Hotels remained cautious towards current business situation

The tourism sector in Singapore has endured a challenging three-year period due to the global health crisis. The hotel industry saw occupancy rates and revenues plummet to all-time lows as international travel came to a standstill. The Singapore Tourism Board reported international visitor arrivals to have plunged more than 80 percent in 2021 from 2020, though there have been signs of recovery with year-on-year growth in the last three quarters of 2021.  Still, hoteliers’ sentiments towards their business situation have remained less positive compared to their peers in other sectors to date – despite the resumption of international travel.

Revenue recovery of hotels may be uneven

The tourism industry was dealt a heavy blow when the global health crisis halted international visitors to Singapore. IndSights Research’s quarterly Business Sentiment Survey (BSS) found hotels’ year-on-year (YoY) revenues to be significantly lower (8 percent) compared to other industries (24 percent) from Oct 2020 to Mar 2021 but this showed signs of improvement in the latter half of 2021 as Singapore gradually exited from its Phase 2 Heightened Alert (P2HA) measures, coupled with the introduction of Vaccinated Travel Lane (VTL) arrangements. In fact, from 1 Apr 2022, the existing VTL scheme will be replaced by the Vaccinated Travel Framework. The new border policies aims to make the travel experience almost like that before the pandemic where all travellers vaccinated against Covid-19 will be able to enter Singapore with just a pre-departure Covid-19 test. There will also be no more quotas on the number of daily arrivals and no entry approvals needed for all vaccinated travellers.

Singapore’s SRV scheme also allowed hoteliers to target the domestic tourism market to stay and spend at their establishments. However, results from the BSS found that only three in ten SRV-eligible hoteliers registered a profit in FY2020. One of the reasons why the SRV scheme may not have benefited more hotels is that smaller hotel businesses may have found it challenging to utilise the scheme. To be SRV eligible, a hotel needs to fulfil a set of criteria (e.g., allocation of extra spaces for quarantine areas, manpower for pandemic management purposes, among others) that smaller businesses may have trouble meeting. Therefore, sustainable business strategies may be more useful to keep hotel businesses afloat.

READ ALSO: Hotels in Singapore – how COVID-19 has changed the industry

Strategic measures such as digitalisation are crucial

Despite the emerging recovery, results from the BSS indicate that the tourism industry is not planning to rest on its laurels.  Hoteliers polled are looking to invest heavily in areas of productivity and digitalisation in the first half of 2022 – an increase compared to 2021, and more than their peers from other sectors.

The application of technological innovations such as virtual queue systems or Vouch SG’s digital concierge automates repeatable manual tasks, enhances operational efficiencies and translates into savings in time and cost.  However, successful technological adoption and implementation requires the support of a trained workforce. Therefore, it is encouraging to note that the majority (85 percent) of hoteliers have plans to maintain or increase training budgets in 2022.

Smaller hotels tend to struggle to fully benefit from business support schemes or are generally unsure of how to digitalise. Industry players that IndSights Research spoke to explained that information gathering often takes up a lot of resources which they do not have. In view of that, and to encourage more in the industry to embrace digital transformation, the Singapore Government launched the Hotel Industry Digital Plan (IDP) in 2019. The IDP is part of the larger initiative (SMEs Go Digital programme) to make going digital simple for SMEs, with step-by-step guides on the digital solutions to adopt at each stage of business growth.

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Effective trendspotting will steer the hotel industry back from the red

Getting international arrival numbers to rebound to pre-pandemic levels will likely take time, hence hotels will need to continue engaging the domestic market. However, with almost three years of non-travel, ‘staycation fatigue’ is inevitable. Hoteliers need to look beyond stays and woo guests with new experiences. Local hoteliers have been cleverly opportunistic and have kept abreast of current lifestyle trends to create new experiences – prominent hotels such as Oasia Hotel Downtown and Pan Pacific Orchard have caught on to Singaporeans’ renewed interest in sustainability, and incorporated environmentally-friendly façade designs and operational practices. These “pandemic makeovers” or rebrands not only help to re-establish a hotel’s unique branding, but are also a timely move to appeal to consumers who are supportive of the sustainability movement.

Despite the uncertainty about their current business situation, the hotel industry is more optimistic about their business outlook in the near future – likely buoyed by the expectation that business will be on the uptick as international travelers return to the region. To ensure continued recovery, it is optimal for hoteliers to stay the course with their digitalisation plans, and commit to innovative offerings to sustain domestic interest.