'Growing demand' for hotel stays as S'pore becomes exciting place

'Growing demand' for hotel stays as S'pore becomes exciting place

The growing attraction of Singapore as a tourist destination has made the local hotel industry as competitive as that of the city's great rival, Hong Kong, according to a leading industry figure.

Mr Clarence Tan, InterContinental Hotels Group's (IHG) senior vice-president of development in Asia, Middle East and Africa, told The Straits Times: "We used to be a boring destination that was cheap to come to. But today, as Singapore matures as a city, it has become a much more exciting place to see and visit."

He said this trend is underlined by the recent sharp increase in new hotel rooms here.

Singapore added 15,746 rooms in the past five years, while Hong Kong added 14,527 rooms, according to a recent report by property consultancy CBRE.

The number is "a testament to the continued and growing demand here" for hotel stays, said Mr Tan.

He noted that Singapore is "constantly re-inventing itself" with many new projects, such as the Changi Airport revamp, that will keep drawing crowds.

Last year, Singapore welcomed a record number of 15.5 million visitors, up 7.2 per cent on 2012.

Mr Tan believes prospects for the hotel market are "firm to bullish" for the next two to three years, with the bulk of the demand set to come from the growing middle classes in nearby countries like Indonesia, India and China.

Two of IHG's three projects in the pipeline - Hotel Indigo Singapore Katong and Holiday Inn Express Singapore Katong - will cater to this market segment at different price points, he added.

The third is luxury development InterContinental Singapore Robertson Quay, the second InterContinental hotel in Singapore. This will replace the Gallery Hotel.

All three hotels are slated to open by 2016.

"The fact that Singapore has a stable environment appeals to many visitors," said Mr Tan, noting that the duration of tourist stays and the value of tourism spending have been growing.

And this demand for tourism will continue to head north, he added, especially as Singapore "continues to provide excitement for visitors in many ways".

The transformation of the Jurong Lake District, for instance, will be a key feature expected to bring in business and leisure travellers alike, noted Mr Tan.

He said that IHG will consider opening hotels there as well as in areas such as Sentosa and at Changi Airport.

While Mr Tan did not disclose the occupancy rates for IHG's hotels here, he noted that they are "above the market rate".

The average occupancy rate across all hotel segments stands at 86 per cent, based on Singapore Tourism Board data for the first quarter of this year.

Despite the rosy outlook, several challenges remain for hotel owners, said Mr Kaushik Vardharajan, partner managing director of HVS Global Hospitality Services in Asia Pacific.

"The biggest problem lies in having enough people to run the hotel," he noted.

"The recent changes in labour laws have made it even more difficult to overcome this, and that's not going to change any time soon."

Mr Vardharajan also warned that pricey hotel room rates could backfire if travellers choose to visit other destinations with cheaper accommodation, such as Seoul or Bangkok.

"There is a large segment of people out there who want to spend less on hotels here, but more on other things like shopping or sightseeing," he said.

"So we need to ensure that we have a diversified product offering and enough supply at various price points that will cater to more people coming in."

This article was first published on Oct 13, 2014.
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