Swissotel Merchant Court Hotel May Be Sold Soon

Source : The Business Times, August 6, 2009

TA Enterprise Bhd is proposing to buy both the hotel and its business

Swissotel Merchant Court hotel in the Clarke Quay area is expected to change hands soon. Bursa-listed TA Enterprise Berhad said last week that it's proposing to buy the 476-room hotel.

On the market: The hotel was put up for sale a year ago, but a deal did not materialise then as sentiment worsened due to the global financial crisis

It did not reveal the price but market watchers say that it is likely to be in the mid-$250 million range.

TA Enterprise is proposing to buy both the hotel and its business. The hotel will be sold subject to a management contract with Swissotel, part of Fairmont Raffles Hotels International. Jones Lang LaSalle Hotels is said to be brokering the deal.

TA Enterprise - controlled by Tony Tiah and his wife Alicia - owns Westin Hotel Melbourne, Radisson Plaza Hotel in Sydney and the Aava Whistler Hotel in Canada, according to its website.

In an announcement last week, the group said that it had struck a deal with LaSalle Asia Opportunity II SARL to buy the entire issued shares of Quayside Gem Limited, which owns the hotel and business of Swissotel Merchant Court Singapore.

TA has secured an exclusivity agreement to perform due diligence on the property. The company has paid a deposit of $5 million, which will be forfeitable, if TA withdraws from the negotiations for the proposed acquisition or does not enter into a sale and purchase agreement with the seller by Aug 25, 2009.

During the exclusivity period, the seller will not sell, negotiate or solicit any invitations or bids for the sale of the hotel with any other parties.

Seller LaSalle Asia Opportunity II bought the hotel in 2006 from Fairmont Raffles Hotels International (owned by Kingdom Hotels International and Colony Capital), which had in turn acquired it as part of the entire hotel business of Raffles Holdings in 2005.

The hotel is on a site with a remaining lease of about 84 years. It was put up for sale a year ago, but a deal did not materialise then as sentiment worsened due to the global financial crisis.

Frasers Launches New Service Residence Brand

Source : The Business Times, July 17, 2009

FRASERS Hospitality yesterday launched Modena - a new line of service residences which cater to a budget-conscious and highly mobile group of business travellers.

Home away from home: The Modena line of service apartments cater to a budget-conscious and highly mobile group of business travellers

Room rates at Modena will be around 20 per cent lower than those at properties under the existing Fraser brands. Some 1,000 apartments across five Modena properties will come on-stream in the next three years.

The launch is timely 'because companies are really looking at cost-cutting measures' and Modena will be 'a lot more palatable' for them, said Frasers Hospitality CEO Choe Peng Sum, who was in Tianjin, China yesterday to launch the brand. He heads the hospitality arm of Frasers Centrepoint, which is part of local conglomerate Fraser and Neave.

Apartments at Modena will be smaller than those under the Fraser brands. But Modena properties will have various facilities catering to 'road warriors' on the go, such as lobbies supplied with food and groceries, and 24-hour play rooms with gymnasiums and electronic game machines.

The first Modena property, with 272 units, will open its doors in Tianjin towards the end of this year or early next year. The second will be in Shanghai and another two will be in Suzhou. Frasers Hospitality will run them through management contracts.

The fifth Modena property - and also the flagship - will be ready in Singapore's Changi Business Park in Q1 2012. Frasers Hospitality will own and manage the 300-unit Modena Singapore, which is under construction at a cost of $124 million.

Guests could come from the business park, Singapore Expo and the fourth university which is under development at Changi.

Modena Singapore will be part of a 4.7 ha integrated business and lifestyle development - a $500 million joint venture between Frasers Centrepoint and Ascendas.

The economic downturn has not curbed Frasers Hospitality's ambitions for Modena. Negotiations are underway to expand the brand in Asia and Europe, and countries that it is interested in include India, France, the UK and Qatar.

Frasers Hospitality has also set itself a target of managing around 8,000 service apartments by 2010 and perhaps 10,000 apartments by 2012.

'In this economic downturn, we have a very contrarian view - we see this as an opportunity for step-up,' said Mr Choe. Modena for instance, may appeal to companies tightening their budgets, he explained.

Nonetheless, the picture for the service residences industry is not all rosy. In China and Singapore for instance, the economic downturn has pushed rates at Frasers Hospitality's apartments down by 15-20 per cent. Occupancy rates have remained relatively stable, in the 80-90 per cent range.

Frasers Hospitality has also shelved plans to set up a real estate investment trust for 'a few years' until the 'market is a lot more conducive', Mr Choe said. For similar reasons, it has postponed plans to set up private equity funds to invest in service residences.

HPL To Pump $13m Into Concorde Hotel's Renovation

Source : The Business Times, July 6, 2009

HPL Hotels & Resorts, the hotel arm of Hotel Properties Ltd (HPL), is spending $13 million to renovate and refurbish its four-star Concorde Hotel Singapore.

The work has been taking place in phases to ensure business continuity and is expected to finish early next year, general manager Andrew Khoo told BT. Response to the overhaul has been good, he said. 'Regular customers who have stayed with us under Le Meridien have said very positive things. They like what they see.'

The hotel was previously managed under the Le Meridien brand. When the contract ended in September last year, HPL Hotels & Resorts took over and rebranded it Concorde Singapore.

Meanwhile, as the travel and tourism industries deal with the fallout from the H1N1 flu outbreak, the hotel has received emails asking whether it is safe to travel to Singapore, but there are few cancellations, Mr Khoo said. Most countries have reacted pro-actively to the outbreak, he pointed out. 'People are still travelling.'

But the hotel, like most, is feeling the impact of the economic downturn. Occupancy has dropped about 15 percentage points this year from an average of 70 per cent, and room rates have come down 27 per cent. Rates start around $198++.

Bookings also tend to be made with shorter lead-time, such as two or three days, versus two to three weeks previously, Mr Khoo said.

Still, events such as CommunicAsia and Water Week have helped bolster occupancy. The hotel is managing costs by negotiating terms with suppliers, rather than cutting jobs or wages. Retrenchment benefits no one, said Mr Khoo. 'It takes one year to train someone. It's cutting your nose off to spite your face.'

Concorde Singapore is HPL Hotels & Resorts' fourth Concorde hotel - the other three are in Malaysia. HPL Hotels & Resorts is looking to expand the brand in other markets, such as Thailand, Indonesia and India.

