Demand for budget hotels soars as budget travellers increase

Budget hotels in Singapore are outpacing their five-star counterparts by a number of measures.

They are being built at a greater pace, and they are also fuller.

More are in the pipeline for 2013 and 2014, as demand for budget travel continues to grow.

And with new attractions like the Marine Life Park at Resorts World Sentosa to attract visitors, industry players see positive outlook for the sector.

Days Hotel is the latest so-called economy hotel to arrive on Singapore shores.

Set to open end of December, the 14-storey hotel has 405 rooms, catering to budget conscious travellers who are looking for value. A stay in this room costs around S$160.

The growth of intra-regional travel and low-cost airlines are driving the new wave of cheaper accommodation.

Jonas Ogren, Area Director – Asia, STR Global, said: “A lot of those travellers are looking for a mid-scale to budget type property more so than a luxury one. There is an increased need for that kind of hotel and Singapore has been lacking, particularly in branded and internationally-recognised budget product.”

Located mainly in outlying areas, data provider STR Global says occupancy in economy hotels has outpaced the 84.3 rate of the overall market.

For instance, Fragrance Hotels which operates 23 properties in areas like Geylang and Aljunied – averaged 90 per cent occupancy in the third quarter of 2012.

And even with over 10 economy and mid-tier hotels coming onstream from 2013 until 2014, experts say there’s enough demand for budget hotels to go around.

Jonas Ogren added: “Short-term it probably will impact them a little bit. But when you look at the percentage increase and the number of rooms, even though you have two or three new hotels coming into that sector, it’s not a huge increase in supply. So from a medium- to long-term, I think they will do just fine.”

Lim Chee Chong, CEO of Global Premium Hotels, said: “To stay competitive, we have more variety and range of product being offered – be it our partner or traveller. We have the advantage of different location offerings, different product range and we cater to a wider range of travellers. We constantly upgrade our hotels to look fresh, clean and new to attract travellers.”

Business and leisure travellers from the region pay between S$70 and S$150 a night for a stay at Fragrance hotels depending on location.

Still, experts say budget travellers tend to look beyond the price.

Aaron Hung, Director of Partnerships, APAC, TripAdvisor, said: “Sure, they are concerned about the cost. But more than normal travellers, they would be even more keen to find out the quality.”

Online travel portal TripAdvisor says most travellers will not book a hotel without checking the reviews first.

Source : Channel NewsAsia – 6 Dec 2012

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