There may be worries about the world economy – especially with the ongoing subprime crisis and rising standards of living – but that hasn't stopped interest in luxury hotels from making a steady comeback.
With the recent entry of a new player in Singapore's luxury hotel industry, the exclusive St Regis, competition looks set to heat up.
St Regis opened the Saturday before Christmas, but even before it officially commenced business, the hotel has already sold out almost all its year-end dinner parties. Singapore's hospitality sector is experiencing one of its strongest recoveries in over a decade despite the US subprime setback.
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In November, the average room rate (ARR) set a new milestone of S$226 per night, the highest ever in any month and up 29.8 per cent over last year, according to figures from the Singapore Tourism Board (STB).
The city-state's hotels also generated record room revenues of an estimated S$175.4 million, representing an increase of 23.8 per cent from last year.
The rise was likely due to an increase in the number of visitors in Singapore – 837,000 in November, representing a growth of 4.6 per cent as compared to a year ago.
In fact, analysts believe this is just the take-off for the industry. Industry players expect the ARR to continue growing due to upcoming high-impact tourism projects set to be unveiled, starting from next year.
The average occupancy rate is also expected to test the 90 per cent level, industry players say.
Next year, the Singapore Flyer, complete with its signature cocktail (both alcoholic and non-alcoholic) will set its wheel turning from February. Following that, the Formula One (F1) Singapore Grand Prix will roar off in September, expected to draw in F1 lovers from around the world.
Also coming up are the Integrated Resorts – Marina Bay Sands and Resorts World at Sentosa – both of which are expected to boost the tourism rate.
Yngvar Stray, General Manager of the St Regis Singapore, said the city-state is an ideal market for luxury hotels like St Regis to step into "at this point of time in Asia".
"Singapore is stepping up to the plate in Asia... competing in a very high level. And the economy in Singapore is fantastic and seeing a lot of growth; I think the high-end market in Singapore is also showing substantial growth," said Stray.
"You can look at the occupancy levels in the city – the demand for this level of hotel is clearly present. So for us, (Singapore) is a starting point."
He also said that the travel and tourism industry looks positive in the year 2008, despite the overhanging shadow of the subprime crisis.
"I think there is a lot of optimism in 2008 for the travel sector and the travel industry," said Stray. "Of course, the subprime crisis causes some jitters in the market, but the demand within Asia is by far stronger and more independent than it was ten years ago, when similar trends were showing.
"And we see a market within Asia where about over 60 per cent of ... our clientèle... (in Singapore are more financially) independent. There's stronger economy in this region than before so it won't cause any dramatic changes for the trend in travel and luxury hotels for the time being. - CNA/yb
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