reporter2
09-03-22, 09:05
Hotels get makeover before anticipated return of international visitors
That's even as some watchers flag potential over-supply of room stock, should recovery in demand be slower than expected
Mar 09, 2022
SINGAPORE hoteliers are seizing the downtime from the Covid-19 pandemic to invest in their properties and gear up for an anticipated return of international visitors.
That's even as some watchers flagged a potential over-supply of room stock, should the recovery in demand be slower than expected.
"Hotel owners with access to capital are taking the opportunity to refresh their older properties during the least busy periods," said Sashi Rajan, senior vice-president at JLL Hotels & Hospitality, adding that the refurbishments are "following a defensive strategy: upgrading to remain relevant and competitive".
Steve Carroll, head of Asia-Pacific hotels and hospitality at CBRE, added that "well-capitalised owners are taking advantage of this lower occupancy period to refurbish key revenue generator areas" such as rooms and food and beverage (F&B) services, and are also investing in conversion of properties from unbranded to branded hotels.
Genting Singapore's Resorts World Sentosa (RWS) last month announced plans to overhaul attractions and hotels under its RWS 2.0 expansion, while the OUE Group has just opened Hilton Singapore Orchard, after rebranding and refreshing the former Mandarin Orchard for a tidy S$150 million.
But analysts warned of potentially too much room stock supply, with Helena Gomes, CBRE senior director of project management, pegging more than 6,000 rooms to hit the market in the next 3 years.
Cushman & Wakefield research head Wong Xian Yang, called the pipeline fine "in normal times", as annual supply came to about 2,530 rooms a year pre-pandemic.
But "depending on the pace of recovery for tourism, we could see supply pressure in 2022 and 2023", he added, referring to over-supply amid modest demand.
Rajan noted that the pandemic delayed completion of "a large volume of new supply" to between 2022 and 2026, which may coincide with the conclusion of some asset enhancement initiatives (AEIs).
But he added it is still "a good time to refresh hotel products", as hotels would otherwise risk their ability to drive rates, thus potentially seeing cash flows take a hit.
He expects the industry to regain pre-pandemic levels by 2024, which "would position ourselves fairly well" and also support rates.
And for now, Alan Cheong, executive director of research and consultancy at Savills, remarked: "With the industry's operating metrics still idling at a low baseline, additional supply would probably not make much of a difference."
The recent and ongoing investments in AEI come despite sluggish momentum in hotel transactions.
Wong noted that no hospitality real estate transactions were recorded in 2020, while hotel investment sales in 2021 came to just S$100 million - down from the 5-year average of S$1.6 billion for the period 2015-2019.
Cheong from Savills attributed the insipid level of interest in the market to the large difference between bid and offer prices by interested parties. He said: "Hotel owners in general have the financial muscle to hold on and the improving operating conditions (are) not helping the market clear."
Still, CBRE's Carroll has tipped the bid-ask spread to narrow, "which will result in a flow of transactions in the second half of 2022, across urban and resort locations".
In the meantime, hotel owners and operators told The Business Times (BT) that they have been using the downtime to overhaul their properties and gear up for expected trends in post-pandemic travel.
Han Khim Siew, chief executive of OUE Commercial Reit's (OUE C-Reit) manager, said Covid-19 was "a timely opportunity to capitalise on the weak operating environment", with the rebranding of the Mandarin Orchard announced in March 2020 at the start of the pandemic.
A spokesperson for CDL Hospitality Trusts (CDLHT) said that the Reit reviewed the portfolio for "critical guest-related enhancements" that could be done during industry downturn, "and we continue to do asset enhancements in 2021 and 2022 to prepare towards the full recovery of the hotel industry".
Projects included ventilation works at M Hotel, as well as room refurbishment at both Copthorne King's Hotel, which was completed in April 2020, and Studio M Hotel, set for completion in May 2022, with inbound travel expected to pick up from mid-year onwards.
Besides AEI, CDLHT has also made investments such as a digital transformation initiative involving in-room voice commands for guests, which aims to reduce staff calls by 20 per cent and increase in-room dining by at least 30 per cent.
Far East Hospitality Trust (FEHT) will finish refurbishing The Elizabeth Hotel and Regency House serviced apartments in the second half of 2022, and is also revamping the F&B offerings at Orchard Rendezvous Hotel.
"On average, FEHT spends S$4 million to S$5 million annually on asset enhancement, improvement works, and replacement of major plant and equipment," said Gerald Lee, CEO of the manager - although such spending was cut back during the pandemic, as some properties remain under government contract as Covid-19 isolation facilities.
And, on top of S$400 million of expansion works at Universal Studios Singapore and S.E.A. Aquarium set to finish by end-2024, RWS is refurbishing 3 hotels between the second quarter of 2022 and end-2023 at an undisclosed cost.
