Channelnewsasia.com | Posted: 29 March 2013 0012 hrs
SINGAPORE : Singapore's prime shopping belt Orchard Road is set to see its first new hotel in two years.
The new Holiday Inn Express is slated to open in the second quarter this year.
Another new 500-room hotel located at the upcoming new mall Orchard Gateway is expected to receive its first guests in the second quarter of next year.
After a number of new shopping malls have set up shop along Orchard Road in the last few years, new hotels are now coming up along the prime shopping belt.
Slated to open in the second quarter of next year is the hotel in Orchard Gateway to be managed by Traders Hotel.
Analysts said the global financial crisis and the manpower constraints in the construction industry have contributed to the lack of new hotels coming up on Orchard Road in the past few years.
However, patience does pay off.
Robert McIntosh, executive director for Asia Pacific at CBRE Hotels, said: "The same quality of hotel, they would have marked it up 10 to 20 per cent premium on the room rates in Orchard Road.They are definitely more attractive than some other location.
"There is a lot of extra supply, about 6 per cent annually in the next couple of years. But the demand is coming through pretty strongly as well. We think it is going to balance out.'
Last year, Singapore attracted a record 14.4 million visitors who spent S$23 billion in tourism receipts. Despite a slowing global economy, officials are still confident of tourist arrivals growing by up to 7.6 per cent to 15.5 million.
With the increased supply of hotels in Singapore, analysts expect the occupancy rate or the number of rooms that will be taken up to come down.
Alan Cheong, research head at Savills Singapore, said: "The occupancy (rate) will hit towards the 80 to 82 per cent levels in the next three to four years. But the average room rate would be S$230 to S$240 per night for some hotels, which is the current level.
"Anything above 80 per cent is good for hoteliers. If your room rates hit about 60 per cent or 70 per cent like in Bangkok, Beijing, you will charge about US$100 per night."
A slight dip in occupancy rate may not be all bad for hoteliers.
Analysts said this will help maintain room rates and help the hotels to continuously generate revenue.
Revenue Per Available Room should continue to hold at a steady pace.
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