Four-star hotel room rates dropped 10-20% in 2Q13

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Four-star hotel room rates dropped 10-20% in 2Q13

Competition was ''very stiff''.

The continuous roll-out of mid-scale hotels is predicted to bring Singapore's pricey average room rate (ARR) down, according to local travel consultants.

Mid-scale hotels that have debuted this year include The Ramada Singapore at Zhongshan Park, Days Hotel Singapore at Zhongshan Park (TTG Asia e-Daily, September 6, 2013), Park Avenue Changi and Dorsett Singapore (TTG Asia e-Daily, April 16, 2013). The Village Hotel Katong and The Amoy will also open their doors later in 2013.

In a report by CBRE Global Research and Consulting, some 11,000 rooms are expected to enter the market in the next four years. Mid-scale hotels will supply the largest number of rooms at 4,100 (TTG Asia e-Daily, February 1, 2013).

Luxury Tours & Travel's director, Michael Lee, said: “The entry of these new mid-scale hotels with comparatively lower hotel rates can help ease the typical high hotel rates by the bigger brands in the market.”

Sharing similar sentiments, Ramesh Travel Service's general manager, Ram Samtan, said the entry of such hotels was “significant in this price-sensitive market” and the impact had already been manifested in the recent dip in ARR.

Preliminary estimates from the Singapore Tourism Board (STB) reveal that ARR for January to April slipped 2.2 per cent year-on-year to S$253.70 (US$202.20), while revenue per available room was 2.6 per cent lower at S$217.80.

CTC Travel senior vice president, marketing and PR, Alicia Seah, noted that competition was “very stiff” among business hotels, and observed that four-star hotel rates had fallen 10-20 per cent year-on-year in Q2.

However, she highlighted that this effect was unlikely to spill over to other sectors, saying: “The five-star hotels will still hold up their rates because of their prime position and iconic status.”

Agreeing, Lee said: “These new mid-scale hotels will create more choices into the three- and four-star hotel segment, but (are) unlikely to pull traffic away from the upscale market.”

However, STB statistics also show that while room rates have softened slightly, the average occupancy rate for January to April held firm, edging down just 0.3 per cent to 86 per cent.

By: Lee Pei Qi
Source: http://ttgasia.com/article.php?article_id=21147

Singapore, June 11, 2013

http://sbr.com.sg/source/ttg-asia/four-s...20-in-2q13
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