Rolling Out The Red Carpet Around The World

Source : The Business Times, November 1, 2007

Singapore's hospitality players are making their mark on the global stage, reports CHUANG PECK MING

THEY may come from a small country, but Singapore hotel and serviced apartment owners have long reach in the global hospitality market.

According to International Enterprise Singapore, which is pushing Singapore companies to reach out to markets abroad, Singapore-based companies operate 592 hotels and serviced residence properties with 132,871 keys worldwide.

'If the Singapore-managed properties are excluded, our Singapore-based hospitality players operate 537 overseas properties with some 115,822 keys worldwide,' says Tham Poh Cheong, director of infrastructure and environmental services at IE Singapore. This is still a formidable number for these companies, coming from a small home market.

One example of a local player that has made it in the global hospitality market is the Ascott Group. It is the world's largest international serviced residence owner and operator outside the United States. It also released the world's first Pan-Asian Serviced Apartment Reit last year.

'Another notable Singapore hospitality player is Banyan Tree,' Mr Tham says. 'Recently the Banyan Tree (Bangkok) was in the Conde Nast Traveller's Gold List 2006 for 'Best for Rooms' category and won the Travel & Leisure Award for being the world's 33rd best hotel and 11th top hotel in Asia.'

Raffles Hotels & Resort was another Singapore hotel conferred Conde Nast World's Top 10 hotel chains. And it was 'Best for Service' on the Gold List in 2006.

More rooms

'In addition to these world-renowned hotel and resort chains, Singapore also has several hospitality companies which aspire to global expansion, including Frasers Hospitality, Meritus Hotels and Resorts, The West Paces Hotel Group Asia and Amara Hotels and Resorts,' Mr Tham points out.

The local market still has room for more hotels - and more will be built. The government is bent on developing the local tourism and hospitality sector to meet its target of attracting 17 million tourists and hitting tourism revenues of $30 billion by 2015.

Mr Tham points out that the Urban Redevelopment Authority has released new hotel sites and existing hotels are getting a facelift, such as the former Crown Hotel on Orchard Road when it was acquired recently by the Park Hotel Asia Group.

Still, there is only so much space for hotel expansion in tiny Singapore. 'Internationalisation is needed to maintain their growth momentum,' Mr Tham says.

The hospitality business is very much tied to the global travel and tourism industry. According to estimates by the United Nations and World Trade Organisation, global tourism receipts were US$733 billion. In the next eight years, travel and tourism are projected to expand by an average 4.5 per cent yearly, surpassing revenues of US$9.5 trillion by 2014.

The WTO also tipped that there will be 100 million people from China and 50 million from India, the two emerging giants, travelling abroad by 2020.

'These (figures) demonstrate the immense potential for the hospitality market around the world,' Mr Tham says.

The Asia-Pacific region offers the whole range of hospitality-related developments - from established city hotels to resorts and casinos. China, in particular, is the country that Singapore players should look out for, according to IE Singapore.

A report by the UN World Tourism Organisation says China could overtake Spain and the United States to become the second most popular tourist destination by 2010. Currently it ranks fourth, behind France, Spain and the US.

Europe, which made US$374.5 billion from tourism and accounted for 39 per cent of global room capacity, is likely to remain the biggest tourism and hospitality market.

Second-tier cities

'For China, the Singapore-based hospitality companies' thrusts are shaped by the commercial urgency to tap the growth opportunities presented by China's relentless economic growth,' Mr Tham says. 'Most of the Singapore hospitality players are concentrated in the gateway cities of Beijing and Shanghai, but they are beginning to take notice of the up and coming key growth cities, such as Chengdu, Nanjing and Tianjin.'

Business Monitor International says China's hotel industry posted strong growth in 2006. Revenues per available room rose 8.7 per cent and average room rates jumped US$10 to US$111.

'All cities tracked across China saw increase in average room rates over the period between 2005 and 2006,' Mr Tham says. 'Although Shanghai and Beijing are attracting the lion's share of this rise, there is also increased interest in the key growth cities such as Tianjin, Guangzhou, Shenzhen and Sanya.'

According to China's National Bureau of Statistics, these are among the 24 so-called second-tier cities currently boasting 2 per cent higher GDP growth than China's national average.

While much of the construction and investment activity now in the Chinese hotel industry is in preparation for the 2008 Olympics, Mr Tham says there is a surge in China's popularity with tourists.

'China National Tourist Office states that international tourism receipts have doubled since 2003,' he notes.

Nearer home, South-east Asia remains an attractive market for Singapore's hospitality players, Mr Tham says. 'This is due to geographical proximity, which offers cost-competitive investment and management opportunities, as well as the common branding orientation towards the cultural-based marketing of 'Asian Hospitality & Grace'.'

South-east Asian countries are also a natural extension for tourists coming to Singapore, he adds.