Singapore Hotel Market 'May Firm Up In 2010'

Source : The Straits Times, May 25, 2009

IRs could boost room demand across the board, says consultancy

HOTELS are feeling the pinch of recession, with occupancy down and room rates falling in the wake of plunging visitor arrivals.

The upcoming Marina Bay Sands IR (right, background), which is set to open next year along with Resorts World at Sentosa, could increase visitor arrivals here and generate significant demand for hotel rooms, says Horwath HTL managing director Robert Hecker.-- ST PHOTO: ALPHONSUS CHERN

But the good news is that the market could stabilise as soon as next year, according to hotel consultancy Horwath HTL. It bases its optimism on the two integrated resorts (IRs) drawing plenty of visitors when they open in Marina Bay and Sentosa next year.

In the first three months of this year, occupancy fell 12per cent to 67per cent for mostly three- to five-star hotels. The crunch has already prompted a 16 per cent decline in average daily rates (ADRs) to $260.

'We are projecting a further decline for full-year 2009, but with the strengthening of the (Singdollar), the US dollar ADR remains approximately in the same range,' said Horwath HTL managing director Robert Hecker.

Hotel demand started to slip early last year, but hotels were driving their ADR growth even though occupancies were falling, he added.

Mr Hecker said the ADR was positive until last September's Formula One race, and then the situation 'caught up with Singapore. We'll see a few more months of decline'.

This decline is unavoidable, given the downturn, and the industry has basically written off this year, he added.

'It's all about 2010 and trying not to lose anything in 2009,' Mr Hecker told the Hotel Investment Conference Asia Pacific here last week.

Singapore had around 39,000 hotel rooms last year and will add 1,100 more rooms in the three- to five-star range this year and a further 20per cent next year, thanks mainly to the IRs, he said.

But the huge additional supply coming onstream concerns some analysts, given the falling tourism numbers.

Visitor arrivals recorded a 10th consecutive month of decline in March. About 10.1million visitors arrived last year, short of the 10.8million target.

Before the global downturn hit home, Singapore was aiming to attract 17million visitors by 2015.

Singapore Tourism Board (STB) data for March showed that the average occupancy rate for all hotels here fell 13percentage points to 74per cent, while the average room rate stood at $196, down 18.5per cent from the figure a year ago. Revenue per available room fell nearly 31per cent to $145in March.

But Mr Hecker told the conference that the market will hold next year.

'We believe the opening of the two IRs next year will generate significant amounts of induced demand to help absorb their new rooms and prop up the overall market,' he said. 'There will be visitors at all price points such that demand will spread across the market.'

Additional business in the Mice - meetings, incentive travel, conventions and exhibitions - industry will also be significant, he added.

Another conference speaker, Park Hotel Group director Allen Law, who is keen to invest further in Singapore, said a lot will depend on how the IRs release their hotel rooms. It will have to be in phases so as not to flood the market, he told The Straits Times.

Horwath believes occupancy this year and the next will average 65 per cent to 70per cent, with ADR hovering around $250 to $255.

Unlike the STB, which surveys all hotels, its forecast is primarily for those in the three-to five-star range.

Meanwhile, the hotel investment market will remain subdued going into next year, according to Jones Lang LaSalle Hotels' managing director of Asia investment sales, Mr Mike Batchelor.

He said there would be buying opportunities and postponement of new projects while a few deals are being discussed now.

In the general Asia-Pacific market, institutions and funds are selling while the buyers are Asia-based high-net-worth individuals and families.

Mr Batchelor told the conference that hotel owners should prepare for further asset value write-downs, but he sees light at the end of the tunnel.

So does property tycoon Kwek Leng Beng, who attended the conference. He told The Straits Times that he would restart the South Beach project in Beach Road next year.

City Developments, of which he is executive chairman, announced last November that it was shelving the $2.5billion leasehold project due to the economic turmoil and high construction costs.


Falling rates

Singapore Tourism Board (STB) data for March shows that the average occupancy rate for all hotels here fell 13percentage points to 74per cent, while the average room rate stood at $196, down 18.5per cent from a year ago.

Horwath believes occupancy this year and the next will average 65per cent to 70per cent, with average daily rates hovering around $250 to $255. Unlike the STB, which surveys all hotels, its forecast is primarily for those in the three- to five-star range.

New Hotel Oens In Clarke Quay

Source : The Business Times, May 8, 2009

It banks on area's popularity and lack of hotels there even as tourist arrivals are falling

AGAINST a backdrop of declining numbers of tourists to Singapore, another hotel, the Park Hotel Clarke Quay, has opened this month.

The new Park Hotel Clarke Quay is dangling carrots such as free Internet access, free meals and even a free river taxi ride to attract guests. -- ST PHOTO: LIM SIN THAI

Like many others braving the downturn, the brand new 336-room four-star hotel in Unity Street is dangling a special package with freebies.

Guests who book between now and Aug 31 will get, for $198 and upwards, a room with free Internet access, free breakfast and lunch, free non-alcoholic mini-bar drinks and a free river taxi ride, on top of discounts on laundry, drinks and food.

Those who pay $238 and upwards for a Park Privilege Club room will also get free afternoon tea and evening cocktails, free use of the Club Lounge facilities and free laundry services.

Many hotels have rolled out similar promotions. Far East Organization's boutique hotel Quincy opened in March with a $208 flat rate (excluding taxes) covering all its services, such as three meals, Internet access and limousine pick-up from the airport.

The offers are a sign of how anxious hotels are for their share of a shrinking pie. In March, visitor arrivals fell for the 10th straight month compared with the same period last year.

The downward trend forced hotels to slash their average room rate to $196 in March. It marked the first time in nearly two years that the average room rate has dropped below $200.

But the Park Hotel Group remains optimistic. Based on the 'strong' booking response from leisure and business travellers, its director Allen Law forecasts 80 per cent occupancy by August. The average hotel occupancy was 74 per cent in March.

He said: 'Clarke Quay is an area which a lot of tourists want to visit, and there are not many hotels there. We think we've hit a good market segment.'

Another New Hotel Opens

Source : The Straits Times, May 7, 2009

TO A backdrop of declining numbers of tourists visiting Singapore, another hotel, the Park Hotel Clarke Quay, has opened this month.

Like many others operating in this less-than-stellar climate, the 336-room four-star hotel at Clarke Quay is dangling a special package chockful of freebies. -- ST PHOTO: LIM SIN THAI

Like many others operating in this less-than-stellar climate, the 336-room four-star hotel at Clarke Quay is dangling a special package chockful of freebies.

