecting core elements such as:
  • Space Optimization: Poorly planned layouts lead to cramped feelings or wasted space.
  • Functional Utility: Furniture is merely "eye-catching" but inconvenient for daily living (e.g., insufficient storage, inadequate lighting, unsuitable appliances).
  • Customer Psychology: A lack of understanding of the needs of different customer segments (business travelers need a quiet workspace; families need common living areas; tourists need simplicity and ease of movement).
• The Consequences:
  • Reduced Return Rates: Dissatisfied tenants are unlikely to consider returning or recommending the property to others.
  • Negative Reviews: Poor ratings on OTA platforms directly impact the apartment's reputation, visibility, and ability to attract new customers.
  • Continuous Repair/Upgrade Costs: Unsustainable design that can't withstand high usage intensity leads to rapid wear and tear and increased maintenance expenses.

III. Unsystematic and Unprofessional Operations

Self-managing a serviced apartment without a professional operational system and standardized processes is a significant challenge, often leading to instability and inefficiency.

• The Problem: Self-managing owners often lack:
  • Booking Management System: No effective tools for managing bookings, pricing, or vacancy schedules, leading to errors, overlaps, or missed opportunities.
  • Customer Service Procedures: No 24/7 process for handling inquiries, complaints, or emergencies, directly impacting the customer experience.
  • Maintenance and Housekeeping Management: A lack of regular inspection, maintenance, and strict cleanliness standards, affecting the apartment's quality.
  • Dynamic Pricing and Multi-channel Marketing Strategies: Inability to analyze the market for flexible pricing adjustments or effectively promote the property on online platforms.
• The Consequences:
  • Inconsistent Customer Experience: Leads to low ratings and failure to cultivate loyal customers.
  • Reduced Competitiveness: Even with a good product, a lack of professional operation makes it difficult to compete with systematic rivals.
  • Hidden Management Costs: The owner's time and effort, and additional expenses incurred due to a lack of optimized processes.

The Optimal Solution: Approaching Property with a Business Mindset

Transforming a property into an effectively profitable asset isn't just about owning a prime location or luxurious furnishings; it requires a professional investment and operational mindset, akin to running a business.

CityHouse Apartment is not just an operational unit; we are your strategic partner, accompanying property owners from the very first step, applying deep professional knowledge to:

• Analyze & Position: Precisely identify the most promising customer segments, and subsequently develop the most suitable pricing and marketing strategies for your property's location and characteristics.
• Optimize Design & Experience: Advise on and implement spatial designs that are not only aesthetically pleasing but also functionally optimized, delivering a superior living experience that encourages guests to return and recommend.
• Systematic & Professional Operations: Implement a service-standard management system, with a 24/7 professional team handling everything from bookings, customer care, maintenance, housekeeping, to transparent financial management, ensuring smooth and maximally efficient property operations.
• Brand Building & Value Enhancement: Develop the brand of your building/apartment on online platforms and social media, attracting a stable clientele and increasing the sustainable value of your asset.

Don't let your valuable property continue to "lie dormant" and miss out on profitable opportunities that should rightfully be yours.

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CITYHOUSE - Estate Management