Mid-Tier, Upscale Hotels Faring Best: STB Figures

Source : The Straits Times, May 28, 2008

For first time, data groups hotels into classes, shows their performance

MID-TIER and upscale hotels have fared best among different types of hotels in the current tourism boom.

The Singapore Tourism Board (STB), releasing the latest tourism statistics here, has grouped the hotels into four classes and released figures on their performance for the first time.

The four are:

# Luxury hotels: those in prime locations or historic buildings (4,500 rooms);

# Upscale hotels: boutique hotels and those in prime locations, charging slightly lower rates (12,400 rooms);

# Mid-tier hotels: those in commercial zones (9,500 rooms); and

# Economy hotels: those with budget rooms in outlying districts (3,800 rooms).

The STB declined to cite examples of hotels in each category, but going by its descriptions of each, luxury hotels include the likes of The Ritz-Carlton Millenia; upscale ones include Orchard Hotel; mid-tier hotels cover Link Hotel in Tiong Bahru and economy hotels include Hotel Bencoolen.

Going by STB figures, upscale and mid-tier hotels did best in average room occupancy, average room rate and revenue per available room last month.

Among the four categories, upscale hotels saw the biggest jump in revenue from each available room - 27.9 per cent - from a year ago.Revenue per available room is calculated by multiplying average room occupancy by average room rate.

Mid-tier hotels had the biggest increase in average room rates, up 28.2 per cent over last April's.

Mr Colin Tan, director of research and consultancy at Chesterton International, said the sound performance by mid-tier and upscale hotels could have come from the room crunch and higher demand for these hotels.

The average hotel occupancy rate stood at 84 per cent last month, at an average room rate of $254. Hotels are expected to earn $186 million from their rooms, up 30.1 per cent from last April.

Knight Frank director of research and consultancy Nicholas Mak, noting an uptrend across all four hotel categories, said that, by releasing such data, the STB is helping investors judge the industry's state and decide which categories are worth putting money into.

Chesterton International's Mr Tan surmised that the recent 'no-bid' situation for a 0.9ha Little India hotel site could have spurred the STB to make this information part of its monthly updates.

The plot above Little India MRT station made the news last week as the first instance in seven years where a government land tender failed to draw bids.

Mr Tan said one reason could be that the site is suitable for mid-tier or budget accommodation and developers had the idea returns on these types of hotels are lower.

However, he added, with STB information that all sectors are doing well, investors may be spurred to take up non-prime land to build non-luxury hotels.

The STB confirmed it made the data available 'to facilitate their business and investment decisions'.

Fuelling the growth of hotels is a rise in the number of tourists. Last month was another sterling month, with 826,000 arrivals: Indonesians led the charge with 131,000, followed by 107,000 Chinese, 63,000 Australians and about the same number of Indians, and 53,000 Malaysians.