Many hotels, including another one which opened recently, have rolled out similar value-added promotions.

Far East Organization's boutique hotel, Quincy, opened in March with a $208++ flat rate covering all its services, such as three meals, Internet use, and limousine pickup from the airport.

The offers are a sign of how anxious hotels are for their share of a shrinking pie.

For the 10th straight month, visitor arrivals in March were down compared to the same period last years.

The downward trend forced hotels to slash their average room rate to $196 in March. It marked the first time in nearly two years the average room rate has dropped below $200.

Despite such worrying signs, the Park Hotel Group remains optimistic.

Based on the 'strong' booking response from leisure and business travellers alike, the group's director Mr Allen Law forecast an 80 per cent occupancy by August. In comparison, the average hotel occupancy rate for March was 74 per cent.

'Clarke Quay is an area which a lot of tourists want to visit, and there are not many hotels there. We think we've hit a good market segment,' said Mr Law.

Read the full story in Friday's edition of The Straits Times.

Resorts World Expects Strong Hotels Demand

Source : The Business Times, April 22, 2009

RESORTS World at Sentosa (RWS) is expecting strong demand for its hotels from potential corporate clients, based on the positive response to sneak peaks of its designer hotel rooms.

'We fully anticipate over-demand,' RWS vice-president of rooms, Andrew Hickey, told BT. Hotel bookings will open in the second half of 2009. Meanwhile, RWS is also seeing enquiries for its MICE facilities.

Four of the six hotels - Maxims Tower, Hotel Michael, Festive Hotel and the Hard Rock Hotel Singapore - will be launched in the first quarter of next year when the $6.59 billion integrated resort opens its doors. The remaining two hotels, Equarius Hotel and Spa Villas, will be launched during the latter half of 2010.

The different hotels will 'provide a variety of guest experiences', said Patrick Burke, principal architect for Michael Graves & Associates.

For instance, the premier, 120-room Maxims Tower is mostly by invitation only and boasts 24-hour butler service while the 390-room Festive Hotel caters to families.

The six hotels will collectively add 1,800 rooms to the local hotel industry.

RWS, which expects to employ 10,000 staff in all, has over 500 on its payroll at present, of which 80 per cent are Singaporean.

Thirty per cent of the 10,000 staff will be employed in the casino while another 30 per cent will be stationed at the Universal Studios theme park. The remaining 40 per cent will be engaged by the hotels and corporate services.

Raffles Hotel Reported To Be Going On Sale

Source : The Straits Times, April 17, 2009

THE wealthy Arab owner of Raffles Hotel is reported to have put the local icon back on the market in a bid to offset billion-dollar losses racked up in the financial meltdown.

Saudi Arabian Prince Alwaleed bin Taal Alsaud (next picture), who owns Raffles Hotel, is said to have put the heritage icon back on the market in a bid to offset billion-dollar losses racked up in the financial crisis. -- PHOTOS: ST FILE PHOTO, BUSINESS TIMES, ISTOCKPHOTO


Prince Alwaleed Bin Talal Alsaud of Saudi Arabia is said to have put a price tag of $674 million on Raffles, the iconic heritage hotel on Beach Road.

London's Times newspaper said yesterday that Fairmont Raffles Hotels International is seeking buyers for Raffles and other hotel assets, despite a severely depressed market.

If true, this is the second time in as many years that the Singapore landmark has been the subject of a sale.

However, the communications manager for Prince Alwaleed's Kingdom Holding Company, which has a controlling stake in Fairmont Raffles, said early this morning that the Prince was not seeking a buyer for Raffles Hotel.

Last May, a proposed sale of Raffles Hotel to a consortium led by former Credit Suisse banker Mark Pawley failed to materialise for reasons that remain unclear. The deal was said to have been tagged at about $650 million.

The hotel is more than 120 years old and gazetted as a national monument.

Built by the Sarkies Brothers in 1887 on the site of a 10-room bungalow, the hotel expanded quickly and its fame grew far and wide, partly thanks to it being mentioned in the works of writers Somerset Maugham and Joseph Conrad.

In 2005, it was part of a hotel portfolio belonging to Raffles Holdings - since delisted - that was sold to US-based Colony Capital for $1.7 billion.

Colony Capital later merged that portfolio with Fairmont's assets to create Fairmont Raffles. Other local assets owned by Fairmont Raffles include Fairmont Singapore and Swiss�tel The Stamford.

The group has 123 hotels under the Fairmont, Raffles, Swiss�tel and Delta brands.

The Saudi Arabia-based firm is one of the world's leading hotel investors.

But industry sources told The Times the Saudi Prince is considering a range of disposals after a sharp fall in value of some of his biggest investments.

The Evening Standard in Britain yesterday said he is also looking for a buyer for the Savoy, London's most famous hotel, which could be worth more than £200 million (S$445 million). Kingdom Holding has denied this report as well.

Prince Alwaleed's investments have taken bruising hits, most notably in American banking giant Citigroup. His initial 3.9 per cent stake has plunged in value from more than US$50 a share two years ago to about US$4 today.

Last October, the Prince tried to stabilise the situation by increasing his stake to 5 per cent, but the shares have continued to nosedive.

KHC also lost a bundle of cash on its investments in Songbird Estates, the majority owner of London's Canary Wharf financial complex, Euro Disney and Rupert Murdoch's News Corporation.

Kingdom Hotel Investments, a small London-listed vehicle in which the Prince has a 55 per cent stake, has also lost more than two-thirds of its value in the past 12 months.

Fortune magazine said his wealth has fallen from US$21 billion to about US$13 billion (S$19 billion) over the past year. - BLOOMBERG

Hotel Occupancies, Room Rates Expected To Drop: CBRE Hotels

Source : The Business Times, April 14, 2009

Additional supply of rooms is likely to result in further softening of market

SINGAPORE'S hotel industry will continue to see a downward trend as an additional supply of rooms is injected into the market.

Going by the Singapore Tourism Board's (STB) forecast of 9-9.5 million visitors this year, hotel occupancies are likely to drop to 71 per cent, while room rates will fall about 12.5-15 per cent, said Robert McIntosh, executive director of CBRE Hotels (Asia-Pacific). As such, revenue per available room (revpar) should decline 23 per cent, he added.

For 2008, the average occupancy rate was 81 per cent while the average room rate was $246. Revpar was $199.

