Hotel industry in S’pore rides on Asian wealth

In 2015, as many as 17 million visitors are expected to arrive on Singapore’s shores.

That is a big jump from less than 9 million business travellers and tourists last year.

Experts said more visitors will mean greater demand for hotel rooms.

Analysts added that long-term demand for hotel rooms in Singapore is also expected to drive hotel investment trusts.

Global hoteliers like Holiday Inn Express said Singapore holds many business opportunities.

Holiday Inn Express has partnered InterContinental Hotels and RB Capital Hotels to open Southeast Asia’s biggest Holiday Inn Express in Singapore.

Opening in 2013, Holiday Inn Express will cater to the emerging market of discerning business travellers.

Kishin R K, CEO of RB Capital Hotels, said: “As we see an increasing number of savvy travellers coming into Singapore, they know exactly what they want in their product offering.

“So they do not want to pay for something that is not going to be used by them. For example, the ballroom space in the hotel – if a consumer of a hotel room does not use the ballroom, I do not think they want to be paying for the maintenance of a ballroom.”

Holiday Inn Express, which has between 460 to 500 rooms, is located beside Clarke Quay, at the junction of Clemenceau and Havelock Road.

Four more Holiday Inn Express hotels in Asia will be announced in the next two years.

And as the Asian economy recovers, analysts are bullish on hotel Real Estate Investment Trusts (REITs) in Singapore.

Wilson Magee, director of Global REITs at Franklin Templeton Investments, said: “Some of the companies we have visited this week have occupancy rates above 90 per cent, which in most hotel markets around the world is remarkably high.

“That is significantly driven by improvements in leisure travel where weekend occupancy rates are running at over 80 per cent.”

Analysts said room rates will continue to increase 30 per cent year-on-year.

However, developers warn that under supply of hotel rooms may limit tourist numbers.

Meanwhile, rising interest rates may crimp profit margins for hotel REITs, which are posting 6 to 7 per cent yields.

Analysts said funding to acquire more property will come at a higher price.

But they added that the current low interest-rate environment will encourage REITs to procure more properties.

Source : Channel NewsAsia – 17 Nov 2010

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