In glitzy Singapore, hotels' success recipe is being average

Shangri-La Asia

09/02/2017 23:00

By Aradhana Aravindan 
    SINGAPORE, Feb 10 (Reuters) - Liesbeth Foesters travels for 
business around the world, but none of her hotel rooms was 
smaller than the one she got in Singapore. Her company has a 
tight budget. 
    "If you compare this with (the room I had in) China, it is 
nothing, but ... we have to adapt to the budget," the 
30-year-old Belgian pharma professional said as she left Hotel 
Jen for a business meeting. 
    It is a compromise that works well both for travellers like 
Foesters and the hotel industry in Singapore, which for the past 
two years has been aggressively targeting middle income guests. 
    Visitors from upwardly mobile China and India are providing 
much of the growth, flocking to Singapore to enjoy a city more 
modern and clean than anywhere back home.  
    "I have been to Gardens by the Bay and Skypark at Marina 
Bay. I came to see this place because it's beautiful and 
modernized -- a garden city," said Chen Jianan, a Chinese 
tourist from Hainan. 
    Visitor arrivals are on track for their biggest rise since 
2012, helped by the realignment in strategy, offering everything 
from smaller rooms and lower prices to new services such as 
unlimited laundry and age-based discounts. The data is due next 
week. 
    This is a new era for Singapore's hotels, once known for 
their opulence. 
    Visiting a city that for the past three years the Economist 
Intelligence Unit has ranked the world's most expensive to live 
in may have been alright when travel budgets were fatter, but 
less so in these more thrifty times. 
    The banking industry has contracted globally and fewer oil 
executives are coming to Singapore due to the crash in crude 
prices. Reflecting a structural shift in the tiny city-state's 
economy, the more commonly sighted business visitors these days 
are pharma and tech professionals, according to industry 
executives and analysts. 
    Millennials flying in for business in Singapore's growing 
Fintech space are more interested in good wifi and how much fun 
they can have in the hotel's common areas than elegant 
furnishings. 
    "The technology industry in Singapore is far more supportive 
of mid scale and upscale than luxury, which finance or oil and 
gas executives typically prefer," said Frank Sorgiovanni, head 
of research, Asia Pacific, at JLL's hotels and hospitality 
group. 
    According to real estate services firm CBRE, the number of 
mid scale rooms -- which government data show cost on average 
S$170 per night ($120)-- increased 32 percent over the past two 
years. 
    That is a far bigger increase than seen at the top of the 
market. The number of upscale rooms - averaging S$260 a night 
rose 8.25 percent, while luxury rooms - averaging S$446 - 
increased 1.8 percent.  
    The trend continues. For 2017, mid-tier hotels are set to 
account for the highest proportion of new supply at 34 percent, 
research from brokerage DBS shows. 
    "It has to be about going for the middle class," said Beh 
Swan Gin, chairman of the Economic Development Board, the lead 
government agency for economic strategies. 
    Park Hotel Group is among those moving down the value chain, 
with its mid-scale brand, Destination, debuting in Singapore in 
the second-quarter. Marriott International Inc's  MAR.O  
mid-scale Four Points by Sheraton hotel opened last year. Yotel, 
a London-based operator specialising in small rooms, opens its 
first flagship Asian property in Singapore this year. 
     In far less well off parts of the region, hoteliers have 
been moving up the value chain, upgrading facilities to tap into 
the same burgeoning middle class segment of the travel market. 
     
    ACCOMMODATING CHINA 
    Visitor arrivals rose 8 percent in the first 11 months of 
2016 to roughly 15 million.  
    Spending by tourists was up 12 percent to reach S$12 billion 
until June-end even as room rates fell 3.2 percent on average.  
    Chinese visitors were up 36 percent in the first 11 months 
of the year, while arrivals from India rose 8.2 percent, 
trumping other source countries.  
    Many come from so-called second-tier cities such as 
Zhengzhou and Jinan in China and Jaipur in India. 
    Adapting to this, mid-scale Hotel Jen, launched by high-end 
focused Shangri-La group 2-1/2 years ago, now rents GoPro 
cameras to guests for free, offers a single price for unlimited 
items in the laundry bag and hands out age-based discounts -- 
which works well with Chinese who travel in big groups.  
    Shangri-La finished renovating an older property for S$45 
million last year to open a second Hotel Jen in Singapore. 
    Tan Shin Hui, executive director of Park Hotel Group, says 
she targeted the Chinese market by opening up sales offices 
there and partnering with local travel agents. Its offerings, 
from breakfast to communication materials, also aim to suit 
Chinese customers. 
     
    COST CONSCIOUS 
    Ascott Residence Trust  ASRT.SI  says business travellers' 
length of stay at its service apartments has virtually halved to 
one to three months. 
    Its CEO Ronald Tay says before reducing room sizes, which is 
a longer-term strategy, he will spruce up common areas with 
foosball tables and other facilities. 
    "A lot of business travellers are trending down, which is 
not surprising given that a lot of them are not even able to 
travel anymore, and when they travel they tend to cut back on 
expenses," said Oliver Chong, an executive director at the 
Singapore Tourism Board. 
    "So from luxury they are moving to mid-tier." 
($1 = 1.4155 Singapore dollars) 
 
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Singapore hotel supply    http://tmsnrt.rs/2kqrkJp 
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 (Additional reporting by Edgar Su; Editing by Marius Zaharia 
and Simon Cameron-Moore) 
 ((marius.zaharia@thomsonreuters.com; +65 6403 5657; Reuters 
Messaging: marius.zaharia.thomsonreuters.com@reuters.net)) 
 
Keywords: SINGAPORE TOURISM