SINGAPORE (Apr 17): Changi Airport is home to numerous attractions, one of which is the Crowne Plaza hotel located at Terminal 3. The luxury hotel has earned a name for itself as the World’s Best Airport Hotel. Some six months ago, Liza — who prefers not to give her family name — had booked a staycation at the hotel, in anticipation of a high demand from both locals and tourists.
Earlier this month, she checked into the hotel with her husband. While they received a warm welcome and were delighted to check into their “stunning room”, she was taken aback by the lack of guests there. “It was almost eerie, because Changi Airport and the hotel are known to attract large crowds of people on any given day. In fact, the Changi Airport itself was almost desolate,” she tells The Edge Singapore.
“We knew the virus would cause the crowd in hotels to thin, but we didn’t know it would be this bad,” adds Liza.
This unfamiliar sight is the new reality for the whole hospitality industry. Revenue foregone from the missing travellers are adding up by the hour. And the situation is likely to get worse before it gets better.
Millennium & Copthorne Hotels, a member of property group City Developments, is also reeling from the virus outbreak. Conferences, meetings, weddings, anniversaries — events that typically keep the hotels busy — have all been cancelled. “It is difficult to predict the full impact from Covid-19,” a CDL spokesman tells The Edge Singapore. “The prolonged outbreak has adversely affected the hospitality industry in Singapore since late January 2020.”
The government, aware that the hospitality and tourism sector has been among the hardest hit by the virus outbreak, has taken various measures — ranging from wage subsidies and property tax rebates — to help hotel operators pull through the crisis.
“With the plunge in both visitors and meetings, I am sure the government is going to have to do more for sure if there is any hope for the hotels to survive,” says Liza.
Cancellation conundrum
As tourists around the world scramble to cancel their holiday plans because of travel bans, questions arise on how the costs of booking cancellations should be apportioned. Different markets have different practices, as Cynthia Lim found out.
Last November, Lim — who works as a hawker — had booked a trip to Sydney for the family for the school holidays in June. When the Covid-19 situation first broke out in Singapore in January, Lim was left to wonder if she should cancel the family’s much-awaited holiday.
On March 19, that decision was made for her. Lim had no choice but to cancel her plans as Australia shut its borders to tourists. For seven hours, she tried to get Expedia on the line but could not get through as the online travel shopping company was dealing with a “sevenfold surge” in customer calls.
“The accommodation portion of our trip cost us about $4,000 in total for a week,” rues Lim. “For my husband and I, this is about two months of take-home pay for us. If we can’t get a refund, what are we supposed to do?” In light of the pandemic, hotels in Singapore have adjusted their cancellation policies. Fullerton Hotels and Resorts, for instance, now allows changes or cancellation without penalty for up to 48 or 72 hours prior to arrival for stays between March 17 and May 31.
Diversifying customers, operations
One of the biggest vulnerabilities the pandemic has exposed is that a company should not be overly reliant on one particular geography or type of business.
“The virus outbreak is a fitting reminder that with globalisation and the group’s scale, as part of risk management, we cannot be overly reliant on a specific geography or asset class,” says the CDL spokesman. “We will continue to build a diversified portfolio, enabling us to tap on various sustainable income streams to withstand cyclical headwinds and market shifts,” adds CDL.
Ascott Residence Trust (ART), the REIT which is sponsored by The Ascott Limited, a hospitality subsidiary of CapitaLand, has built a very diversified portfolio of properties over the years. But when the pandemic hit, 15 out of the 88 ART properties were temporarily closed either in response to government mandates and health recommendations, or simply to optimise resources.
Instead of relying solely on depleting tourist numbers, ART has started providing accommodation to people who need it. “New sources of business include providing accommodation to those on self-isolation, healthcare personnel on the frontline, workers looking for alternate work-from-home locations and workers affected by border shutdowns,” says ART.
ART also found that markets with higher transient demand such as Australia, Japan, Europe and the US experienced a greater decline in occupancy in March, while properties catering to the longer-stay segment in countries like China, Vietnam and Singapore were less impacted.
Still, ART plans to continue diversifying geographically as well as to have a good mix of stable and growth income streams, and longer average lengths of stay.
However, with just about every country affected by the outbreak, there is a limit to how much a broad-based diversification strategy can achieve. “Once we have weathered the crisis, the economy would undoubtedly need other stimulus and investment packages to help kick-start the recovery so that we can hit the ground running,” says Edmund Lee, managing director of TMF Singapore which provides corporate secretarial, fund administration and trust services.
Although the tourism industry is expected to be one of the worst hit by the virus, experts are worried about the pandemic’s effect on the larger economy. “Given the ongoing situation and the introduction of stricter control measures, we can see the knock-on effect on secondary and tertiary industries such as retail, property and the larger business community,” says Lee.
“While tourism is a very important facet of the local economy, Singapore remains a very important hub for other sectors by serving as a regional management and financial centre.
Local demand and market activity, independent of tourism, should hopefully be enough to sustain the economy during this interim period,” he adds.
But Lee is quick to stress that the crisis, like many others, will pass. And although Singapore will not be spared, Lee notes that Singapore’s economy is diverse enough to sustain itself through the period of turmoil.
