Hotel rates seen rising 10-15%

Occupancy levels could rise 5-10 percentage points

(SINGAPORE) With tourist arrivals bouncing back, room rates and occupancy levels at Singapore hotels continue to rise, hosing down worries that the 4,000-plus rooms added by Resorts World Sentosa (RWS) and Marina Bay Sands (MBS) would depress the sector.

According to consultancy HVS Global Hospitality Services, the average room rate will rise 10-15 per cent this year from 2009's $191. And HVS managing director David Ling says that there is potential for rates 'to go higher'.

Despite the new rooms at the integrated resorts, Mr Ling reckons demand will outpace supply because the resorts are 'demand generators'.

He expects overall occupancy to climb 5-10 percentage points from last year's 76 per cent.

'MBS is a huge hotel,' he said. 'Sure, it will affect neighbouring properties in the short term - but consider the pick-up in arrivals and the pipeline of events. With the Singapore Airshow, Youth Olympic Games and Grand Prix, it will be a record year.'

In a recent report, Credit Suisse said that the casinos should boost visitor numbers as much as 20 per cent this year.

Singapore's tourism industry also benefits from the rebound of regional economies such as China, India, Malaysia and Indonesia. 'If those places are doing well, their people have more disposable income to travel,' Mr Ling said.

At the same time, the political upheaval in Thailand could lead travellers to look for alternative destinations, in which case neighbouring countries such as Singapore, Malaysia and Indonesia could pick up some of the spoils.

According to the Singapore Tourism Board, overall hotel room revenue rose a sharp 36.5 per cent year on year to $158 million in April. It was supported by events, such as Food&HotelAsia, and the six-day disruption to Europe-bound air traffic. The figures for May have yet to be released.

The average occupancy rate (AOR) jumped 15 percentage points in April to 85 per cent from a year back, while the average room rate (ARR) increased 12.2 points to $211. Revenue per available room (RevPAR) surged 36.1 per cent to $179.

At the Royal Plaza on Scotts, business was very healthy last month, with ARR, AOR and RevPAR all much higher year on year.

ARR was up 30 points to $280, AOR climbed 12 points to 90 per cent and RevPAR 46 points to $248.

The meetings, incentives, conventions and exhibitions (Mice) industry is also picking up, industry players say.

'We're getting a lot more corporate enquiries for meetings,' said Nancy Tan, managing director of conference organiser Ace:Daytons Direct. 'Last year, the market was quite bad as they held back.'

As companies cut costs during the downturn, budgets and corporate meetings were cut back.

But Ms Tan said that companies are still cautious about how much they pay. 'That is something we'll have to manage, since manpower costs have gone up,' she said.

Suntec Singapore expects a 10 per cent increase in the number of events it hosts this year and a 5-10 per cent increase in visitor numbers.

Last year it hosted 1,408 events, down from 1,575 in 2008.

'We expect a stellar performance this year,' said director of sales and client services Ong Wee Min.

Source: Business Times, 7 Jun 2010