Great times for hoteliers, not so great for agents

It’s good times for Singapore’s inbound but while hoteliers are smiling, destination management companies are having to battle with rising room rates and reduced allotments.

Judy Lum, Group Vice-President Sales & Marketing of Tour East (pictured), shares her views in this interview with TravelMole Asia.

1. Inbound visitor arrivals are at record highs. The hotel industry is on a roll, breaching the $200 average rate mark for the first time this first half of the year. Are inbound operators also enjoying the boom times?

Business is good but could be better if not for the situation with the hotels.

2. Why has business to Singapore suddenly swung from fairly dull to virtually sizzling?

I believe it is cyclical, Asia has suffered for 10 years, we had been the brunt of all things bad, Asian crisis, haze, Bali bombs, SARS, bird flu, tsunami and unfair and unwarranted Travel Advisories. Singapore was hit from all angles directly or indirectly and no one wanted to build a hotel in Singapore. In fact they all wanted to turn their hotels into service or resident apartments. If anyone had had an inkling then, we would not be in this state of affair with hoteliers increasing their rates to heaven. In short, Asia recovered with a vengeance and caught us all by surprise.

3. How are DMCs coping with the tight room supply? Hotel Phoenix’s closure does not help but new hotels like the Link have opened. What’s your reading on the room supply situation?

For 2007/08 & 2008/09, we will still be faced with a room crunch in Singapore but at Tour East, we have established contracts with hotels that we have not had a close working relationship with before and have obtained additional rooms allotments from 3 and 3.5 stars hotels to increase our inventory by another 8,000 rooms for the next season. There are great opportunities in this current situation for hotels that were less exposed in the international markets to be diversifying into these markets and we intend to be able to support them.

4. Looking ahead to 2008 – what’s the outlook? Can we expect the tight room supply to continue? How much will hotel rates rise by? And do you expect it to dampen demand from leisure visitors? Which markets do you anticipate will be affected by the increased costs of visiting Singapore?

As mentioned earlier, the room shortage will continue through to 2009 and beyond so long as there is no untoward incident in this region. It is as if Midas has laid his hands on Asia, all industries are booming, economies are strong, major events seem to be having Singapore as a venue option and even Bali seem to be recovering – all these will benefit Singapore and increase the pressure on the room crunch.

Yes, I do expect it to dampen the demand from the leisure segment and it is not only because of consumer’s reaction on the high costs of visiting Singapore, it is also due to the disfavour the hotels here have done to the destination by the lack of professional approach to increasing rates, cutting allotments and retracting of value offers to tour operators featuring Singapore. We have hotels who do not even want to meet tour operators.

5. Specifically, Formula 1 – what’s your strategy for this event? Will you be packaging it? What kind of rates are you expecting hotels to charge?

We do not want to be closed out of business during this period by the hotels. We hope to promote this event by incorporating F1 Packages to be sold in various countries via our principals but this is still in preliminary stages. I would expect the rates to be between two to three times higher than the current rack rates.

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