Hotels badly hit

NUMBERS for the hotel industry for the year also took a plunge, with overall room revenue falling 28.3 per cent to S$1.51 billion.

This is the result of falls in two hotel indices – overall average occupancy rate and overall average room rate.

Occupancy rates stood at an average of 76 per cent, a drop of 4.6 percentage points compared with the same period a year ago.

The drop was felt sharply when it came to room rates, which fell 22.3 per cent to S$191.

Santa United International Holdings, which owns six mid-tier hotels here, said that revenue dropped 7 per cent in 2009 compared with 2008.

Similarly, Rendezvous Hotel reported a loss in revenue and occupancy due to the recession.

‘As a result, there was intense competition among hotels for the shrinking pie,’ said general manager Kellvin Ong. ‘Price comparison was also rampant, with consumers… trying to stretch their dollar.’

Competition was made even tougher with the introduction of an additional 2,740 rooms to the total hotel room inventory last year. There are 41,000 hotel rooms on the market now, and the figure will rise further this year with the integrated resorts.

When asked if there were fears of an oversupply, Singapore Tourism Board chief Aw Kah Peng said the ‘demand and supply balance has to adjust itself in lieu of the new inventory’.

‘We do expect to see some adjustments there,’ she said. ‘We believe much of it is in anticipation of future growth, because these are long-term decisions taken by hotel investors.’

Source : Straits Times – 10 Feb 2010