Hotel room rates down 9%, expected to rise this year
Source: Today (Singapore) / Valarie Koh / 05 March 2015
It’s the age-old question for businesses: how can you increase the demand for your product? Is it a matter of value-adding? Savvy marketing? Or can it be as simple as lower prices getting more people through the door? The Singapore travel industry certainly hopes so.
Comparative with most of the rest of the world, Singapore’s hotel room rates are going backwards. Whilst hotel room rates continue to grow steadily in other major markets, the Hotel Price Index in Asia fell by 2% in 2014. This means that travel destinations in Asia, like Singapore, represent great value for international travellers. And whilst this is great news for those planning on experiencing the wonders of Singapore travel in the not-too-distant future, there is a catch. Due to several different factors, hotel room rates in Singapore are expected to rebound again soon. Which is welcome news for Singaporean hoteliers. However, the question remains whether this will deter tourists from coming and spending their money driving up the Singapore travel industry.
Singapore travel pull factors
There is a slew of major events and celebrations happening in Singapore this year that will certainly draw in the overseas visitors.
The Singapore International Film Festival (SGIFF) will play host to film industry glitterati and movie fans from around the world alike in late November to early December this year. The SGIFF is the largest film festival in Southeast Asia and regularly attracts visitors in the tens of thousands.
Other huge gatherings this year include:
Singapore International Festival of the Arts - mid-May to early June
Beerfest Asia - mid-June
Singapore Dragon Boat Festival – 11th – 12th July
Combined, these major events are expected to pull in tens of thousands of international tourists to the island city-state. Which will no doubt drive up flagging hotel room rates. And this is welcome news indeed for the Singapore travel industry as a whole, and even more so for Singapore’s smaller and newer hotels in particular.
Feeling the pinch
The numbers of visitors to Singapore were on the decline last year, the first slump of its kind since the GFC in 2008. The Straits Times recently reported that only 15.1 million visitors made it to Singapore in 2014, representing a 3.1% drop compared to 2013. This, combined with the fact that hotel development continues unabated in the city, creating even more competition for the tourist dollar, means that the Singapore hotel industry has been feeling the pinch of late.
Compared to their bigger, international-brand rivals, Singapore’s smaller hotels have had to pursue a different course of action to stay afloat. Indeed, besides dropping room rates to encourage more tourist stays, Singapore’s smaller hotels have also begun to explore other avenues to ensure their bottom line stays healthy.
A recent speech given by Dr Amy Khor, a senior minister of state, at the Singapore Hotel and Tourism Summit, paved the way forward for the Singaporean hotel sector to embrace technology as a driver of sustainable growth. Dr Khor called for the hotel industry to leverage the power of technology to drive up productivity.
And this is a great workaround to the problem of decreasing demand.
Once Singapore's smaller hotels embrace innovation, not only can they reduce labour costs and wastage, but they can also offer their guests greater access to unique stays and technology designed to enhance their hotel stay experience. Which is a clear marker of difference from the competition and something that is sure to keep more guests coming back, no matter how the Singapore travel industry is faring economically as a whole.