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

Hotels  |  23 Dec 2021

The disparate effects of COVID-19 have brought the world’s economy to a standstill, leaving many in the hotel industry stunned and reeling. As one of the key components of the hospitality sector that specialises in guest accommodation services, the hotel industry has been among the worst-hit business industries when COVID-19 erupted in late 2019 and almost plunged the world into arguably the most severe recession since World War II.

In response to the highly contagious virus, governments around the world collectively imposed stringent travel restrictions and social distancing measures to safeguard public health, while travellers cancelled their plans in droves due to personal safety concerns. Although these restrictions were meant to save lives, they came at the expense of livelihoods in the hotel industry which generates most of its revenue from business and leisure travellers. Gradually, as vaccination programmes are launched across the globe in 2021, talks of new travel lanes among various countries have begun and hoteliers are gearing to welcome guests back at their doorsteps again.

In this article, we shall explore the evolving hotel landscape in Singapore and around the world, how COVID-19 is reshaping consumer behaviours in the industry, and what hoteliers can do to not only survive, but also thrive.

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The impact of COVID-19 on the hotel industry

Globally, hoteliers have witnessed a sharp decrease in hotel occupancies due to COVID-19, driving many properties to close temporarily or operate at less than full capacity. This has negatively impacted profitability in the hotel industry, resulting in economic repercussions for the society. According to the American Hotels & Lodging Association, the hotel industry in the United States is expected to end 2021 with 500,000 less jobs than in 2019. To further illustrate the ramifications of COVID-19 on the hotel industry, Marriott International, the world’s largest hotel operator, recorded its first full-year loss in 2021 after more than a decade of stable revenue growth. The hotel chain had also laid-off approximately two-thirds of its corporate staff when its revenue declined by 75 percent in 2020. According to Marriott International, the fiscal impact of COVID-19 has been more severe and sustained than what the hotel chain experienced in 2001’s 9/11 and 2008’s global financial crisis.

Closer to home, Singapore’s outlook for the hotel industry, which comprises of around 400 properties and 63,000 rooms island-wide, has been similarly grim. In the period from January to September between 2019 and 2021, revenue per available room (RevPar) across the industry has declined by 60 percent from $190.60 to $76.23; the average occupancy rate has also fallen from 87.18% to 49.77% in the same period. [Source]

Bar graph showing the decline in RevPar and average occupancy rate of Singapore’s hotel industry in the period from January to September between 2019 and 2021
Performance data of Singapore’s hotel industry adapted from Singapore Tourism Analytics Network

Hotels involved in Singapore’s event industry also bore the brunt of COVID-19. For instance, around 80 percent of couples who arranged for wedding receptions with Millennium Hotels and Resorts requested to postpone their weddings; hotels providing venue services for MICE (meetings, incentives, conventions, and exhibitions) also experienced a decline in bookings due to cancellation of large-scale events.

Besides economic impact, the emergence of COVID-19 also reshaped consumers’ mindsets surrounding guest experience and comfort in the hotel industry. Moving into the new era, the ability of hoteliers to respond to consumers’ changing needs will be essential to the recovery of the industry, especially as consumers adapt to new ways of living which influence their social conduct and consumption behaviours.

 

What hoteliers can do to stay agile

While the hotel industry in the Asia Pacific is expected to only rebound to pre-COVID levels from 2023 onwards, it is important for hoteliers to start preparing for this day to arrive. Some measures that hotels may adopt include:

 

a) Improve guest experience

Enhance safety and sanitation protocols

In the post-COVID world, safety and sanitation protocols are one of the most crucial considerations that will make-or-break guest experience; these considerations are also key to influencing consumers’ choice of accommodation. Echoing this sentiment, a survey conducted by travel news and research firm, Skift, and cloud technology company, Oracle, found that 60 percent of consumers would be more comfortable to stay in a hotel that implements extra cleaning and disinfecting procedures than one that does not.

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To meet expectations, hoteliers have drafted new policies to assure the public that adequate sanitation protocols and safety measures are implemented on hotel premises to safeguard the well-being of all guests and employees. For example, Hilton Hotel’s CleanStay program ensures a safe and hygienic experience for guests at its premises, while hotels in Singapore that meet industry-specific sanitation and hygiene criteria can be certified with the SG Clean quality mark to reflect their commitment to environmental hygiene.

Safety and cleanliness standards are also vital to a hotel’s brand identity and reputation. A hotel environment with poor adherence to such protocols can frustrate guests and drive negative reviews, impacting the frequency of future bookings. Although the new sanitary requirements in the hotel industry can be time-consuming and cost intensive, hoteliers can use this opportunity to build trust with guests and nurture a positive public reputation in preparation for consumer demand to return in the post-COVID world.

