HOTEL DEVELOPMENT AT SOUTH BRIDGE ROAD / NEIL ROAD SITE - A FEASIBILITY ANALYSIS

Abstract

Hotel industry has been enjoying high occupancy rate since the economy picks up from the recession in the mid-1980s. In 1990, the occupancy rate reached a peak of 91.6% in the month of February and visitors arrivals had surpassing the five millionth mark for the first time. In view of the buoyant economy and in response to Singapore Tourist Promotion Board (STPB)'s forecast of a likely shortage in hotel accommodation, the government offered four sites for hotel development through URA sales of site programme in December 1990. While the programme had released substantial land in the late 70s for hotel development, the recent Gulf crisis in the Middle East caused a poor response to the tender with only four bidders tendered for two sites. There were different views in the industry regarding these sites proposed for hotel development which are located in the fringe of conservation areas. Some welcomed more developments away from the main tourist belt , so as to build more medium class hotel at a competitive rate for visitors who are more price sensitive. In addition, these prime sites have potential attractions to offer to the tourists. Taking the pessimistic view, hoteliers were worried that the creation of new rooms might not be matched by growth in visitors. This could lead to a glut similar to the one that hit Singapore in the early 1980s, where some projects suffered losses while others were shelved or abandoned. This drastic financial losses could be minimised or avoided if thorough feasibility analysis are conducted before making a decision to embark on any investment. With conflicting views of the future prospect for this new development, this study will attempt to evaluate the feasibility and financial viability of the subject site at South Bridge Road/Neil Road.