HOTELS TO SERVICE APARTMENT REDEVELOPMENT

Abstract

Average occupancy rates of gazetted hotels fell in 1995 and fell again in 1996. However, supply of hotel rooms showed no sign of falling and tourist arrivals are not expected to pick up in short run. What have created this unbalance in the industry and what can be done to save it? Drop in hotel's occupancy rate was not caused over night, neither was it a result of a single factor. Strong Singapore dollar against most other currencies, continually high supply of hotel rooms and tourism competition in the region are just a few to name. The demand for gazetted hotel rooms is not expected to rebound in short run, with its occupancy rate expected to fall below 80%. The overall result was that many hoteliers decided to redevelop their properties for other uses. Among this redevelopment, service apartment was proposed as one of the most feasible solutions. With strong government support to bring in more expatriates and increasing popularity of service apartment over other lodging concept, service apartment industry has being enjoying above 90% occupancy. The flexibility of decision between sale and lease, and high yield that service apartments could offer are some of the reasons for writer's proposal. According to some operators, competitions are tough. Innovation and creativity are a must for the operators to stay a breath.