Room with a view to growing business

Some Singapore hotels have opened up to the idea of moving down the value chain, as shrinking travel budgets among business visitors often mean that guests prefer mid-scale and upscale rooms to opulence. The realignment in strategy is likely to bring
Some Singapore hotels have opened up to the idea of moving down the value chain, as shrinking travel budgets among business visitors often mean that guests prefer mid-scale and upscale rooms to opulence. The realignment in strategy is likely to bring more opportunities for mid-tier hotels.ST PHOTO: DIOS VINCOY JR

Some hotels are offering smaller spaces at lower rates to draw middle-income guests

Ms 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 Ms 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.

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.

According to real estate services firm CBRE, the number of mid-scale rooms - which government data shows cost, on average, $170 per night - increased 32 per cent over the past two years. That is a far bigger increase than seen at the top of the market... The trend continues.

"I have been to Gardens by the Bay and SkyPark at Marina Bay. I came to see this place because it's beautiful and modernised - a garden city," said Chinese tourist Chen Jianan 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 all right 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 because of the crash in crude prices.

Reflecting a structural shift in the country'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 Wi-Fi 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 Mr 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 shows cost, on average, $170 per night - increased 32 per cent 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 $260 a night - rose 8.25 per cent, while luxury rooms - averaging $446 - increased 1.8 per cent.

The trend continues. This year, mid-tier hotels are set to account for the highest proportion of new supply at 34 per cent, research from brokerage DBS shows.

"It has to be about going for the middle class," said Dr 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's 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 the same burgeoning middle-class segment of the travel market.

REUTERS

A version of this article appeared in the print edition of The Straits Times on February 11, 2017, with the headline 'Room with a view to growing business'. Print Edition | Subscribe