THE Singapore Tourism Board will work closely with other agencies to ensure hotel capacity does not constrain future tourism growth, Senior Minister of State (Trade and Industry) S. Iswaran has said.

But market forces should determine the number and price of hotel rooms, he said, noting that Singapore remains a competitive travel destination.

The average room rate of $250, was comparable to Hong Kong and Tokyo, and lower than New York and London, he added.

Mr Iswaran was responding to questions from Nominated MP Gautam Banerjee in Parliament on Monday on whether room shortages and steeply rising rates had turned away potential tourists and meetings.

Mr Banerjee also felt there should be more three- and four-star hotels as cost was a key factor for visitors from new markets.

But Mr Iswaran said it was for travel industry players and hoteliers to assess the demand for such rooms.

A significant number of hotel sites, with space for over 5,000 rooms, had been made available, he added.

Three- and four-star hotels have also come up in several locations like the Serangoon Road area where demand for them is concentrated, he added.

Old Government buildings could also be used to boost potential supply.

'The important thing is for the market players to assess where these needs are and to respond to them,' he added.