Singapore has close to 10,000 rooms in the four and five-star categories expected to come onstream by the end of 2012, representing a 39 per cent jump in supply. 'With declining occupancy and revpar levels already apparent, the addition of new supply will likely result in a further softening of the market in the short term,' said CBRE Hotels senior consultant Alison Poore.

At the same time, Singapore's 'underlying market fundamentals' such as its infrastructure, steady stream of attractions and destination marketing initiatives are sound, placing it in good stead to respond swiftly when the economy starts to pick up. The launch of the two integrated resorts will also act as a driver.

In comparison, Bangkok will see over 6,000 four and five-star hotel rooms enter the market over the same time period, bringing the total supply of rooms in these categories to over 31,000. Faced with the double whammy of political upheaval and lower tourism demand on the back of the economic environment, hotels in Bangkok are likely to see further declining demand in the short term.

Mr McIntosh also pointed out that the increasing supply of hotel rooms can also lead to greater demand, thanks to factors such as additional marketing by individual hotels, reduced prices and new hotels catering for different segments.

'This has positive implications for employment, demand for airline seats and expenditure in restaurants and other tourism attractions,' he said, adding that extra supply can, however, affect existing hotels negatively as occupancies and room rates tend to fall.

Hotel Glut In SE-Asia

Source : The Straits Times, April 13, 2009

KEY South-east Asian cities will suffer a glut of hotel rooms for the next three years as the economic slowdown hits the travel sector, a global real estate consultancy said on Monday.

Key South-east Asian cities will suffer a glut of hotel rooms for the next three years as the economic slowdown hits the travel sector. --PHOTO: GRAND COPTHORNE WATERFRONT HOTEL

A CB Richard Ellis (CBRE) survey of five cities including Singapore, Bangkok, Hanoi, Ho Chi Minh City and Kuala Lumpur showed 23,000 four- and five-star hotel rooms will be potentially available from 2009 until the end of 2012.

'Despite the likelihood that some projects will be delayed or even cancelled, a significant number of hotel properties will open across the region in the next two to three years,' said Robert McIntosh, CBRE Hotels regional executive director. 'The additional supply, combined with declining demand, will present a challenging period for hotels in the short to medium term.'

In Singapore, which is already in recession and hit by falling tourist arrivals, almost 10,000 new rooms in the category will come onstream by the end of 2012 on top of the 25,700 in supply now, the consultancy said.

'Until recently, there was general consensus that Singapore could not only absorb the increase in supply, but that additional rooms were essential to accommodate the future growth in visitor arrivals,' said Alison Poore, CBRE Hotels senior consultant for South-east Asia.

'However, with declining occupancy... the addition of new supply will likely result in a further softening of the market in the short term,' she said.

Looking beyond the downturn, Singapore's tourist sector stands to benefit from the rise in hotel rooms when the global economy returns back to health, CBRE said.

'Singapore's underlying market fundamentals remain strong,' said Ms Poore. 'The ongoing success of branding and destination marketing initiatives combined with excellent infrastructure and a steady stream of attractions will ensure Singapore can respond quickly when the economy shows signs of recovery.'

In Bangkok, the number of four- and five-star hotel rooms will rise by more than 6,000 by the end of 2012 - a concern that is increased partly because of the ongoing political unrest in the Thai capital, said CBRE.

'Supply has increased substantially over the past two years, and the addition of further supply in the future is a cause of concern,' the consultancy said. 'The performance of hotels in Bangkok will be further impacted by declining demand driven by the economic crisis and recent political unrest.'

In Hanoi, new rooms will increase by 75 per cent to about 7,000 while in Ho Chi Minh City, it will rise by 38 per cent to more than 7,000, said the CBRE.

The consultancy said new rooms in Kuala Lumpur will increase by 10 per cent to 20,400 for the same period. -- AFP

Top-End Hotel Opens On Sentosa

Source : The Business Times, March 31, 2009

THE ultra-luxurious Capella Singapore on Sentosa opened its doors yesterday.

With room rates starting at $750 a night, it is the only top-end hotel to open here this year.

Guests have to pay $750 for a night's stay in a standard room, which is almost twice the size on an average hotel room in Singapore. -- ST PHOTO: DESMOND LIM

Despite the poor economic conditions and global paring down of travel budgets, the hotel's general manager, Mr Michael Luible, expressed optimism that it would do well because it was a 'unique product'.

He said the hotel would run on the philosophy that whatever guests want, they will get. For example, they can check in whenever they want.

This week, the Capella will be where British carmaker Rolls-Royce launches its new model 200EX; fashion house Gucci will also flaunt its spring collection there.

The 111-room hotel sits on a site more than 12ha in size. It has 61 'standard' rooms and 11 suites, and each of its 38 villas has its own swimming pool.

A standard room, at $750 a night, is 77 sq m in size - almost twice the size of an average 40 sq m hotel room here.

The private villas, starting at about $1,800, offer at least 133 sq m of space.

The property is the first for the luxury brand in Asia and will be its flagship in the region, said Mr Horst Schulze, the chairman and chief executive officer of the West Paces Hotel Group, the parent company for the chain.

Deputy Prime Minister S. Jayakumar was the guest of honour at the opening of the hotel, which departed from the practice of having a soft opening ahead of its official debut.

To mark its opening, the hotel is offering guests who are staying two nights an extra night free. This deal is available till the end of May.

From Four-Star To Five After $80m Renovations

Source : The Business Times, March 31, 2009

PARK Hotel Group is sinking $80 million in the renovation of Park Hotel Orchard, which will reopen in the second quarter of 2010 as a five-star hotel.

Modernistic: The Park Hotel Orchard will close from tomorrow for renovations and will be rebranded as Grand Park Orchard

The four-star Park Hotel Orchard will close from tomorrow to facilitate the renovations and will be rebranded as Grand Park Orchard, the group's flagship hotel. Rates will start from $350.

The group will also be soft launching its 336-room Park Hotel Clarke Quay on May 1. Allen Law, director of Park Hotel Group, expects occupancy for the first month of operation to come in at 70 per cent, and to build up to the high 80s within three months.

Commenting on the performance of the group's hotels so far this year, Mr Law said: 'We do see a slight drop (in revenue per available room) compared to 2008, down 10-15 per cent. However, it is still a little above our 2007 level, which is healthy.'

In comparison, revpar for the group's hotels in 2008 was up 22-25 per cent year on year, he said.

