Oft-glitzy Singapore focuses on middle class

Tourist spending up as room rates tumble

SINGAPORE — 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 travelers 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 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 coming for business in Singapore’s growing Fintech space are more interested in wifi and the fun they can have in the hotel’s common areas than elegant furnishings.

“The technology industry in Singapore is far more supportive of midscale 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 midscale rooms — which government data show cost on average $120 per night — 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 rose 8.25 percent, while luxury rooms increased 1.8 percent.

The trend continues. For 2017, midtier 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.

Visitor arrivals rose 8 percent in the first 11 months of 2016 to roughly 15 million. Spending by tourists was up 12 percent even as room rates fell 3.2 percent on average.

Many tourists come from so-called second-tier cities such as Zhengzhou and Jinan in China and Jaipur in India.

Adapting to this, midscale Hotel Jen, launched by high-end-focused Shangri-La group in 2014, now rents GoPro cameras to guests for free, offers a single price for unlimited items in the laundry bag and hands out agebased discounts — which works well with Chinese who travel in big groups.

Ascott Residence Trust said business travelers’ 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 travelers 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 midtier.”

A FOCUS ON QUALITY

Not all craft makers agree that growth is a laudable goal, but the focus on quality dates to Mayan cultivation of cacao and production of chocolate products as early as 400 B.C. The notion of fine cacao and chocolate was passed on from indigenous people to Europeans and “really took off with excitement among French chocolate producers,” said Carla Martin, executive director of the Fine Cacao and Chocolate Institute. “Companies like Bonnat, Valrhona and Bernachon in the 1970s, 1980s and 1990s began producing single-origin chocolate products that were meant to express a sense of terroir through their flavor.”

In 1997, winemaker John Scharffenberger co-founded Scharffen Berger Chocolate Maker in Berkeley, California, and helped establish this alternative to largescale chocolate in the United States. Through a focus on small-scale production methods and higher-quality cacao beans, Scharffenberger empowered pioneers including Steve DeVries and the co-founders of