 

Adopt technology solutions

In addition to enhancing safety and sanitation procedures, hoteliers are also implementing technology solutions to enhance guest experience. Long gone are the days when guests are only concerned about physical comforts, such as a mattress’ quality or a carpet’s wear-and-tear. Today, the exponential increase in guest experience comes from a seamless integration of physical experience with the personalised digital experience through technology adoption. This includes the ability to launch a Netflix mobile application on a television, the capacity to perform a self-service room check-in, and more. The survey by Skift and Oracle has also found that more than 70 percent of consumers are more likely to choose a hotel that adopts self-service technology as opposed to one that does not.

Technology can also assist hotels in responding to guests’ requests safely while minimising physical contact. For instance, Hilton Hotel has unveiled more contactless options in its connected rooms initiative, allowing guests to use the Hilton Honors app to control room settings and to customise reservation preferences. Meanwhile, Minor Hotels’ group IT director, Thiruselvam Tholtan, confirmed that the hotel has planned to provide more digital options for guests, such as the ability to order food online.

Although hoteliers have been investing in technology for more than a decade, COVID-19 has accelerated this process. However, in the quest to innovate, hoteliers should be mindful about keeping things simple. Instead of building and customising new equipment from scratch, hotels ought to find ways to connect guests’ devices with established technologies in the hotel. This would help hotels save on cost while offering guests with a personalised digital experience through their own devices.

 

b) Pivot business models

Although international travel and large-scale events have been blinkered by safe-distancing measures during COVID-19, there is always a silver lining if hoteliers can identify new opportunities and adapt to consumers’ changing preferences. For example, hoteliers can cater to domestic demands by offering staycation bundles, adapting parts of the hotel into isolation facilities, or tapping on the telecommuting trend to allow guests to book rooms as an alternative to working from home. Hotels can also form partnerships with other companies to increase the reach and visibility of their properties.

 

c) Implement flexible booking policies

Due to the unpredictable nature of COVID-19, border measures have been rapidly evolving, creating uncertainties for travellers. Hence, it is imperative for hotels to adjust to the new norm by offering potential guests with the flexibility to change or cancel their reservations. Echoing this suggestion, 76 percent of consumers are more likely to make reservations with a hotel that offers flexible cancellation and refund policies than with one that does not.

To cater to consumers’ preferences, industry players like Hyatt have taken steps to extend its cancellation policy to provide guests with more flexibility to make travel arrangements once border restrictions are eased. “In addition to offering a reimagined hotel experience that is focused on safety and well-being, we want to help our guests and members book with confidence as they start planning their travels again,” said Mark Hoplamazian, President and Chief Executive Officer, Hyatt.

 

d) Redesign jobs

Many in the hotel industry have been exploring ways to replace manual labour and promote service concepts that require less manpower to operate. It is not unimaginable that a front-desk employee may one day become experts at customising travel itineraries, while housekeepers become the supervisors of cleaning robots through the use of mobile applications.

To further reduce labour costs during COVID-19, more than one-third of hospitality businesses have furloughed between 76 and 100 percent of their employees. However, instead of laying off manpower, hotels may want to consider redeploying existing staff to other roles within the business by offering upskilling opportunities.

To help hotels train and upskill workers, Singapore has initiated a Career Conversion Programme for hotel professionals. Under the 3-month programme, hotels can receive up to 90 percent of financial support to offset salary and course fees incurred by staff during training. By retaining and retraining staff, hotels will be better equipped to reopen and meet the influx of guests once business picks up in the near future.

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The hotel industry remains at crossroads

Although vaccine roll-outs in 2021 have raised hopes of an economic rebound, renewed waves and new variants of COVID-19 still threaten the hotel industry’s outlook. At the time of writing, a new COVID-19 variant, dubbed Omicron, was declared a variant of concern by the World Health Organisation (WHO) on 26 November 2021 and has been detected in nearly 80 countries to date. According to WHO, Omicron’s mutation may make it more transmissible and capable of evading immune protection conferred by the current vaccines, leading to a new wave of infections around the world.

Such discovery has inevitably sent jitters across the globe. In response, governments from around the world have swiftly recalibrated economic reopening plans and re-imposed border measures and travel bans. For example, the Australian government has decided to bar skilled migrants and foreign students from entering the country from 29 November 2021 onwards, just a week after a decision to relax such measures. In Singapore, the Republic implemented a stricter COVID-19 testing regime on all incoming air travellers and those transiting through the city-state. According to Health Minister Ong Ye Kung, Singapore would be taking a cautious approach in its border reopening strategies, citing the evolvement of COVID-19 in the nation as being comparable to “a game of snakes and ladders with the Omicron variant determining if the country remains on track to living with the virus”.