When it reopens next year, the Grand Park Orchard will feature 309 rooms as well as a four-storey retail podium. The 83,000 square foot podium will house flagship stores of international brands.

The group's other properties include Park Hotel Hong Kong, Grand Park Otaru in Japan and Grand Park City Hall in Singapore.

Meanwhile, Capella Singapore, the luxury hotel on Sentosa Island, opened yesterday. The hotel - which comprises a presidential manor, 38 villas, 11 suites and 61 guest rooms - sees rates starting at $750 for guestrooms and suites and $1,800 for the villas.

Capella is offering various introductory packages, including a complimentary third night for every two nights' stay, valid through May 31.

Park Hotel Orchard To Get Makeover

Source : The Straits Times, March 31, 2009

AN ORCHARD Road fixture will be revamped and given a brand-new look by next year.

The four-star Park Hotel Orchard, located across Bideford Road from Paragon Shopping Centre, will be closed for renovations from tomorrow.

An artist's impression of the revamped Park Hotel Orchard, which will be transformed from a four-star to a five-star hotel with four storeys of retail. It will also change its name to Grand Park Orchard. -- PHOTO: COURTESY OF PARK HOTEL GROUP

When it reopens by the second quarter of next year, it will have been transformed into a five-star hotel with four storeys of retail space.

Its upgraded rooms and suites will also feature state-of-the-art technology, said its owners, the Park Hotel Group.

It will also boast a new name - Grand Park Orchard.

This is not the first name change for the 25-year-old hotel, which is still known among many Singaporeans by its first name - the Crown Prince Hotel.

The $80 million makeover has been in the works since it was bought over by Park Hotel Group in 2005.

Once an Orchard Road landmark with its eye-catching outdoor capsule lifts, the hotel looks distinctly dated now, overshadowed in recent years by newer and swankier neighbours such as Paragon and Ngee Ann City malls.

Other hotels along the stretch, such as the Meritus Mandarin, have already embarked on renovations.

Speaking at the unveiling event yesterday, Park Hotel Group director Allen Law said the revamp will create a new fashion-themed hotel.

Its familiar white and brown facade, for example, will be replaced by a glass one with a herringbone design more commonly seen in fabric.

'The idea is to transform the hotel into a fashionable icon. The facade is like a dress that clothes the building, and turns it into something elegant and stylish,' said Mr Law.

The facade will also have an eight-storey-tall LED screen for advertisements. At 27m by 21m, it will be one of the largest such screens in Orchard Road.

The 83,000 sq ft retail podium will have double-storey flagship stores of international brands, with entrances in Orchard Road.

Meanwhile, the hotel's lobby, currently on the ground floor, will be moved to the fourth floor.

Rates will likely start from $350 a night for a standard room, about $100 more than the current price.

The group's senior vice-president Mohamed K. Rafin is optimistic that business will roll in when the hotel reopens next year.

'By that time, the integrated resorts would have come up, and there would be an infusion of travellers,' he said.

Details on the retail tenants and room interiors will be made available in the coming months, Park Hotel Group said yesterday.

Designer Hotels The Next Big Thing

Source : The Business Times, March 27, 2009

Hotelier Ted Fang wants to create a new breed of hotels to target independent-minded travellers

THE next big thing in the hotel industry is something which will be coined 'designer hotels', or so believes hotelier Ted Fang. And that's exactly what he plans to do next.

Mr Fang: 'A designer hotel is a cross between a boutique and luxury hotel. Unlike a typical boutique hotel with about 50 rooms, we're aiming for at least 100 rooms with designer fittings created by international designers'

The Singaporean entrepreneur made his mark in the hotel industry when he acquired the master franchise of Day's Inn hotels in China (including Greater China) in 2003. With 58 hotels already in the chain, the Day's Inn brand is already the fastest growing three and four star hotel chain in China.

Now, though, he wants to go upscale, so Mr Fang - who runs the company Frontier Group with his brothers Harry and David Tan - is looking to create a new breed of hotels to target a growing breed of independent-minded travellers.

'Our idea of a designer hotel is a cross between a boutique and a luxury hotel,' says Mr Fang. 'Unlike a typical boutique hotel with about 50 rooms, we're aiming for at least 100 rooms with designer fittings created by international designers.

'But although it is designer, it won't be a six-star super luxurious offering. Instead our target market really would be a hip business traveller who doesn't want to live somewhere too staid and wants something that is comfortable yet fashionable.

'Imagine a W Hotel but less pricey and more functional and you pretty much get the picture.'

This new brand of hotels marks the company's first move to create a completely new brand separate from the already established name of Day's Inn.

He adds that the brand will be created by the brothers as an expansion to their hotel management business by buying over properties to gain more control over the hotels.

Through Tera Capital - an investment management company started and run by Mr Fang, the brothers are also looking to lease or purchase existing properties/projects in China.

Previous Day's Inn projects were franchise/ma nagement deals between Frontier and developers/owners in China. Frontier does not own any of the hotels outright, a situation Mr Fang says will change.

'In a short span of four years, from one Day's Inn hotel in China there are now 58,' says Mr Fang. 'Having done well, we think that now is the right time to take that step into actual ownership of hotels.'

Especially as he believes the hospitality market is on an upward trend.

He says: 'The hospitality market will continue to grow very rapidly and you will see a boom within the next five years in China's consumer market.

'As China becomes less reliant on export-oriented businesses, the domestic market and middle class will grow and expand very quickly in the coming years. And we are positioning ourselves to benefit directly from this by being the dominant player in our markets. We still have a very long road of growth ahead of us.'

Although the company has been looking into ownership for awhile, ironically it was the economic crisis that pushed them over the edge.

Muses Mr Fang: 'Previously, land and property prices were just too expensive. It didn't make economic sense to buy. Especially with the room rates of the Day's Inn (around US$50) and Day's Hotels (around US$90) so affordable, the numbers simply didn't add up.

'Now, with prices of property so much lower, our calculations show that it now makes economic sense to buy. In fact, with prices so attractive, I'm going to be bullish and say if we don't buy now, then when?'

Hard Rock Hotel To Open On Sentosa In 2010

Source : The Business Times, March 27, 2009

A HARD Rock Hotel will be one of four hotels to open at Resorts World at Sentosa (RWS) in the first quarter of 2010.

Collectively, the four hotels will provide about 1,350 rooms. The other three slated to open in Q1 2010 are Maxims Tower, Hotel Michael and Festive Hotel.