The RWS spokesperson told BT that refurbishment and construction is starting now, to have new offerings ready for the return of international travellers - with enquiries coming in for 2023 and beyond.
https://www.businesstimes.com.sg/government-economy/hotels-get-makeover-before-anticipated-return-of-international-visitors
That's even as some watchers flag potential over-supply of room stock, should recovery in demand be slower than expected
Mar 09, 2022
SINGAPORE hoteliers are seizing the downtime from the Covid-19 pandemic to invest in their properties and gear up for an anticipated return of international visitors.
That's even as some watchers flagged a potential over-supply of room stock, should the recovery in demand be slower than expected.
"Hotel owners with access to capital are taking the opportunity to refresh their older properties during the least busy periods," said Sashi Rajan, senior vice-president at JLL Hotels & Hospitality, adding that the refurbishments are "following a defensive strategy: upgrading to remain relevant and competitive".
Steve Carroll, head of Asia-Pacific hotels and hospitality at CBRE, added that "well-capitalised owners are taking advantage of this lower occupancy period to refurbish key revenue generator areas" such as rooms and food and beverage (F&B) services, and are also investing in conversion of properties from unbranded to branded hotels.
Genting Singapore's Resorts World Sentosa (RWS) last month announced plans to overhaul attractions and hotels under its RWS 2.0 expansion, while the OUE Group has just opened Hilton Singapore Orchard, after rebranding and refreshing the former Mandarin Orchard for a tidy S$150 million.
But analysts warned of potentially too much room stock supply, with Helena Gomes, CBRE senior director of project management, pegging more than 6,000 rooms to hit the market in the next 3 years.
Cushman & Wakefield research head Wong Xian Yang, called the pipeline fine "in normal times", as annual supply came to about 2,530 rooms a year pre-pandemic.
But "depending on the pace of recovery for tourism, we could see supply pressure in 2022 and 2023", he added, referring to over-supply amid modest demand.
Rajan noted that the pandemic delayed completion of "a large volume of new supply" to between 2022 and 2026, which may coincide with the conclusion of some asset enhancement initiatives (AEIs).
But he added it is still "a good time to refresh hotel products", as hotels would otherwise risk their ability to drive rates, thus potentially seeing cash flows take a hit.
He expects the industry to regain pre-pandemic levels by 2024, which "would position ourselves fairly well" and also support rates.
And for now, Alan Cheong, executive director of research and consultancy at Savills, remarked: "With the industry's operating metrics still idling at a low baseline, additional supply would probably not make much of a difference."
The recent and ongoing investments in AEI come despite sluggish momentum in hotel transactions.
Wong noted that no hospitality real estate transactions were recorded in 2020, while hotel investment sales in 2021 came to just S$100 million - down from the 5-year average of S$1.6 billion for the period 2015-2019.
Cheong from Savills attributed the insipid level of interest in the market to the large difference between bid and offer prices by interested parties. He said: "Hotel owners in general have the financial muscle to hold on and the improving operating conditions (are) not helping the market clear."
Still, CBRE's Carroll has tipped the bid-ask spread to narrow, "which will result in a flow of transactions in the second half of 2022, across urban and resort locations".
In the meantime, hotel owners and operators told The Business Times (BT) that they have been using the downtime to overhaul their properties and gear up for expected trends in post-pandemic travel.
Han Khim Siew, chief executive of OUE Commercial Reit's (OUE C-Reit) manager, said Covid-19 was "a timely opportunity to capitalise on the weak operating environment", with the rebranding of the Mandarin Orchard announced in March 2020 at the start of the pandemic.
A spokesperson for CDL Hospitality Trusts (CDLHT) said that the Reit reviewed the portfolio for "critical guest-related enhancements" that could be done during industry downturn, "and we continue to do asset enhancements in 2021 and 2022 to prepare towards the full recovery of the hotel industry".
Projects included ventilation works at M Hotel, as well as room refurbishment at both Copthorne King's Hotel, which was completed in April 2020, and Studio M Hotel, set for completion in May 2022, with inbound travel expected to pick up from mid-year onwards.
Besides AEI, CDLHT has also made investments such as a digital transformation initiative involving in-room voice commands for guests, which aims to reduce staff calls by 20 per cent and increase in-room dining by at least 30 per cent.
Far East Hospitality Trust (FEHT) will finish refurbishing The Elizabeth Hotel and Regency House serviced apartments in the second half of 2022, and is also revamping the F&B offerings at Orchard Rendezvous Hotel.
"On average, FEHT spends S$4 million to S$5 million annually on asset enhancement, improvement works, and replacement of major plant and equipment," said Gerald Lee, CEO of the manager - although such spending was cut back during the pandemic, as some properties remain under government contract as Covid-19 isolation facilities.
And, on top of S$400 million of expansion works at Universal Studios Singapore and S.E.A. Aquarium set to finish by end-2024, RWS is refurbishing 3 hotels between the second quarter of 2022 and end-2023 at an undisclosed cost.
The RWS spokesperson told BT that refurbishment and construction is starting now, to have new offerings ready for the return of international travellers - with enquiries coming in for 2023 and beyond.
https://www.businesstimes.com.sg/government-economy/hotels-get-makeover-before-anticipated-return-of-international-visitors