REFURBISHMENT OF THE RAFFLES HOTEL -- A FEASIBILITY ANALYSIS

Abstract

Land is a scarce and precious resource and must, therefore, be optimally utilised as bad decisions would have undesirable consequences on the economy. Ideally, every developer should undertake a comprehensive feasibility analysis before embarking on a development project. In Singapore, the growth of the hotel industry has been so significant that it has become one of the important sectors of the Singapore economy. The phenomenal growth in the tourist arrivals in the past has imputed much confidence in the industry, fuelling numerous hotel and shopping projects. However, decisions to develop were often the result of some developers trying to duplicate the successes of others without a proper appreciation of the market potential. This is especially so in a property boom, as was the case in Singapore. A poorly planned project may turned out to be profitable so much so that a developer would not see the need for a feasibility analysis. Unfortunately, the tourist and hotel industry in Singapore is extremely vulnerable to exogeneous economic and political influences. The current slow-down in the property market and the gross over-supply of hotel rooms within the next few years will give an added impetus to examine the market more closely.