Hotels make case for lower F1 levy on room revenue
By NISHA RAMCHANDANI
(SINGAPORE) With race day looming and a full house at stake, some hotels are not so keen on the cards they've been dealt.
Several hotels are lobbying for a reduction in the Formula One (F1) levy on hotel room revenue, according to sources, in hopes that it will be further cut from four days to three.
However, it is unclear at this point how this hand will play out, given that the levy was already revised last year in what was meant to be a one-off concession.
'The one-day reduction in 2009 was intended as a one-off concession in view of the economic downturn and its impact on the hotel industry,' said Justin Chew, the Singapore Tourism Board's (STB) executive director of F1 & sports & hospitality, in response to a query from BT.
For the inaugural F1 race in 2008, the Ministry of Trade and Industry (MTI) and STB implemented an F1 levy to defray some of the cost of staging the F1 race in Singapore. The tax spanned five days (Sept 24-28) - leading up to and including race weekend - to the tune of 30 per cent of total room revenue for trackside hotels and 20 per cent for non-trackside hotels.
In March 2009, MTI and STB announced that the 2009 F1 levy period would be shortened after the tourism industry was hit hard by the recession. In response to feedback from hoteliers, MTI and STB trimmed the period from five nights to four while maintaining the percentage rates at 30 and 20 per cent respectively. An official announcement on the 2010 F1 levy has yet to be made.
'The F1 levy for 2010 will be announced after consultation with the relevant stakeholders,' added Mr Chew.
The Singapore Hotel Association (SHA), which is said to be liaising with the hotels, did not respond to queries from BT.
One reason that the hotels are hoping for a revision of the levy is that some don't expect to see significant growth over last year in room revenue from F1, BT understands.
Other hotels that BT contacted pointed out that the tax penalises visitors who are not in town for the race since costs are passed on to the consumer.
'It does not seem very fair for guests who are here for meetings . . . to pay a levy because of the extra day,' said Rendezvous Hotel's general manager Kellvin Ong.
Room rates typically rise sharply for the F1 period (especially at trackside hotels) due to the significant demand for rooms as well as the F1 tax.
In the event of a revision, the savings could be put to better use, reckons Patrick Fiat, general manager of Royal Plaza on Scotts.
'F1 is very much a weekend race. The costs saved can be used to promote our property in conjunction with the race event, in addition to STB's efforts in promoting F1,' said Mr Fiat.
There is also the question of whether more hotels - such as Marina Bay Sands (MBS) - will be roped in as trackside hotels this year. Last year, the Grand Park City Hall and boutique hotel Naumi were declared trackside hotels, bumping up the number of trackside hotels from 11 in 2008 to 13 in 2009.
Hotels along the track may also face stiffer competition filling up rooms this year, thanks to the debut of MBS, which is fairly close to the race track. MBS launched some 960 rooms in its first phase in April but will have a total of 2,560 rooms operational by June, several months ahead of this year's race from Sept 24-26.
As it is, the poor global economy took some of the shine off the numbers at last year's Grand Prix.
According to data previously released by STB, 30 per cent of the 90,000 spectators at the 2009 Grand Prix came from overseas, versus some 40 per cent of the 100,000 spectators who attended the inaugural race - a shortfall of roughly 13,000 foreign spectators.
At the same time, incremental tourism receipts racked up from hosting the F1 nearly halved year-on- year. Singapore chalked up some $93 million in incremental tourism receipts during the race period last year, missing the $100 million target. In 2008, it registered $168 million in incremental tourism receipts.
With the F1 race now in its third year, there is also the added challenge of fading novelty, although the Singapore Grand Prix is unique in that it offers a night race on a street circuit. Veteran driver Michael Schumacher - 'Schumi' to his legions of fans - could also be a huge draw if he ends up racing in Singapore come September.
And now that the global economy is in a much healthier place, hoteliers are keeping their fingers crossed that bookings will pick up speed.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Hotting up: Hotels along the F1 track may face stiffer competition this year because of the debut of MBS
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