'The Hard Rock Hotel Singapore is a welcome addition to our portfolio,' said Hard Rock International's CEO Hamish Dodds.

The five-star, US$223 million hotel will have 360 rooms, conference facilities and a ballroom that can seat up to 7,300.

Room rates are likely to be 30 per cent dearer than hotels in the surrounding area, as is usually the case with hotels in other theme parks, said RWS chief executive Tan Hee Teck.

Mr Dodds acknowledges the travel slump sparked by the global economic downturn has hit hotel room rates and occupancy levels, but is confident the Hard Rock brand will outperform its competitors in the four to five-star category.

Hard Rock International, which now has 124 Hard Rock Cafes and nine hotels/casinos, is expanding in the US and overseas.

Major projects are on the way in Macau and Penang - scheduled to open this year - as well as in Palm Springs, Atlanta and Panama in 2010. Hard Rock Hotels will also open in Dubai in 2011 and Abu Dhabi the following year.

Despite the tough economic environment, Hard Rock International grew its top and bottom lines last year. Top line was up 7-8 per cent, said Mr Dodds, who declined to reveal figures.

The $6.59 billion RWS project will have a total of 1,800 rooms spread over six hotels, plus a casino and attractions such as South- east Asia's only Universal Studios theme park.

The project expects to generate more than 9,000 jobs by the end of this year and a total of 10,000 when it is fully up and running. It expects 15 million visitors in its first year.

Check-Ins Dip, So Hotels Must Check Out Options

Source : The Business Times, March 26, 2009

The period of rapid and easy growth is over and the sector now faces the combined pressures of reduced demand and increased supply

HOTELS in Singapore have witnessed a spectacular performance over the past few years, reaching unprecedented highs in 2008. Singapore hotels reaped the benefits of strong tourism demand, achieving a record in average room rates at $246 in 2008, and garnering a record $2.1 billion in room revenue, a 12.1 per cent increase over 2007.

Hotel room rates (also called average daily rates or ADRs) have grown at an impressive pace since 2004, with a compounded annual growth rate of over 19 per cent. The strength of this performance is unmatched in many markets, and is testament to Singapore's image as a vibrant destination for both business and leisure. The result is that revenue per available room (RevPAR) grew from approximately $100 to $200 between 2004 and 2008.

But Singapore's record-breaking run was to end in mid-2008. Since June 2008, visitor arrivals have declined, and as the gravity of the current financial crisis began to unfold, changing consumer sentiment across the region saw travel budgets and plans cancelled or restricted, impacting hotel performance.

Recent indications suggest that performance in 2009 will continue to weaken. In January 2009, hotel rates declined by an estimated 11.7 per cent year on year, while occupancy levels dropped to 67 per cent (the lowest level since the Sars crisis).

While the decline in performance may in part be due to the occurrence of Chinese New Year in January, much of it is attributable to the deteriorating worldwide economy and poor consumer sentiment.

The extent to which falling demand for hotel rooms impacted on different hotel tiers is difficult to determine at this stage. However, in assessing the most recent data in January 2009 compared to January 2008, economy hotels in Singapore saw a 26.8 per cent decline in RevPAR while hotels in the luxury tier registered a drop of 32.4 per cent over the same period.

This suggests that while all hotels have suffered a considerable decline in RevPAR, the impact is less apparent in the economy sector vis-à-vis the luxury market.

Uncertain future

Looking forward, there are few signs of the global economic crisis abating, and a high degree of uncertainty regarding the future remains. Economists are revising market projections on a daily basis, superceding previous forecasts as the market continues to fluctuate.

The difficulty in forecasting hotel performance is that no one really knows how deep or how protracted the economic crisis will be. However, at a fundamental level, future hotel performance in Singapore will primarily depend on two key drivers: the demand for, and supply of, hotel rooms in the market.

In January, the United Nations World Tourism Organisation (UNWTO) projected international tourism to either stagnate or decline by up to 2 per cent this year. While tourism in Asia is expected to fare slightly better and retain positive growth rates, projections will likely be revised downwards if the global economy continues to deteriorate.

The Singapore Tourism Board (STB) has also adjusted previous forecasts for 2009, with visitor arrivals now expected to be nine to 9.5 million, a decline of between 5.9 and 10.9 per cent on 2008 figures.

In addition to shrinking demand, Singapore is expected to see the largest increase in room supply across South-east Asia in the next few years. According to CBRE Research, an estimated 32 new hotels with over 12,000 hotel rooms are expected to enter the Singapore hotel market by 2012. Assuming all projects proceed as planned, total room nights available will increase by 40 per cent to reach 15.2 million in 2012.

Impact of IRs

The largest contributors to future room supply are the two integrated resorts (IRs) which offer a combined 3,978 rooms. At the opposite extreme, conversions from historical buildings into creative boutique properties will provide diversity in the market.

In forecasting future supply in the current environment, it is inevitable that some projects will experience delays in construction, and the probability that a project will face postponements or even cancellations increases the later the hotel is expected to open. In the current economic climate, difficulty in accessing finance from capital markets may force some investors in the smaller projects to reassess their developments.

While the IRs will be the largest contributors to future supply, they will also generate significant additional demand for both the tourism industry, and more broadly, the economy.

In addition to the gaming facilities, the massive increase in conference and exhibition space will enable Singapore to host larger business and MICE (Meetings, Incentive Travel, Conventions and Exhibitions) meetings, and further build on the Republic's reputation as a venue for top international meetings. Furthermore, leisure visitors will be drawn to new attractions and events hosted in the new IRs, including Universal Studios, Marina Life Parks and the new ArtScience Museum.

So how will hotels perform in 2009? If STB visitor arrival forecasts hold true, and the fundamental ratios between arrivals, length of stay and visitor days remain stable, occupancy levels may decline to around 71 per cent in 2009.

However, CBRE Hotels believes demand will show a strong recovery in 2010, driven by additional attractions and, hopefully, increased stability in the global economy.

CBRE Hotels is of the opinion that the fall in occupancy will impact room rates which are likely to decline by 10 to 15 per cent in 2009, to reach an average room rate of between $209 and $221. This would still be above 2007 levels. RevPAR will then face the most significant decline, and it is likely to drop by 20-25 per cent, to reach an average of between $148 and $158. The decrease in RevPAR represents a downward revision from previous industry estimates and is due to declining performance and continued uncertainty in the global economy.

At present, it is difficult to predict what will happen in 2010 and beyond. While the additional supply will have a negative impact on room rates, this will be countered by the potential improvement in the economic environment and the new demand drivers. Nevertheless, occupancy levels appear likely to take several years before they recover to 2007 levels.

