The economic downturn is helping serviced apartments and budget hotels gain business as companies try to reduce travel expensesand cut down on expensive luxury hotel stays.

Several global and domestic budget hotels and corporate residences, including Alila Hotels and Resorts, Formule1,Siesta Hospitality Services, Olive Apartments, Sarovar Hotels and Resorts, Seven Serviced Apartments, Oritel Service Apartments and the Ginger hotel chain, have seen business rise 30% over the last six months as companies seek short-term rental solutions, downgrading to lower-cost accommodation.

"Hotels cost a lot. Serviced apartments are flexible at slashing their prices as compared to hotel chains and we have realized that tapping options of cheaper stays has benefited the company hugely," said Vinay Negi, assistant manager, administration and facilities, at Capgemini. When the economy was booming, top company managers always stayed at five-star hotels.

Most are now opting for branded budget hotels and serviced apartments. Hemant Mahajan, senior administrator at HSBC, said the company had cut spending considerably by shifting to serviced apartments and bed and breakfast (B&B) services as per an ET report.

"The current economic situation has pushed corporates across sectors to downtrade on hotels. Companies can save at least 40-50% cost per employee by opting for budget accommodation," said Satyapal Unnikrishnan, chief marketing officer at Siesta Hospitality Services, which manages more than 1,500 rooms at corporate residences.

French hotel company Accor group's budget brand Formule1 that recently launched its fourth property in the country in Whitefield, Bangalore, has tied up with 50 companies from sectors such as IT, defence and pharmaceuticals.

"Companies are cutting discretionary spends and low cost is no longer looked as cheap. Some companies are also looking at bundling portfolio of hotels," said Philip Logan, vice president of Formule1 in India.

Budget hotels allow companies to save on travel costs while also benefiting in terms of locations close to the local office, bigger rooms and facilities similar to the ones offered at five-star hotels along with rate flexibility.

"Even allied services like tea, coffee, laundry and wi-fi in a budget hotel costs less than that of luxury hotels," said Ajay Bakaya, executive director, Sarovar Hotels and Resorts.

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