Boutique hotels see near full occupancy rates

Source : Channel NewsAsia - 11 Mar 2009

Small is apparently beautiful for Singapore’s hotel industry in these uncertain times.

Boutique hotels with fewer than 100 rooms do not seem to be seeing the tourism blues, with some seeing near full occupancy rates in the past few months, even without slashing prices.

Size does not matter for boutique hotel Naumi, even though it has only 10 storeys of 40 rooms.

Naumi, set up in 2008, has seen about 75 to 80 per cent occupancy rates for the past few months, despite falling tourist arrivals in Singapore.

Its strategy is to boost its share of leisure travellers by working with tour operators. Naumi plans to increase its share of leisure travellers to 30 per cent from the current 20 per cent. The rest of its guests are regulars or corporate clients.

Hotel manager of Naumi, Hamant Rai, said: “We have actually a very small inventory, but if you have identified key operators and you just give those allocations - not in the numbers that a large-scale hotel can, but in the numbers that we can manage - then it is actually a bonus for us.

“Although the corporate clientele has gone down a little bit for us, but the growth factor in the leisure clientele that is coming on board has helped us to sustain our occupancy rates, compared to last year.”

With the growth potential, Naumi plans to open two more boutique hotels in Singapore in the next three years.

Bar operator Harry’s also plans to go into the boutique hotel space here.

Tour agent CTC Travel is also looking to do the same, after setting up a boutique hotel in the old French Quarter of Shanghai by end-March.

Observers say the growth in boutique hotels can make Singapore a more attractive destination.

CEO of Tourism Management Institute, Loi HP, said: “It is important, in any big city, especially a big one like Singapore, which is multicultural, (to have) boutique hotels because they add variety to the hotel scene, just like in London and New York.

“Boutique hotels have about 50 rooms or even less, and that’s where they can give very personalised service. You’ll be surprised that some top executives, they prefer to stay in these boutique hotels.

“What is important is how you price the strategy for a boutique hotel vis-à-vis a bigger hotel or a mid-tier hotel so that it gives you the advantage.”

Most hotels say they are very reluctant to slash prices, but some have already done so in light of falling occupancy rates.

Observers say hotel rates in Singapore are likely to fall by about 20 per cent by the end of this year since tourism numbers are expected to slide further.