Spot-on Again, “IRs No Game Changers for Hotels”

Posted: June 16, 2010 in Uncategorized

Professional Ground again had predicted the correct outcome on “Singapore IRs, Hospitality… Game Changers”.

 

16 June 2010  Commentary by Panel                   Lack of real hot demand for high-end hotels by mass market

Readers may refer to Professional Ground’s commentary posted on 1st May 2010 on the general sentiment of the hospitality industries (mainly hotels) that the two IRs would be the game changers for a better gorwth in hotel demands & rates…

The truth is, as pinpointed by TheEdge Singapore (14th June 2010) that the opening of the two integrated resorts with more hotel rooms inventory, high visitor numbers to IRs might not lead to higher room rates.

The main reasons cited are,

* Most visitors are more sensitve to hotel room rates and that might not stimulate more demands. Casino goers consist of at least 1/3 local Singaporeans are day-trippers.

* Majority of visitors are from the neighboring countries, such as Malaysia. They are minaly the mass market segment and many are not staying at hotels. Instead they might come in for day-trip or stay at friend’s place or at cheaper rest house.

From the perspective of toruism cycle, hotel rates here will continue to remain at the current level because of more supply of rooms inventory. Travel agents will benefit from the larger rooms inventory in the market to negotiate for lower pricing packages. Especially from the two integrated resorts.

The industry operators must take note that this remains a mass market like the Atlantic City model, bus-loads of Malaysian visitors will create the visitor counts but not necessary for some premium products such as higher-end hotel room rates.

One glaring example is Macau. high percentage of mainland Chinese visitors are staying in Zhuhai city across the bordergate for much lower room rates and spend their day-trips into Macau.

Hope for Big Spill-over from MICE? Unlikely.

IRs No Game changers for hotels!

IRs No Game Changers for Hotels… !

“Do not over-estimate economic benefits of the IRs”

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