Hotel room rates come under pressure

Hotel room rates come under pressure
The Parkroyal on Pickering (above) and Carlton City Hotel opened this year.

Hotel operators are feeling the heat from an increasingly competitive industry landscape, which is hitting mid-tier hotels the most.

Several listed operators say a recent flood of new hotel rooms - with more to come - tighter corporate travel budgets and higher labour costs have put pressure on room rates.

They are stepping up their efforts to address these challenges.

Far East Hospitality Trust, which owns mid-tier hotels like the Rendezvous Grand Hotel Singapore, Village Hotel Albert Court and The Quincy Hotel, reported a gross revenue of $31.5 million for the three months to Sept 30. This was down 9.4 per cent from its forecast of $34.7 million.

The firm's average revenue per available room (RevPar) for the same period was also 8.9 per cent below its forecast at $167.10. RevPar is a widely used indicator tracking hotel performance.

Far East said it will address the competition by increasing the number of direct bookings from its website, as well as strengthening its central sales force.

It was a similar picture for CDL Hospitality Trusts, which has the Copthorne King's Hotel, Novotel Singapore Clarke Quay and M Hotel and reported a 6.4 per cent decline in RevPar to $191 for the three months to Sept30. It also recorded a 0.8 per cent slide in gross revenue to $35.9 million.

Experts say most of the new hotel rooms coming onstream are in mid-tier hotels, placing pressure on that segment. In the first half of the year, eight new hotels were opened, including the Carlton City Hotel, Dorsett Singapore and the Parkroyal on Pickering.

Mr Robert McIntosh, executive director at CBRE Hotels (Asia-Pacific), estimated 1,400 mid-range hotel rooms would have come onto the market by the end of the year. This is out of a total supply of 3,629 new rooms this year.

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