Fortunately, the underlying fundamentals in the Singapore market are extremely strong. In addition, the Singapore government has announced a variety of initiatives to support businesses in general, and the tourism industry specifically.

The recent $90 million BOOST (Building on Opportunities to Strengthen Tourism) package aims to generate demand through activities such as global marketing campaigns, value-focused packages, funding support and training.

Hoteliers should make sure that they participate and throw their support behind these proposals, as a way of helping to mitigate the adverse impact of the downturn. There will be changes and challenges over the short term. For example:

# Hotels will need to be more innovative by offering value-added packages and benefits such as free breakfast, wireless Internet, spa vouchers or complimentary transportation.

# Hotels will be looking to further develop and nurture their existing customer base, revisiting customer preferences and requirements and exploring other opportunities to provide value to loyal existing customers.

# Long-haul travel is also being sacrificed for short- and medium-haul destinations. This is particularly true for leisure travellers. Hotels will be exploring opportunities to attract regional demand and provide packages which offer a strong value proposition.

# Hotels will need to ensure that their product and services are clearly differentiated from competitors. A strong marketing strategy targeting both existing and new customers through a variety of channels is essential to ensure sufficient publicity during competitive times.

# Finally, downturns also present opportunities to focus on efforts which are often overlooked in busier periods. Hotels could go ahead with refurbishment and upgrading of facilities during quiet periods; this is less likely to impact overall performance and will ensure that they are well-placed for a market recovery.

In the short term, the hotel market is going to be under the combined pressures of reduced demand and increased supply. The extraordinary period of rapid and easy growth is over. The next few years will be challenging and this is when well-managed and branded hotels in strong locations will outperform the general market.

The writer is executive director, CBRE Hotels,Asia-Pacific

Far East Priming For Market Swing With Sub-Brands

Source : The Business Times, March 26, 2009

Village will be the first of such labels, it says at launch of hotel Quincy in Orchard Road

FAR East Organization, which unveiled its new Orchard Road hotel Quincy yesterday, said that it would launch hospitality sub-brands as it gets ready to welcome more tourists to Singapore in the coming years.

Quincy: Had its soft opening in February and achieved occupancy of 76 per cent that month. It kicked off with a rate of $198++ but has since raised it to $208++

The first of these sub-brands - called Village - will debut in the third quarter of this year. It will group 8-9 Far East hotels and serviced apartments with 'similar attributes' under one umbrella. Boutique hotel Quincy will not be part of the Village brand.

'By launching a brand, we will better articulate the hospitality offerings from the Far East group,' said Chia Boon Kuah, executive director of Far East's hospitality business.

Far East has currently six hotels and 11 serviced residences. The Village brand will group those properties with a 'village' feel, such as Changi Village Hotel.

Mr Chia said that the 108-room Quincy, which is located on Elizabeth Walk, has been a success so far. The hotel had its soft opening in February and achieved an occupancy of 76 per cent that month. It kicked off with a rate of $198++ for its opening month and has since raised it to $208++.

'There is no such product on Orchard Road,' said Mr Chia.

In what is believed to be an industry first in Singapore, Quincy offers a distinctive all-inclusive stay - the room rate includes a limousine transfer service from the airport, all three meals at the hotel, all mini-bar amenities, and cocktails and drinks each evening.

Most of the clientele so far have been corporate guests.

Mr Chia told BT that the property group opened its hotel even amid the economic downturn as it was confident that tourist arrivals in Singapore would pick up. 'With the current climate, we believe that intra-Asean and intra-Asian travel will increase.'

Quincy, in particular, is located within walking distance of the main shopping belt of Orchard Road. Mr Chia believes that upcoming malls - including Far East's Orchard Central and CapitaLand-Sun Hung Kai's Ion Orchard - will add to demand for Quincy's rooms.

Hotels Cut Room Rates As Occupancies Slide

Source : The Business Times, March 23, 2009

Room rates fall up to 20%; corporate demand slows as companies cut cost

IT'S known that what goes up must come down, but in this case, the inevitable may be coming a little quicker and sharper than expected as lower occupancies force hotels to cut room rates.

At the Rendezvous Hotel for example, corporate rates have gone down 20 per cent to $190++ and walk-in rates have dropped 20 per cent to $220++. Average occupancy is hovering at 70 per cent, versus last year's 80 per cent. The hotel aims to beef up occupancy through a lower room rate so as to reclaim its 80 per cent occupancy level.

The Royal Plaza on Scotts has adjusted average room rates downward by 12 per cent, due to weakening demand for high end products such as club rooms and suites, says Patrick Fiat, general manager. Its room rates currently start from $198++.

At the Marina Mandarin, rates are down year on year but the hotel declined to give figures. Occupancies for Q1'09 were as expected, but rates are 'under pressure.'

One of the reasons for this is a drop in business travel as companies try to keep expenses down.

'Since the last quarter of last year, we observed that there has been a slowdown in the corporate sector. Currently, the business trend is still on the slow side, hence we have adjusted the rates to further suit our client spending power,' said a spokesperson from the Marina Mandarin.

Over at the St Regis Hotel, room rates for both frequent individual travellers (FIT) and corporates have been lower for the first two months of the year compared to the corresponding period in 2008, according to Cheryl Ong, its director of marketing communications. 'Occupancy is under pressure with lesser in-bound travel into Singapore,' she added, but declined to comment on actual figures.

Hotels are also offering value-added packages. The Novotel Clarke Quay, for instance, has tweaked rates by between 5-10 per cent for key corporate clients. Those that forego the discount can look forward to other perks such as transportation and Internet service, said general manager Heinz Colby.

And as some consumers trade in their five-star hotel stays for value-for-money accommodation, hotels in the three and four star range are expecting to reap the benefits, although such establishments won't escape unscathed either.

'There are clients who are looking for cheaper accommodation. Hence, we are also affected. For leisure, we see a decline in visitor arrival especially for long haul travel,' said Kellvin Ong, general manager of the four star Rendezvous Hotel.

'There are also other factors which may affect occupancy. New kids on the block are sprouting, which may shrink the pie,' he added.

Indeed, another hurdle facing the industry, aside from the slump in visitor arrivals, is the injection of supply that the market will see this year as new hotels come onstream.

