Why new hotels are still opening in Singapore despite the COVID-19 pandemic

SINGAPORE: After opening the doors to The Clan Hotel in the central business district last month, Far East Hospitality is already gearing up for another launch this year.

The upcoming property will mark the Singapore company’s foray into the resort and spa category, and it is going ahead with plans despite the COVID-19 pandemic.

“The Oasia Resort Sentosa is slated to open in the second half of 2021,” said chief executive Arthur Kiong.

The Ascott, CapitaLand’s wholly-owned lodging business unit, also has new properties lined up this year.

It is set to debut the 172-room Citadines Connect City Centre Singapore in Dhoby Ghaut this December, as well as a 240-unit property at Farrer Park in October under its co-living brand lyf. 

The development of another lyf property located at one-north is expected to be completed in the fourth quarter.

These are not the only hotel and serviced residence operators that are braving the COVID-19 pandemic with new offerings. Last year, the Singapore market saw several new entrants such as Parkroyal Collection Marina Bay, Dusit Thani Laguna Singapore, Duxton Reserve and Mint Hotel within One Farrer Hotel.

Launches will continue next year and beyond, including new hotel brands such as the 204-room Edition by Marriott, the 350-room Pullman Singapore and the 303-room Mondrian Singapore, according to CBRE Hotels Asia-Pacific associate director Zhang Jiahao.

These plans reflect continued confidence among hoteliers in the Singapore market, he said.

“While there is now a standstill in global travel and tourism, we expect demand to return to normalcy in the mid-term and it is expected to be potentially stronger than pre-COVID days due to the pent-up demand, and strong support and efforts by the Singapore Government for the industry,” he added.

“Therefore, the proposed supply is believed to be adequate and necessary to cater to this expected increase in demand.”

Mr Zhang noted that the new supply comprises a range of mid-scale to luxury hotels which will appeal to a variety of travellers.

READ: Sentosa will welcome a new hotel in 2021, on the site of former Le Meridien

“BEST TIME” TO OPEN

Although it might seem counterintuitive to start a business at a time when the travel industry is at a near standstill, Mr Govinda Singh, executive director of valuation and consultancy services at Colliers, told CNA that now “is the best time for hoteliers to open”.

This is because new hotels take time to ramp up their operations.

“For hotels, the pre-opening to soft-opening period takes about six months where they solve out teething issues, and from there to the formal opening is about another three to four months,” Mr Singh explained.

Corporate contracts and group bookings, which bring in the bulk of bookings for hotels, also take time to be negotiated and established, he added.

“Hotels take time to ramp up operations. During market entry, business will be soft anyway so why not open when the market is weak? By the time markets start to recover, teething issues would be ironed out and you’ll be ready to welcome your guests.”

Mr Kiong from Far East Hospitality said that while the pandemic has slowed business, it has provided the company with time to hone its product and service offerings, as well as a chance to try out new processes and technology.

“Moving ahead with our plans during the pandemic has given the operations team more time – a luxury we cannot afford under normal operating conditions – to fine-tune all areas and be ready when international travel returns fully. The timing also forced us to sharpen the marketing of our hotels,” he said.

READ: Contactless service and cleaning robots: Here’s what your next travel experience may be like

With that, Far East Hospitality has gone ahead with all of its opening plans in Singapore and key overseas markets, such as Australia, Japan and Vietnam. It is also in the process of refurbishing and rebranding several properties within its portfolio.

Mr Kiong said the new hotels have “done well” despite the pandemic. These include The Clan Hotel and The Barracks Hotels Sentosa in Singapore which have “delivered better operating results than expected”, he added.

RIDING OUT THE PANDEMIC

According to the Singapore Tourism Board (STB), overall hotel occupancy averaged 41.7 per cent in February, compared with 43.8 per cent in January and 49.6 per cent in the year-ago period. Occupancy rates were around 83 per cent in January last year, before the coronavirus pandemic annihilated the tourism industry.

Industry experts said hotels have been largely kept afloat by government demand as stay-home notice facilities for travellers, as well as domestic staycation bookings following the launch of SingapoRediscovers vouchers.

Mr Ervin Yeo, managing director for Southeast Asia at The Ascott, said its properties have managed to maintain “robust occupancy”.

For instance, Ascott Orchard Singapore and lyf Funan Singapore had “near 100 per cent occupancy” during the holiday period from Dec 24 to Jan 1. Currently, about half of the guests at these two serviced residences are corporate groups and long-stay guests of between one and 24 months.

READ: Shifts in technology, sustainability present opportunities for tourism sector in the long run: Chan Chun Sing

Ascott has also been adapting its products and services to suit emerging trends.

Apart from staycation packages and contactless services, it tried to tap the telecommuting trend by allowing people to book its suites as an alternative to working from home. The “work in residence” initiative has received “positive feedback” since its roll-out in August last year, said Mr Yeo.

CHANGING FOR POST-PANDEMIC WORLD

Industry players and observers said the worst of the pandemic is over and a “gradual recovery” could be in sight this year.

“Assuming a vaccine is effectively rolled out by mid-2021, we anticipate Singapore to introduce more safe travel lanes, comprising Green Lanes, Periodic Commuting Arrangement and Air Travel Pass with countries who have managed the pandemic situation well. This will eventually translate to a gradual recovery in international visitors to Singapore in the later half of 2021,” said Mr Zhang.

The launch of the tourism vouchers since the end of last year should also help to drive up occupancy and room rates, he added.

READ: Commentary: What the Singapore tourism vouchers are really about

That said, transformation for a post-pandemic world will be key. The STB, at its annual industry conference held earlier this month, has urged the industry to set its sights on trends including technological innovation, sustainability and holistic wellness.

Industry players who spoke to CNA for this story said they are already doing so.

“As Singapore prepares to reposition itself for a shift in demand and new travel trends, holistic wellness will be a key strategy,” said Mr Kiong, who noted that the company will focus on the “upper mid-tier and upscale market segment” with its Oasia brand.

The upcoming Oasia Resort Sentosa, for instance, will focus on wellness and target health-conscious guests. More than just spa treatments, guests can also expect healthy eating, fitness routines, wellness journals, self-care checklists and access to a collection of guided meditation audio during their stay.

The newly opened The Clan Hotel also attempts to merge modern luxury with nostalgia and history from its location near Chinatown. The company is aware that “hotels need to compete as part of a larger concept, in terms of precinct or proposition, rather than a standalone building consisting of rooms”, said Mr Kiong.

“Traditional-styled hotels are not enough anymore. In the future, what we may expect will be more innovative hospitality concepts that will better activate the area and be a draw for quality tourism,” he added.

For Ascott, its new lyf property at one-north will have several green and sustainability features, such as an energy monitoring system, dual-technology motion sensors and light-emitting diode light fixtures which can achieve energy savings of more than 30 per cent.

The property achieved the Green Mark certification from local authorities last year, said Ascott.

Greenery will also be used to create social spaces, such as an extensive green roof to reduce heat gained by the building in order to create an energy-efficient and sustainable development, said Mr Yeo.

BOOKMARK THIS: Our comprehensive coverage of the coronavirus outbreak and its developments

Download our app or subscribe to our Telegram channel for the latest updates on the coronavirus outbreak: https://cna.asia/telegram