More Hotels, Rooms Amid Global Gloom

Source : The Straits Times, Dec 9, 2008

But hoteliers hope to woo customers by offering more bang for the buck

ABOUT 10 new hotels offering some 5,100 rooms are expected to open next year despite news that Singapore's hotel industry is labouring amid the global economic downturn.

The buildings, conceptualised during a more prosperous period, face a difficult task ahead of filling up their rooms. However, hoteliers say there is still business to be done despite the gloom.

'Ideally, we want to open in more favourable times,' said Mr Puneet Dhawan, general manager of the 500-room Ibis hotel, which is scheduled to open early next year. 'But we are still optimistic because people are coming to Singapore. We just have to offer them more bang for their buck.'

The optimism comes at a trying time for the industry. Visitor arrivals have been declining since June as travellers cut back on trips in the face of a worldwide recession.

October saw 8 per cent fewer visitors to Singapore than the same month last year - the biggest year-on-year drop of this year.

In the last year, hotel room occupancy rates islandwide have slid about 10 percentage points to about 80 per cent. The country has over 30,000 rooms.

Hotels slated to open next year range from the Marina Bay Sands integrated resort to mid-range establishments

like the Park Hotel Clarke Quay. The number of openings is comparable to the last few years.

Among the new additions is the five-star Capella Hotel in Sentosa, which is scheduled to open in March. While its daily rates will be between $600 and $800, a spokesman said the hotel will be able to pull in business and luxury travellers because demand for posh rooms remains strong.

Still, hotel analysts predict that 2009 will be a tough year. Ms Chee Hok Yean, executive vice-president and head of corporate advisory for Jones Lang LaSalle Hotels, said occupancy rates will likely drop to between 70 and 75 per cent and room rates will remain flat.

The new properties, she said, will have to work harder to make their mark. 'Competition will be tough next year and hotels have to be constantly aware of the market condition and their competitors.'

The lull in visitors has prompted some hotels to publicise below-market rates even before they open their doors.

The three-star Ibis, which is scheduled to open in February in Bencoolen Street, is offering rooms for $148++ per night - almost 25 per cent lower than the average for mid-range hotels.

Mr Dhawan said the promotion is designed to appeal to budget-conscious travellers, adding there will always be a market for hotels like his. 'During times of recession, people tend to trade down, so it is a good time for a property like ours to open.'

However, Mr Klaus Kohlmayr, director of service at hotel consultancy Integrated Decisions and Systems International, advised against cutting prices.

He said hotels 'which discount almost always lose money' as there is no guarantee they will get better occupancy. His advice is for hoteliers to establish closer partnerships with the local community.

With the declining tourism numbers, hotels are looking at the local market to boost occupancy. Mr Cheng Chee Chiang is the general manager of home-grown firm Santa United, which plans to open a 74-room hotel in Bugis early next year.

He said the hotel, the Santa Grand, may introduce special weekend packages for locals.