The recently launched Ibis Singapore - a no-frills, three star hotel by the Accor group - offers rooms starting from $138 per night. Other hotels that are expected to open their doors this year include the 336-room Park Hotel Clarke Quay.

According to a Kim Eng report, an estimated 2,000 hotel rooms from the Marina Bay Sands and a further 1,640 rooms from other hotels are slated for completion in 2009. This would raise the total available room-nights by 12 per cent to 11.7 million for 2009. There are currently 39,000 hotel rooms in Singapore, said the Singapore Tourism Board (STB).

If the integrated resorts (IR) fail to draw the crowds, Kim Eng estimates that average occupancy rate (AOR) could fall to 55 per cent by year end, and to 50 per cent by end 2010 - not far from the lows plumbed at the height of the Sars outbreak in May 2003, when AOR fell to 34 per cent.

On the flip side, a successful showing by the IRs coupled with the positive impact of the various global stimulus packages and the efforts of STB's $90 million BOOST scheme could stabilise AOR at 60-65 per cent for 2009 and 2010, Kim Eng reckons.

Meanwhile, hotels are banking on recent efforts by STB and tie-ups with airlines such as Singapore Airlines to bring the tourists back.

'We are expecting last minute bookings from the region as the various airlines have come up with promotions to stimulate travel. We are optimistic that there will be business out there although the numbers have not yet shown it,' said Mr Ong.

STB's figures for January 2009 saw average room rate (ARR) sliding 11.7 per cent year on year to $209, while AOR dropped 17.7 percentage points to 67 per cent, well below last year's overall AOR of 81 per cent. Revpar (revenue per available room) fell 30.2 per cent year on year to $140. Hotels pulled in $124 million in room revenue, a staggering 29.9 per cent less than the corresponding month in 2008.

In contrast, for 2008 as a whole, ARR was $246, an increase of 21.9 per cent over 2007. For the first time since 2003, AOR was down by six percentage points to 81 per cent while Revpar for the year reached $199, up 13.5 per cent from 2007.

For January 2009, luxury and upscale hotels suffered larger drops in ARR and Revpar, while hotels in the economy tier - budget hotels in outlying areas - emerged in a better position.

However, economy hotels still saw a 3.4 per cent year on year dip in ARR to $101 for January, and a 26.8 per cent fall in Revpar to $66.

Empty Rooms, Falling Rates May Dog Hotels

Source : The Business Times, January 14, 2009

Hoteliers eye leisure visitors as corporate business set to fall

Hotels in Singapore are in for hard times, with analysts saying that double digit falls in room rates and occupancies could be on the cards in 2009.

Hospitality consulting firm HVS International expects revenue per available room (RevPAR) to decrease to $171 in 2009 and $154 in 2010 - from about $203 in 2008. This translates to falls of 15.8 per cent in 2009 and 9.9 per cent in 2010. In 2007, RevPAR was $175.





















Likewise, marketwide occupancy is expected to see negative growth during the first half of 2009, although HVS expects the market to gain momentum in the middle to late 2009.

Marketwide occupancies will fall to 75 per cent and 72 per cent by 2009 and 2010 respectively, HVS said. By contrast, occupancy for 2008 is estimated to be 82 per cent. 'Looking forward, an increase in supply not met by demand levels will lead to decreased occupancy projections,' said David Ling, HVS managing director for Asia.

Bill Barnett, managing director of hospitality consulting firm C9 Hotelworks, also has a sombre set of numbers. 'ARRs (average room rates) look to retreat back to the levels in 2006. RevPAR is forecasted to decline in double digits. Occupancies are set to decline in the region of 7-10 per cent,' Mr Barnett predicted.

And in a Dec 18 note, DBS Group Research estimated that RevPAR will drop by 15 per cent this year from FY 2008 levels.

Hotels BT spoke to said that so far, they are holding rates firm. However, many are offering packages to draw leisure travellers as business from corporate travellers is expected to fall this year.

Hoteliers are certainly aware that tough times are ahead. 'There is a definite softening of the market, in line with the global economic slowdown,' observed Ignacio Gomez, regional vice-president and general manager of Four Seasons Hotel Singapore. Similarly, a spokesperson for Hong Leong Group said that 2009 is expected to be a 'very challenging' year.

The Royal Plaza on Scotts told BT that it expects room rates to decline by 5 per cent this year, while occupancy is forecasted to come in one percentage point lower.

The main problem is the expected drop-off in tourism numbers. DBS, for example, forecasted that the global slowdown in travel could drag visitor arrivals for this year 4 to 6 per cent lower than 2008 levels and 10 per cent from the record 10.5 million visitors registered in 2007.

'This is in line with previous down-cycles in 1997-1998 and 2001- 2003, which declined 2-13 per cent,' the firm said.

To aggravate the situation, the hospitality industry will also see a fresh injection of supply as various new hotels open their doors. Total room stock is expected to grow by 12,000 rooms between now and 2012, of which about 40 per cent was slated for 2009, DBS reckons.

However, given the hefty construction costs coupled with the credit crunch, completion delays are pushing back launch dates - which could help cushion the impact somewhat.

For instance, NTUC Club's 200-room Palawan Beach Resort, which was initially supposed to open last year, has been delayed while Far East Organization's Quincy hotel will see a Q1 2009 opening instead of 2008 as originally planned. As such, the main supply looks set to come only towards the end of 2009 and 2010, with a large chunk stemming from the 2,600-room Marina Bay Sands.

Hotels also appear to be holding on to their staff for now. Four Seasons' Mr Gomez, for example, said that it will continue to hire talent as required and will not compromise on its service standards. The Royal Plaza on Scotts has no plans to trim its workforce either. 'In the weakening economy, it is still our top priority to provide our guests with a comfortable stay. The hotel will ensure that training, and staff development and growth are consistently maintained,' said general manager Patrick Fiat.

Hotels are also expected to undertake various measures to fill rooms - such as tying up with various credit card brands to offer discounts, tweaking its client mix as well as cutting room rates to remain competitive. 'Hotel operators need to try to match guests' expectations of paying lower room rates or creating value add propositions in order to retain market share,' said C9 Hotelworks' Mr Barnett.

Keeping a watchful eye on costs can also go a long way. To combat the slower growth rate for its hotels in Asia, Hong Leong early on embarked on efforts to manage costs and streamline operations, so as to adapt to the changing market conditions. 'As a result, we managed t1/4o achieve revenue and earnings,' a spokesperson said. 'We will continue to evaluate our portfolio for improvement to remain competitive.'

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.