Hotels roll with the punches to keep rooms occupied

aerial view of city during daytime

FOR a city with just 5.6 million people and a severe cap on tourists because of the ongoing global pandemic, it may come as a surprise that some hotels in Singapore are achieving high occupancies on weekends.

Starved of overseas travel, Singaporeans and other residents have been going on staycations at a steady clip. And as the year-end peak season approaches, more hotels are re-opening their doors to meet this demand for a short respite on home turf.

But there are various factors at play for hotel occupancies, checks by The Business Times showed.

Hotels that have stayed shut to staycation guests until recently include those that were contracted by the Singapore government for some months now to house those serving quarantine.

The names of these hotels are largely up for speculation, as the list has not been made public. BT understands that some hotels might be wary of the potential stigma of being linked to those in quarantine.

BT’s checks turned up different categories of hotels operating:

  • Government quarantine facilities (GQFs), contracted fully by the government for those serving quarantine;
  • Stay-Home Notice or SHN-dedicated facilities for those serving SHN, such as incoming travellers; and
  • Partially contracted SHN dedicated facilities, which can take on leisure guests, provided they set up stringent protocols – segregated blocks, wings or floors – so as to separate those serving SHN from leisure guests or business travellers, said the Singapore Tourism Board. (Business travellers include those given the green light for essential travel, such as under fast-lane arrangements.)

Some hotels are not listed as SHN hotels, but offer an SHN rate to travellers who choose to serve their SHN there.

It is understood, however, that hotel allocation is not left to choice for those serving quarantine: Some get a sea view at a five-star hotel, and others, a less exciting vantage.

The Straits Times reported in July that more than half of Singapore’s 67,000 hotel rooms were being used for isolation and quarantine facilities and for those serving SHNs.

In a recent report on Singapore’s listed hospitality reits, CGS-CIMB analysts Eing Kar Mei and Lock Mun Yee highlighted that more hotels have been approved for staycations as they were removed from the government hotel booking scheme.

As of Oct 15, there were 223 hotels approved for staycations, up from a reported 80 or so in late July. (As at end 2019, Singapore had 424 hotels.)

The analysts said hospitality Reits in Singapore enjoyed occupancy rates of over 90 per cent in Q3, thanks in large part to “alternative businesses”, such as government contracts and foreign workers displaced by border closures.

Hotels typically earn higher room rates from leisure guests, so with more rooms made available as more hotels hope to ride the staycation wave, overall rates should edge higher.

Opening up to the public is also seen as positive for staff morale in what has been a trying year for the hotel industry.

All this comes as Singaporeans and residents addicted to travel are bone-weary of working from home, or in desperate need of a change of scene.

The average room rates for August had climbed to S$116, said the latest data from the STB, up around 65 per cent from this year’s lowest rate of S$70 in May. August’s rate of S$116 was not even half that of a year ago.

Revenue per available room (RevPAR) in August was S$72, down 65.5 per cent from a year ago. But it was also roughly double this year’s lowest rate of S$35 in April. The decline in August was less sharp than in July, when RevPAR was down nearly 74 per cent year on year.

The average occupancy rate for Singapore hotels was 62 per cent in August. It was 38 per cent in April, the industry’s lowest point.

CGS-CIMB said the improvement in RevPAR in August was fuelled in part by the luxury segment, as more hotels opened up for leisure business, pushing room rates upwards.

Anecdotally, hotels offering staycations have occupancies hitting 70-90 per cent on weekends, industry observers said.

Hotels on Sentosa, in particular, are popular among staycationers. A BT check online, based on available rooms, found that a room at The W Singapore-Sentosa Cove in early December would cost over S$700++ for a one-night weekend stay; a room at the Capella that same period would set one back over S$1,000++ .

Meanwhile, Singapore is starting to take steps towards reviving leisure travel with countries in the region that have similarly low rates of infection, which could eventually bolster demand for hotel rooms.

Transport Minister Ong Ye Kung announced recently that Singapore and Hong Kong had reached an in-principle agreement on an air travel bubble; it is hoped it can take off in a matter of weeks.

Singapore has also relaxed border curbs for travellers flying here from Australia (except the state of Victoria), Brunei, New Zealand and Vietnam, although restrictions for those countries remain in place for travellers departing Singapore.

Analysts caution that it may still be a long road head to recovery for the hospitality industry, given the slower-than-expected recovery and sharp fall in tourist volumes.

Last year, about 19.1 million visitors came to Singapore, more than triple Singapore’s population.

Cushman & Wakefield’s associate director of research, Wong Xian Yang said: “Though there is higher demand for staycations, it will likely not be enough to compensate for the lack of tourists.

“Hotels have to adhere to strict social-management measures and will be challenged to operate at maximum capacity.”

He added that hotels will likely have to dangle appealing packages to attract local guests, especially value-conscious customers.