Staycations can't sustain Singapore

Travel | BLOOMBERG 8 Jul 2020

In indonesia, locals can soon fly from Jakarta to the beaches of Bali for a domestic vacation. Tokyo residents can escape the pandemic stress with a hike up Mount Fuji, and New Yorkers can head to the Hamptons on Long Island.

Residents of Singapore, a city state smaller than New York City, have few such options, presenting a massive problem for its battered tourism industry.

With borders closed to foreigners, hotels and tourist attractions need to count on "staycationers" to plug the gap in an industry that brought in almost US$20 billion (HK$156 billion) in revenue last year.

It's a tall order.

"Unless we have a return to international business, the hotel industry is going to be decimated as up to 90 percent of our bookings come from international travelers," said Michael Issenberg, chief executive officer of Accor's Asia Pacific unit, the largest hotel operator in Singapore.

While tourism everywhere has been hammered by the pandemic, the gradual opening of some domestic travel has given a shot in the arm to airlines and hotels in places like Australia and Vietnam.

Rosewood Hotel Group has seen occupancy rates as high as 70 percent at some of its China properties as leisure travel picks up, said CEO Sonia Cheng.

Singapore's tourism sector faces a tougher challenge, as the hotels were just given a green light last week to request approval to welcome domestic tourists.

Many locals, like teacher Najeer Yusof, prefer to save their money and wait for travel to resume in nearby hotspots like Thailand and Malaysia rather than spend it on a hotel down the street.

"There's more to see and experience overseas at a lower cost," he said.

There's also the "awe factor - getting to see or experience something I won't otherwise be able to in Singapore, like the mountains and national parks in Indonesia and activities like diving and surfing."

Though the country of 5.7 million people has reopened its economy after a lockdown of more than two months, its borders are still largely closed. It recorded a historic low of just 750 foreign visitors in April, down from 1.6 million in the same month last year.

May's numbers, at 880, weren't much better.

"In the short term, hotels, eateries and attractions can reorientate to draw interest to staycations, attractions or food discounts," said Selena Ling, head of treasury research and strategy at Oversea-Chinese Banking Corporation. "However, our inherent small domestic market size implies it may not be a longer-term sustainable solution."

GDP boost

Tourism has been an increasingly important industry for Singapore, helping to diversify the economy from its traditional strengths of finance, oil refining and shipping. Attractions such as the Marina Bay Sands hotel and casino, Universal Studios theme park and Singapore Zoo have drawn tourists globally.

Last year, Singapore hosted a record 19.1 million visitors and tourism receipts rose to S$27.7 billion (HK$154 billion), from S$26.9 billion the year before.

Its tourism sector, which employs about 65,000 people, contributes about 4 percent to gross domestic product. The Singapore Tourism Board doesn't track the share of local versus international tourism.

The border closure means Singapore needs to persuade locals to spend more money at home.

Even with overseas travel off limits, Singapore residents will still want to venture out, said Tourism Board CEO Keith Tan. "They may therefore be open to take time off in their own city and rediscover all that Singapore has to offer," he said.

Singapore has set aside S$90 million for the tourism sector and a task force is developing domestic and international recovery plans to be shared soon.

Expats return

Hotels, including the Shangri-La, are also getting a small boost from the thousands of Singaporeans and expats who had been traveling abroad and are slowly being allowed back in.

When they arrive, most are being forced to quarantine for 14 days in a hotel, at a cost of about S$2,000.

With occupancy running at just 15 percent for August, the iconic Raffles Singapore is offering a two-night special for about S$795, complete with a complimentary Singapore Sling, free breakfast, city tour and spa discounts.

Some tourist spots are also offering price cuts to attract residents who have been cooped up in their apartments for weeks. Sentosa Development, which manages a resort island with attractions including Madame Tussauds and Universal Studios, has waived admission fees until the end of September, said Lynette Ang, the chief marketing officer.

Lo & Behold Group, which operates the Tanjong Beach Club just 15 minutes from the financial district, is launching a new concept called "Dine In Nature," which includes gourmet picnic baskets.

It hopes this "will fulfill a growing demand from local residents for polished, thoughtful dining experiences," said chief operations officer Andrew Ing.

For Singapore's tourism industry, a full recovery isn't likely before 2022, and depends on countries avoiding new waves of the virus and the development of a vaccine, said Wong King Yin, a lecturer in marketing at the Nanyang Technological University.

"Although domestic travel can be a solution at the beginning during the recovery stage, the tourism industry cannot rely on staycations to survive," she said.

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