Hotel Room Rates Hit Four-Year High in Singapore
Jessica Lim – Straits Times
Singapore. The six-day Singapore Airshow in February helped to push hotel room rates in Singapore to a four-year high.
Tourists paid an average room rate of $218 that month, according to preliminary Singapore Tourism Board (STB) statistics obtained by The Straits Times.
This is the highest since September 2008’s $241. The inaugural Singapore Grand Prix Formula One race was held that month.
Barring that instance, February’s rate is the highest recorded in at least the past decade. The average occupancy rate was 89 percent.
The Republic welcomed a record 1,133,666 tourists in February, lifting the first quarter’s arrivals to 3,573,566 — a 14.6 percent jump from the same period last year.
Experts linked February’s high room rates to the Singapore Airshow, which pulled in more visitors. They stayed for more nights and the demand exceeded the supply of rooms.
Analysts and industry players expect rates to climb higher even as more hotels come on-stream.
Robert Khoo, chief executive of the National Association of Travel Agents Singapore, expects upcoming attractions like the River Safari and Gardens by the Bay to attract more tourists.
“Hotel rates will continue to go up for the next few years. Rates of more than $270 will become the norm,” he said.
He added that it takes time for the Government to release land for the building of hotels and that most of the new hotels are smaller boutique types.
“The industry reaction is that these new rooms are better than nothing, but they are not enough,” Khoo said.
He added that several hoteliers converted their hotels to apartments when Sars struck in 2003. “We are still picking up since then.”
Ngee Ann Polytechnic tourism senior lecturer Michael Chiam said room prices are likely to hit $223 this year.
“We cannot ramp up the number of hotel rooms overnight,” he added, noting that land is scarce in Singapore. “Hotels will charge such rates and the market will be able to absorb it.”
The STB projected in March that Singapore will attract 13.5 million to 14.5 million visitors this year, an increase of up to 10 per cent compared with last year’s 13.2 million figure.
The target is 17 million by 2015.
These robust figures have boosted hotel takings, with the average room rate gaining 13 percent to hit $195 last year.
This was despite a 5.1 percent injection of new hotel rooms, bringing the total number of hotel rooms to 49,719.
According to a recent forecast by CBRE Hotels, room supply is expected to increase by 1,600 — or 4.2 percent — this year. Yet, the property consultancy expects the average room rate to go up by between 5 percent and 10 percent.
Travel agents are facing higher charges from the hotels.
Alicia Seah, CTC Travel’s senior vice-president for marketing and public relations, recently received contract rates for the next six months.
Prices, she said, are up $4 to $16 per night across all hotels.
She added that there is a room shortage when big events are held. During the Food & Hotel Asia trade show last month, one of her clients had to pay $800 a night for a suite at a five-star hotel as all other rooms were taken up.
Average room rates at the Santa Grand chain of seven hotels hit $280 per night during the event, up from the usual $143. The chain turned away about six walk-in customers a day during that period.
While rates have climbed, Khoo noted that they remain competitive vis-a-vis those in Hong Kong and Shanghai.
But Seah said: “If prices continue to rise, we might lose our competitiveness to countries in the region like Thailand and Malaysia where rates are very affordable.”
Chiam warned that cost-conscious travellers may start to look elsewhere if rates continue to soar.
One suggestion is for the Government to open up more land for hotel development.
However, industry players said price is just one factor that determines where travellers spend their holidays.
“There are other factors like new attractions and hotel quality,” said Chiam, adding that it is important to continually give value-add to visitors.
Reprinted courtesy of Straits Times