ST : YOG and F1 driving up hotel room rates

Aug 13, 2010

YOG and F1 driving up hotel room rates

Industry players warn against shutting out lower-budget visitors

By Ng Kai Ling

HOTEL rates in Singapore have spiked and are likely to stay high till the end of September, with events like the Youth Olympic Games (YOG) and the Singapore Grand Prix driving up demand.

Booking through a travel agent, a night's stay at a four-star hotel like Furama City Centre or Carlton Hotel starts from $250 a room - about 40 per cent higher than in the same period last year.

Travel agents and analysts said hoteliers are seizing the opportunity provided by this peak travel period to raise already high room rates.

Tourist arrivals hit a record high of one million last month.

'When demand is high, hoteliers will try to sell rooms at a higher price. For example, a room that went for $200 can now go for $250, if not $300, because demand is there,' said industry consultant David Ling, managing director of HVS Asia Pacific.

In the first six months of the year, the average room rate was $204, compared with $195 over the same period last year, according to figures from the Singapore Tourism Board.

'Rates will continue to remain high for the rest of August, and in September, because of demand from YOG and F1 supporters. But we expect hotel rates to normalise in the fourth quarter after the two major events,' Mr Ling added.

He estimates that the average room rate for the year will be 10 per cent to 15 per cent higher than 2009's $191 average.

The demand for hotel rooms has been so high that travel agents said they are having problems booking more, on top of what is already contracted to them.

SA Tours senior executive Dan Lim said: 'It's difficult to get more rooms as all the hotels are almost fully booked. The only way is to try a walk-in booking, or to book through the Internet, which can cost a bit more.'

Booking online directly, a night at the Carlton hotel starts from $280 a room, compared to $250 through a travel agent.

Across the board, hotel occupancy for the first six months of this year was at 85 per cent, a strong rebound from last year's 72 per cent.

The numbers reflect the seven consecutive record-breaking months of tourist arrivals in Singapore - hotels being one of the main beneficiaries of the tourist boom.

Since January, tourists have spent $755 million on rooms alone, with hotels' room revenues climbing between 5.8 per cent and 36.5 per cent. But the brisk sales may come at a cost.

'It is a double-edged sword,' said CTC Holidays senior vice-president of marketing and public relations Alicia Seah. 'On the one hand, we are taking in bookings from fans and supporters of YOG. On the other hand, leisure travellers are staying away because it is too expensive.'

Industry players warn that Singapore's high prices in general, coupled with higher room rates, may be shutting some tourists out.

'As pricing increases, it will likely edge out some visitors with lower travel budgets. There is a need (and an opportunity for developers) to construct more economy hotels in Singapore, to recapture and attract this visitor segment in the medium to long term,' said Mr Ling.

Hotels contacted would not give numbers, but said that occupancy rates have been high. Marina Bay Sands, in particular, said it is seeing nearly full occupancy this weekend when the YOG opens, and high levels of occupancy for the next weekend.

kailing@sph.com.sg


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HIGH DEMAND, HIGH PRICE

'When demand is high, hoteliers will try to sell rooms at a higher price. For example, a room that went for $200 can now go for $250, if not $300, because demand is there.'

Industry consultant David Ling, managing director of HVS Asia Pacific