* Average hotel occupancy rate drops to 83 pct in Sept
* Hong Kong's occupancy rate set to overtake Singapore's
* CDL Hospitality's room revenues slip from 4-year high
By Charmian Kok
SINGAPORE, Nov 19 The best may be over for
Singapore's booming hotel market as tightening corporate budgets
and bank job cuts leave more luxury rooms empty, crimping
profits at firms such as CDL Hospitality Trusts.
Singapore runs neck-and-neck with Hong Kong for the title of
the world's busiest hotel market, with both boasting occupancy
rates that exceeded 85 percent for 2011, according to the two
cities' tourism boards. That's higher than in global tourist hot
spots such as New York and London.
Hong Kong's occupancy rate may pull ahead of Singapore's in
2013, largely because it has fewer new hotels slated to open. If
Singapore's demand stays lukewarm next year, as many hotel
operators expect, room rates and profits will slip.
"We will see a slight drop in occupancy rate (in Singapore)
mainly due to new supply that is about to come on board in
2013," said Jonas Ogren, Asia director at hotel data provider
STR Global, based in Singapore.
"In Hong Kong, we are not seeing so much new supply coming
on board, which means the hotels that are already there will
continue to do better and better."
The supply of four- and five-star hotel rooms in Singapore
is expected to increase by 17.4 percent from 2011 to 2014, while
Hong Kong's will grow by just 13.5 percent, according to real
estate services firm CBRE.
The city-state's high-end hotels have been hit harder than
moderately priced rooms, which suggests that weaker corporate
travel rather than tourism is weighing on demand. September's
occupancy rate for upscale and luxury rooms dipped to an average
of 81 percent, compared with 86 percent for mid-tier
Far East Hospitality Trust, which operates 11
hotels and serviced apartments in Singapore, said some customers
were downgrading to cheaper rooms.
"The uncertainty in the West and the slowdown in businesses
in certain sectors have caused some to cut back on the
deployment of expats and corporate travel," Gerald Lee, Far
East's chief executive, said in a telephone interview.
"Impact from the financial sector is the most visible," he
Demand has eased at Far East's Regency House serviced
apartments, a popular choice among visiting or relocating
bankers who can rent three-bedroom suites by the month.
CDL, which owns four- and five-star hotels in Singapore,
reported weaker-than-expected results on Oct 30 and said its
revenue per available room slipped to S$209 ($170) in the
July-September quarter from S$217 in the previous three months.
That was the highest rate since the second quarter of 2008, just
before the Lehman Brothers bankruptcy sparked a global recession
that crushed hotel demand.
CDL blamed slowing corporate and conferences demand for the
A booming financial services industry and the launch of two
new casino resorts in 2010 helped Singapore's hotels come
roaring back after the global financial crisis, which drove down
the occupancy rate to just 76 percent in 2009.
But banks have cut jobs and casino revenues have softened.
Other hotel operators, including Hotel Properties Ltd
which owns the Four Seasons and Hilton hotels here,
are cautious and blame the worsening business environment as the
"Singapore's hospitality sector may close the year on a
weakened note," Overseas Union Enterprise Ltd, which
owns Marina Orchard on Singapore's main shopping belt, said in
its third quarter earnings statement.
SOUTHEAST ASIA BOOMS
While's Singapore's hotel market slows, other parts of
Southeast Asia are picking up.
Thailand's top two hoteliers, Minor International PCL
and Central Plaza Hotel PCL, are benefiting
from an expanding economy and a recovery from last year's
Investors have pushed the shares to record highs. Shares of
Central Plaza have more than doubled so far this year, while
Minor has surged 87 percent versus a 25 percent rise in the
Units of CDL are up 17 percent on the year, but they have
dropped 9 percent s ince the company released its
weaker-than-expected third-quarter results on Oct. 30.
In Indonesia's capital, Jakarta, Jones Lang Lasalle expects
average revenue per available room to rise 15 to 20 percent this
year versus 10 percent for Singapore.
"Jakarta is going through a big growth spurt, underpinned by
a strong economy. (Multinational companies) are expanding, and
there's increasing demand for hotels and serviced residences,"
said Tom Oakden, executive vice president of investment sales
Asia at Jones Lang Lasalle Hotels.