In view of the rapidly shifting border measures, short- and longer-term business performance in the hotel industry have become a challenge to forecast. The International Monetary Fund has cautioned that the surge in COVID-19 cases led by Omicron could dent confidence in economic recovery, while analysts from DBS Group Research opined that unless the current vaccines are effective against the new variant, businesses in the hospitality industry would continue to be among the hardest-hit. Given that Singapore is fundamentally susceptible to global influences, such as economic uncertainties, border measures, and geo-political events, the  hotel industry in the city-state is set to be at crossroads for some time until more data is available to ascertain the risk of Omicron. On a brighter note, some veterans in the hospitality industry continue to remain confident about a travel rebound. “For 2022, the outlook (of travel) is a lot more positive,” said Choo Pin Ang, Expedia’s managing director for Asia, citing examples of countries, such as Malaysia and Thailand, which have taken encouraging steps to revive travel.

Regardless of the outcomes and implications of COVID-19, hotels should continue to maintain a safe workplace, stay operationally agile and financially resilient, and be flexible at pivoting business strategies according to consumers’ evolving preferences.

 

Support for Singapore’s hotel industry

Career Conversion Programme for Hotel Professionals (CCP-HP)

The CCP-HP established by Workforce Singapore is a 3-month programme aimed at supporting hotels to reskill and/or upskill existing staff for redesigned job roles. Hotels can receive up to 90 percent of financial support to offset salary and course fees incurred by staff during training.

Hotel Industry Digital Plan (IDP)

The Hotel IDP, which is part of the SMEs Go Digital programme, aims to make digitalisation a simple process for small and medium-sized enterprises (SMEs). Through Hotel IDP, local SMEs in the industry can refer to a step-by-step digital solutions guide that is simplified for every stage of their business need.

Productivity Solutions Grant – Job Redesign (PSG-JR)

The PSG-JR scheme, an enhancement to the current Productivity Solutions Grant (PSG), supports business transformation among local SMEs. The scheme encourages firms to work with pre-approved Job Redesign (JR) consultants to restructure work processes and responsibilities to make jobs more attractive and productive, allowing firms to hire and retain talents.

Service Industry Transformation Programme (SITP)

The SITP is an initiative that seeks to support local firms in the lifestyle industry, including the hotel industry, in their business transformation journey to become more productive and manpower-efficient. Under the SITP, participants will be trained and provided with key concepts foundations. Subsequently, participants would be subject to workplace mentorship and onsite training upon selection of their core project, typically focused on either digitalisation or service design.

Tourism Development Fund (TDF)

The TDF is an initiative by Singapore Tourism Board to encourage innovation and creation of quality tourism products and services, and to enhance manpower capabilities among companies in the tourism industry. Key enhancements include extending support to hoteliers to implement productivity solutions through redesigning their properties.

 

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Other references

Colliers. (2021, March 17). Singapore Hotels: V-shaped recovery. Retrieved from: https://www.colliers.com/en-sg/news/civas-singapore-hotels-v-shaped-recovery

Deloitte. (2021, April). Forecasting for success in the hospitality industry against a backdrop of uncertainty. Retrieved from: https://www2.deloitte.com/uk/en/pages/consumer-business/articles/forecasting-for-success-in-the-hospitality-industry-against-a-backdrop-of-uncertainty.html

EHL Insights. (n.d.). Hospitality Industry: All Your Questions Answered. Hospitality Insights. Retrieved from: https://hospitalityinsights.ehl.edu/hospitality-industry

Goel, S. (2021, December 16). 4 charts show what the travel industry looks like 2 years into the Covid pandemic. CNBC. Retrieved from: https://www.cnbc.com/2021/12/15/4-charts-show-what-the-travel-industry-looks-like-2-years-into-covid.html

Revfine.com. (n.d.). Hotel Industry: Everything You Need to Know About Hotels!. Retrieved from: https://www.revfine.com/hotel-industry/

Schmitt, A. (n.d.). 4 steps hotels should take to adapt to a post-COVID world. Hospitality Insights. Retrieved from: https://hospitalityinsights.ehl.edu/4-steps-hotels-post-covid-world

Sommet Education. (n.d.). Focus on the future of the hospitality industry, in the short, medium and long term, and how the covid-19 pandemic is influencing course content. Sommet Education. Retrieved from: https://hospitalityinspired.sommet-education.com/news-insights/trends-hospitality/focus-future-hospitality-industry-short-medium-and-long-term-and-how-covid-19-pandemic-influencing-course-content

 

This article is contributed by Cheng Ee Shan, Senior Executive (Engagement), IndSights Research.

 

 



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