reporter2
05-04-22, 10:27
Could there soon be a wave of hotel conversions into condominiums?
As conditions for the hospitality industry are likely to be rough over the next few years, some hotel owners here may potentially convert their hotels to other uses
Apr 05, 2022
https://i.imgur.com/l80HVnN.png
HOTEL owners here have been enduring a torrid time through the Covid-19 pandemic.
Far East Hospitality Trust, which owns nine hotels and four serviced residences here, posted revenue per available room for its hotels of S$56 in 2021, down 21 per cent and 61 per cent from 2020 and 2019, respectively.
CDL Hospitality Trusts (CDLHT), which has a portfolio that includes six hotels here, posted distribution per stapled security of 4.27 Singapore cents in 2021, down 14 per cent and 53 per cent from 2020 and 2019, respectively.
In 2021, hotel industry room revenues here fell by 20.9 per cent year-on-year, following a 70.5 per cent drop in the year before, according to figures from the Singapore Tourism Board.
In 2022, there were 67,760 international visitor arrivals in February and about 57,170 in January, up substantially from a year ago. Prior to the pandemic, international visitor arrivals numbered around 1.69 million in January 2020.
Hotels here can look forward to brighter days as travel restrictions ease.
In its results announcement for 2021, property and hospitality group UOL Group said the hospitality business here may see signs of recovery as borders gradually open.
Revenue challenges
How strongly will hotels bounce back? People may travel less for business and leisure versus pre-pandemic days even if travel restrictions are largely relaxed globally.
Many business interactions can take place online even as Covid-19 fears recede. Productivity and cost reasons will spur such a behavioural shift as busy executives embrace cutting down on time spent in airports, planes and hotels. Also, reducing business travel helps businesses to reduce their carbon footprint.
Business travel is still needed as some interactions may be best done in person and nothing beats walking around the actual manufacturing plant, investment property or research laboratory.
But virtual meetings, conferences, exhibitions and site inspections have their place too, especially as users get more comfortable with such formats and the technology facilitating virtual interactions improves.
Leisure travel may recover more strongly than business travel. The urge to leave home, to explore the world, and to visit relatives and friends in other countries will support demand for leisure travel.
But, worries over public health, concerns over climate change, and greater embracing of domestic tourism, may stymie recovery in international leisure travel.
For Singapore, the slow recovery in visitors from China, which is pursuing a Covid elimination strategy, can hurt.
In 2021, China was the top source market for international visitors to Singapore with around 88,000 visitors. But this number is down from around 3.6 million in 2019.
Going forward, travellers may make fewer trips but stay longer per trip versus pre-pandemic days. Thus, travellers may opt for more spacious digs - serviced residences can have an edge over hotels in meeting such needs.
Cost challenges
Concurrently, hotels here are facing rising costs of labour, utilities, food and other supplies. Hotels may also incur higher costs as they raise hygiene and cleanliness standards to assure guests of health and safety. In short, expect profit margins of hotels to continue to face pressure.
Additionally, hotel owners and operators face a manpower challenge. With a tight labour market, some workers may shun the hospitality sector and frontline hospitality sector workers may demand better work conditions. Automation can help but upmarket hotels typically need a high level of human touch.
Efforts by the government to lure tourists here, improve tourism offerings and grow Singapore as a meetings, incentives, conventions and exhibitions destination will help the tourism sector. With Singapore's credible management of the pandemic, visitors can feel safe visiting Singapore.
The return of the Formula One Grand Prix in 2022 and the deal to host the race for seven years will also give a boost to hotels here.
Still, conditions for the hospitality industry are likely to be rough over the next few years. As such, expect hotel owners to give serious thought as to whether their business is viable over the longer term.
Hospitality trusts such as Ascott Residence Trust and CDLHT have been pivoting their portfolios, with the former moving into student and rental housing while the latter has taken on a build-to-rent project.
Perhaps Hotel Properties, working with its partners, is looking to diversify from its hotels-centric business by buying Singapore Press Holdings, which is largely exposed to property in segments such as retail, student housing, homes and aged care.
Hotel conversions
The silver lining for some hotel owners here may be to give up and potentially convert their hotels to other uses such as homes, should regulations permit. Numerous hotels were converted into condominiums over the last two decades or so.
The Ladyhill Hotel in the Orange Grove Road vicinity, ANA Hotel along Nassim Road, Marco Polo Hotel in the Tanglin area, Sea View Hotel in Marine Parade, Copthorne Orchid Hotel along Dunearn Road and the Hotel Equatorial along Stevens Road became luxury condominiums The Ladyhill, Nassim Park Residences, Grange Residences, The Sea View, The Glyndebourne and The Equatorial, respectively.
In Singapore, land is a scarce resource. If some hotels are not viable going forward, repurposing the hotels for more optimal uses makes sense.
New hotels are coming up such as that which is being developed by IOI Properties at Marina View. The integrated resorts are adding to their number of hotel rooms. Mandarin Orchard Singapore hotel has been rebranded as Hilton Singapore Orchard while Hilton Hotel Singapore has become voco Orchard Singapore.
Still, many hotels may struggle in a tough environment and some owners may be looking for an exit.
Ultimately, some hotel owners as well as investors in listed groups that own hotels may be rewarded for riding out the pandemic by receiving a possible bonanza should a hotel be redeveloped as a condominium or an integrated development.
