Increasing competition puts Singapore hotels on edge
Hoteliers are worried about the lacklustre economic growth, not to mention the expected modest growth of 4% for tourist arrivals in 2017.
As one of the world’s top meeting spots and financial hubs, it seems that Singapore is never in danger of extreme declines in visitor arrivals.
Its booming hospitality industry is supported by 33,000 individuals working to provide the world’s top decision makers, foremost companies, and the city-state’s regular visitors the best hospitality services and deals.
However, with the rapid growth of other cities around the world and in the region, Singapore’s hotel industry needs to keep evolving and innovating if it longs to keep its coveted spot in the hospitality business, particularly in the meetings, incentives, conferencing, and exhibitions (MICE) sector. A report by DBS Bank reveals that
2017 is going to be a challenging year for the tourism sector, with a modest growth of 4% for tourist arrivals.
“With the carryover of new hotels which were originally scheduled to open in 2016 into 2017, our earlier expectation of a more balanced market in 2017 is likely to be delayed into 2018 where the supply of new hotels drops off. The decline in new room supply in 2018 is due to the lack of new land released by the Singapore government for hotel developments over the past two years,” says Derek Tan, vice president at DBS Bank, Group Equity Research.
Stiff competition exists in the hotel industry as supply increases and despite economic uncertainties in the region and beyond. According to the UNWTO Tourism Highlights of 2016, the global hotel industry remains to grow, thereby providing opportunities for local companies to amass revenue through internationalisation. With the growth of the hospitality industry, hoteliers are then expected to keep up and provide creative solutions as customers continue to change and reevaluate their expectations.
“Singapore faces increased competition from other tourism markets through a variety of factors which include easier access to other countries through the relaxation of visa restrictions, like multiple entry visas for Chinese visitors into Japan; devaluation of the other regional currencies, potentially making it cheaper to visit other countries compared to Singapore, e.g. a weaker Korean won and Japanese yen; and Singapore already having a high market share, e.g. Singapore accounts for 38%-39% of total Indonesian outbound travel,” explains Tan.
Frank Sorgiovanni, head of research Asia Pacific, JLL Hotels & Hospitality Group, says that Singapore’s hotel industry is very similar to Hong Kong in that tightly held hotel stock amongst generational owners sees little investment activity. He notes that investors have begun shifting their focus to other markets like Australia. “Two of the most preferred investment markets for 2017 are Japan and Australia, followed by Thailand, Vietnam, and the Maldives. In the Indian Ocean, investor interest is expected to go beyond the highly soughtafter Maldives with a renewed focus shifting to the Seychelles and Mauritius resort markets.”
The Hotel Industry for Sustainable Growth, a report by the Singapore Tourism Board (STB), mentions that the city-state’s hoteliers must be abreast of the current trends and the pressing issues in the hospitality industry in order to encourage investment. According to STB, hotels must leverage technology and analytics, reevaluate business processes and models, enhance customer experience and engagement, and create differentiated value propositions, amongst others.
Across the city-state’s hotel industry, STB found impressive examples of innovation from
Singapore faces increased competition from other tourism markets through a variety of factors which include easier access to other countries through the relaxation of visa restrictions.
Marina Bay Sands remains at the top spot with over 2,500 rooms