Hotels slash rates, offer goodies as tourist arrivals taper

SINGAPORE — Hit by a double whammy of dwindling tourist arrivals and rising room supply, luxury to budget hotels in Singapore slashed room rates in the first half of this year amid fierce competition for the tourist dollar within the region.

Singapore Tourism Board (STB) data published this week showed the Republic welcomed 7.26 million international visitors in the January-to-June period, down 3.4 per cent from the corresponding period last year. Visitors from Indonesia slumped 13.7 per cent while those from Malaysia fell 5.2 per cent as their currencies weakened, offsetting the increases in visitors of 8.9 per cent and 5.7 per cent from China and India respectively.

“The year started slower compared to last year,” said Mr Patrick Fiat, general manager of Royal Plaza on Scotts. “This has impacted the room rates across the hotel industry. Room rates have dipped by 3 to 4 per cent while a good occupancy rate, which is similar to past years, has maintained for this year.”

The STB data showed the daily average room rate (ARR) declined 5.6 per cent to S$243.60 in the January-to-June period from the corresponding period last year. The ARR for luxury hotels dipped 3 per cent to S$444, while the declines in the mid-tier and economy sectors were 6.7 per cent and 5.3 per cent to S$175.70 and S$103, respectively. The overall revenue per available room fell 7 per cent to S$202.80 during the period.

Besides cutting room rates, Royal Plaza on Scotts is sweetening the deal for guests through its “BBB” promotion: Complimentary breakfast, broadband, and beverage bar. Meanwhile, Grand Hyatt Singapore offers guests an extensive list of travel freebies such as a curling iron, humidifier, baby shampoo and yoga mats, among others. The hotel has also introduced an internal guest preference recording system to pamper customers.

“That way, even before they step in, their room and arrival procedures will be set up in the exact manner they like,” said Mr Olivier Lenoir, hotel manager, Grand Hyatt Singapore. “Their favourite pillow type, love of Earl Grey tea and even their language preference can now be recorded and delivered to our guests every time they check in, thus enriching their experience with us.”

Singapore’s tourism industry is expected to face headwinds if the Singapore dollar continues to appreciate against regional currencies such as the Malaysian ringgit and Indonesian rupiah. The ringgit breached the 3.00 mark against the Singapore dollar this week, falling to an all-time low of 3.0563, while the Indonesian rupiah broke the 10,000 threshold to a low of 10,127 against the local currency.

A steady supply of hotels in the pipeline will continue to put pressure on occupancy rates as well as room rates in Singapore over the next 12 months. By the end of this year, more than 60,000 hotel rooms are expected to be available here, up from 57,172 at the end of last year and 54,962 at the end of 2013. Analysts estimate that by 2018, Singapore will have more than 65,000 hotel rooms.

For now, occupancy rates, hovering around 82 per cent, are still among the highest in the world. Mr Robert McIntosh, executive director at CBRE Hotels Asia Pacific, said this has led to some hotel owners failing to plan for the future by delaying the modernisation and refurbishment of properties.

“In order to maintain Singapore’s lead, it is vital that hotels exceed guest expectations so as to encourage repeat visits and increase the length of (their) stay … After all, Singapore has the highest average room rates in Asia — guests expect real value for money,” he said.

InterContinental Singapore is one hotel that is raising its game. Its general manager, Ms Tash Tobias, said the group is currently undergoing a holistic renovation and will be showcasing new guest rooms, restaurants and public spaces in the coming months. Its mid-tier property, Holiday Inn Singapore Atrium, recently unveiled new guest rooms. Meanwhile, Hyatt Singapore has completed a massive event venue renovation, with several other projects in the pipeline.