Eminent Lawyer and well known media columnist P.S. ChanneGowda writes in the wake of the recent controversy about foreigners staying in Bangalore Service Apartments.

• As on today, definition of Service Apartments is not available under any regulatory laws.
• Apartments assessed to tax as residential-flats but are being used as service apartments in Bangalore by their owners.
• The profit from Bangalore Serviced Apartments goes mostly unaccounted.
• A few years back Infosys Technologies Ltd was slapped with a fine of Rs 7.79 lakh (Rs 779,000) by the BESCOM for 'misuse of power' at its service apartments.
• There is a view that service apartments are not commercial in nature. It is thus not clear whether the activities in a residential Service Apartments can be considered commercial.
• The act of converting residential apartments as service apartments, in Bangalore, according to a section of other residents, is commercial and illegal.
• At least now, service apartments in Bangalore are not governed specifically by any laws, rules and regulations, which are applicable to Hotels and lodges.
• The police is not sure whether they have authority to regulate activities in Service Apartments. They can not interfere with the working of an Service apartment unless there is law and order problem.
• Police is likely to ask for new laws or pass the buck to corporation authorities which collects taxes from service apartments or to the Excise Department which has authority to issues license for serving liquor in public places.
• The Corporation and other jurisdictional revenue authorities also have limited authority to regulate service apartment businesses, as their role is limited to collecting taxes.
• It is unclear whether the food offered in some Service Apartments amounts to offering of food to public.
• However City Corporation can stop activities of a service apartment when carried out in residential apartments since both under the old, 1995 and the new , 2015, Comprehensive Development Plans, commercial activities are prohibited in residential premises. The owners of residential apartments are required to obtain change in land use before using their apartments for commercial activities and commercial activities are not generally permitted in residential zones. Moreover the change is permitted after the fulfillment of criteria stipulated in the existing bye-laws that also include ample parking space, cooking establishments and proper facilities to ensure garbage disposal.
• The Labour department can also interfere by taking in to issues of those employed Service Apartments, but is hesitating to do so as the Service Apartments are not declared as commercial establishments.
• Comments about "Foreigners from Middle East" staying in the apartments appears to be prejudicial, socially unacceptable and unethical and is not shared by majority of Bangaloreans.
• It is time Government comes out with suitable laws and rules to regulate the business of Service apartments.

The Service Apartments which are often called New age Hotels are not uncommon in Bangalore City. The concept of them is a decade old , though people have now suddenly started discussing ...... [More]

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A section of residents of a Bangalore Apartments complex protested against foreign nationals from Middle East countries staying in the Service Apartments there. The residents claimed that around 300 of the total 970 apartments in the complex are used as Bangalore serviced apartments. They pointed out that Commercial activity in a residential complex is illegal, and argued that, the Middle-East citizens residing in the Apartments complex is a security concern, in the backdrop of the recent bomb blasts in Bangalore. [1]

Long-term residents are generally not aware of who comes or goes in a Bangalore service apartment, as by the very nature they have a floating population. The security guards have practical difficulty to monitor the movement of Service apartments residents and those who accompany these guests.

There is no list of serviced apartments put up in a public place within an apartment complex. If other residents have complaint about any of service apartments' occupant's behaviour, no one knows whom to complain and the actual owner of the apartments are either not available or not ready to listen to such complaints.

While complaint of a section of long term residents was against middle-east nationalists staying in service apartments, a few others are not against serviced apartments per se but against the lack of regulation. They press for registration of time of arrival and departure of short-term guests , verification of background of the person etc. There is a need for zoning bangalore serviced apartments from other residential apartments. There is a feeling that as the service apartments owners make huge profit by accommodating short term customers, they are not very keen to listen to the complaints from other residents of the same apartment complex.[2]

Later police have asked service apartments operators to maintain thorough checks and a registry of visitors. Police also asked the serviced apartment operators to informally produce required documents like payment of luxury tax to check their legality although it does not comes under their purview.[3]

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References:
[1], [2], [3]

Bangalore Serviced Apartments
As Star Hotels in Bangalore are unreasonably expensive, service apartment in Bangalore are preferred by more and more visitors for their extended stay accommodation requirements. Many corporate also prefer to accommodate their visiting executives in Service Apartments in Bangalore as it help to cut down unnecessary costs. Service Apartments are at least 10% cheaper than Bangalore Hotels. [1]

The Emergence of Industry- Service Apartments, Bangalore.
Though it is true that there were a few Service Apartements in Bangalore earlier itself, people were not very familiar with the concept of "Service Apartment- Bangalore" till the around 2004-2005. The Year 2005 saw approx. 6.8 million square ft of commercial office space absorption in Bangalore and approx. 5.5-6 million square feet during 2006, a number that featured amongst the highest of its kind in the world. [2] At that point of time, the city had shortage for quality hotel rooms. The search for alternative accommodation facilities resulted in large number of Bangalore service apartments opened up. [3]. Service Apartments in Bangalore are, in a way result of the recession prior to 2005. Large number of apartments, which came up during the period of property- boom, found less demand during the recession phase and, as many of them are already fully furnished apartments, some property builders came up with the concept of Service Apartments. Thus, unlike in the west, were it was Hotel industry which came up with this concept, converting some of their suites into serviced apartments, to make the package attractive for their long staying guests, in India, it's either builders or apartment owners that are venturing into the Serviced Apartment business." [4]
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References:
1 , 2 , 3 , 4

Bangalore Slowdown Hits Hospitality Industry- CountryBoat.com Prognostication Vindicated
As pointed out by CountryBoat.com many months before, Bangalore's Hospitality industry has started showing clear indication of slowdown. Businessline has reported recently: "If Indications are to be believed, hotels in the city have been witnessing a softening of rates in the past few months. The average room rates (ARR) have come down by at least five per cent." Read more what Hindu Business line says in its Front Page report with screaming headline: " IT Slowdown Bites- Bangalore Hotel Room Rates Softening." [1] What is true about Hotels is true about Service Apartments also. There is a misconception that the slowdown in the business would in fact help Service Apartment Industry. The assumption is that when the other industries face slow down they will be forced to look for Service Apartments to accommodate their executives and guests. This assessment is not right. Infact, many Hotels in Bangalore already have commited monthly/ extended-stay rates for Corporates. There is a slowdown in the Real Estate segment also. As per one estimate, there are around one lakh Apartments/Houses empty in Bangalore by April 2008. We have pointed out this possibility also. Availability of large number of Apartments would affect Service Apartments' demand. But major factor is the decision by IT industry to shift from off-shore Software development to On-Shore model- into the a job market which is closer to its target export market. Already TATA consultancy and other IT majors have taken up major expansion plans in the Dollar market. The consistent denial of IT business spokepersons that there wont be any slowdown in IT industry should be taken with a pinch of salt.

The Economic Times also points out that the Service Apartments tariffs are expected to fall by 15% - 20% in 4 to 5 years time. It is estimated that in Bangalore 4000-5000 rooms will be added in the coming 4- 5 years. When the supply- demand mismatch gets corrected, unbranded service apartments will become less popular. Economic Times also points out the fact that the Hotels are now having attractive options for extended stay customers.[2]
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References:
[1] , [2 ],