As conditions for the hospitality industry are likely to be rough over the next few years, some hotel owners here may potentially convert their hotels to other uses
Apr 05, 2022
https://i.imgur.com/l80HVnN.png
HOTEL owners here have been enduring a torrid time through the Covid-19 pandemic.
Far East Hospitality Trust, which owns nine hotels and four serviced residences here, posted revenue per available room for its hotels of S$56 in 2021, down 21 per cent and 61 per cent from 2020 and 2019, respectively.
CDL Hospitality Trusts (CDLHT), which has a portfolio that includes six hotels here, posted distribution per stapled security of 4.27 Singapore cents in 2021, down 14 per cent and 53 per cent from 2020 and 2019, respectively.
In 2021, hotel industry room revenues here fell by 20.9 per cent year-on-year, following a 70.5 per cent drop in the year before, according to figures from the Singapore Tourism Board.
In 2022, there were 67,760 international visitor arrivals in February and about 57,170 in January, up substantially from a year ago. Prior to the pandemic, international visitor arrivals numbered around 1.69 million in January 2020.
Hotels here can look forward to brighter days as travel restrictions ease.
In its results announcement for 2021, property and hospitality group UOL Group said the hospitality business here may see signs of recovery as borders gradually open.
Revenue challenges
How strongly will hotels bounce back? People may travel less for business and leisure versus pre-pandemic days even if travel restrictions are largely relaxed globally.
Many business interactions can take place online even as Covid-19 fears recede. Productivity and cost reasons will spur such a behavioural shift as busy executives embrace cutting down on time spent in airports, planes and hotels. Also, reducing business travel helps businesses to reduce their carbon footprint.
Business travel is still needed as some interactions may be best done in person and nothing beats walking around the actual manufacturing plant, investment property or research laboratory.
But virtual meetings, conferences, exhibitions and site inspections have their place too, especially as users get more comfortable with such formats and the technology facilitating virtual interactions improves.
Leisure travel may recover more strongly than business travel. The urge to leave home, to explore the world, and to visit relatives and friends in other countries will support demand for leisure travel.
But, worries over public health, concerns over climate change, and greater embracing of domestic tourism, may stymie recovery in international leisure travel.
For Singapore, the slow recovery in visitors from China, which is pursuing a Covid elimination strategy, can hurt.
In 2021, China was the top source market for international visitors to Singapore with around 88,000 visitors. But this number is down from around 3.6 million in 2019.
Going forward, travellers may make fewer trips but stay longer per trip versus pre-pandemic days. Thus, travellers may opt for more spacious digs - serviced residences can have an edge over hotels in meeting such needs.
Cost challenges
Concurrently, hotels here are facing rising costs of labour, utilities, food and other supplies. Hotels may also incur higher costs as they raise hygiene and cleanliness standards to assure guests of health and safety. In short, expect profit margins of hotels to continue to face pressure.
Additionally, hotel owners and operators face a manpower challenge. With a tight labour market, some workers may shun the hospitality sector and frontline hospitality sector workers may demand better work conditions. Automation can help but upmarket hotels typically need a high level of human touch.
Efforts by the government to lure tourists here, improve tourism offerings and grow Singapore as a meetings, incentives, conventions and exhibitions destination will help the tourism sector. With Singapore's credible management of the pandemic, visitors can feel safe visiting Singapore.
The return of the Formula One Grand Prix in 2022 and the deal to host the race for seven years will also give a boost to hotels here.
Still, conditions for the hospitality industry are likely to be rough over the next few years. As such, expect hotel owners to give serious thought as to whether their business is viable over the longer term.
Hospitality trusts such as Ascott Residence Trust and CDLHT have been pivoting their portfolios, with the former moving into student and rental housing while the latter has taken on a build-to-rent project.
Perhaps Hotel Properties, working with its partners, is looking to diversify from its hotels-centric business by buying Singapore Press Holdings, which is largely exposed to property in segments such as retail, student housing, homes and aged care.
Hotel conversions
The silver lining for some hotel owners here may be to give up and potentially convert their hotels to other uses such as homes, should regulations permit. Numerous hotels were converted into condominiums over the last two decades or so.
The Ladyhill Hotel in the Orange Grove Road vicinity, ANA Hotel along Nassim Road, Marco Polo Hotel in the Tanglin area, Sea View Hotel in Marine Parade, Copthorne Orchid Hotel along Dunearn Road and the Hotel Equatorial along Stevens Road became luxury condominiums The Ladyhill, Nassim Park Residences, Grange Residences, The Sea View, The Glyndebourne and The Equatorial, respectively.
In Singapore, land is a scarce resource. If some hotels are not viable going forward, repurposing the hotels for more optimal uses makes sense.
New hotels are coming up such as that which is being developed by IOI Properties at Marina View. The integrated resorts are adding to their number of hotel rooms. Mandarin Orchard Singapore hotel has been rebranded as Hilton Singapore Orchard while Hilton Hotel Singapore has become voco Orchard Singapore.
Still, many hotels may struggle in a tough environment and some owners may be looking for an exit.
Ultimately, some hotel owners as well as investors in listed groups that own hotels may be rewarded for riding out the pandemic by receiving a possible bonanza should a hotel be redeveloped as a condominium or an integrated development.