S’pore hotel room rates seen tripling by 2015

Hotel room rates here are likely to more than triple to an average $600 by 2015, driven by a shortage of rooms, investment bank Merrill Lynch says in a new report.

The investment bank expects hotel occupancy would stay above 90 per cent with revenue per available room (Revpar) reaching $540 by 2015 – $235 more than the latest figure provided by the Singapore Tourism Board.

In April, the latest month for which official data are available, the average room rate was estimated at $192, while Revpar stood at $161.

Merrill Lynch expects the strong demand for rooms to be underpinned by a large increase in the number of visitor arrivals. ‘We expect Singapore to attract 17.7 million visitors by 2015, an increase of 7.0 per cent per year between 2007 and 2015,’ said the report.

‘The main contributors will be from the leisure visitors, new visitors attracted by the integrated resorts, and growth of the business and meetings, incentives, conventions and exhibitions (BTMICE) segments.’

The bank’s prediction is slightly more upbeat than that of the Singapore Tourism Board, which aims to draw 17 million visitors a year to Singapore by 2015. In 2006, the island saw 9.7 million visitors.

With the expected surge of tourists, more hotel rooms will be needed, Merrill Lynch said. ‘In our opinion, the demand for hotel rooms will increase at an average of 4,050 rooms per year between 2007 and 2015, while supply of rooms is forecast to increase at 3,300 rooms per year – resulting in a 19 per cent shortfall per year.’

The bank forecasts that by 2015 demand for hotel rooms will reach 62,100 rooms per day, whereas supply will only be 59,220 rooms – pushing room rates up.

The shortage means that hotel operators will regain pricing power and room rates will begin to rise to meet those of other cities in the region, the report said. As at the end of last year, Singapore’s four- and five-star hotel room rates were 54 pre cent cheaper than Hong Kong’s and 17 per cent cheaper than Shanghai’s.

In its report, Merrill Lynch also picked Singapore-listed stocks that are likely to benefit from the uptrend in hotel room rates, reiterating its ‘buy’ calls on Ascott Residence Trust (ART), CDL Hospitality Trusts and CapitaCommercial Trust (CCT) – citing the stocks’ large exposure to the Singapore hotel market.

‘CDL Hospitality Trusts is the largest hotel owner, by number of rooms, in Singapore and the purest listed play on the Singapore hotel sector,’ the report said. ART, which has 25 per cent portfolio exposure to the Singapore market, was also favoured for its major portfolio exposure outside Singapore, including Vietnam and China.

Merrill Lynch is also upbeat on CCT, which currently generates 18 per cent of gross revenue from its exposure to the Singapore hotel market via its 60 per cent holding in Raffles City Singapore.

‘We believe that the positioning of the Raffles complex is unique by virtue of both its proximity to Marina Bay and the proposed F1 circuit. With the possible integration of the Circle Line MRT and ongoing retail asset enhancement works, we believe that hotel room rates are set to increase in line with, if not above, our forecasts,’ it said.

Source : Business Times – 23 Jun 2007

‘Hub’ hotels the next in-thing

As Singapore courts new kinds of tourists, enterprising developers are coming up with niche hotels aimed at specific types of travellers, located in specific catchment areas.

The trend has even coined a new term – ‘hub hotels’. And it looks like they will spring up all over the island – from Changi Airport and research hub one-north to Novena and the Central Business District (CBD).

The hotels are located where their customer base is likely to be.

Owners of some of them are banking on government plans to develop hubs – such as a medical cluster in Novena, a research centre at one-north and the upcoming Sports Hub on the Kallang waterfront – to pull in customers.

Other hotels, such as the proposed hotel at Changi Airport’s Terminal 3 and Hind Development’s boutique business hotel which opens in July in Seah Street where the former Metropole Hotel used to be, are counting on an expected increase in transit passengers and the government’s push to boost Singapore’s meetings, incentives, conventions and exhibitions (Mice) segment.

Hotels can be located in any area where human traffic is expected to grow, industry players reckon.

‘For a hub to have a live, work and play concept, you need a hotel to bring in contained human traffic, buzz and 24/7 liveliness,’ says Jackson Yap, chief executive of United Engineers (UE), which is developing a hotel at one-north and bidding for a hotel at the proposed Sports Hub as part of the SingaporeGold consortium.

In particular, the Novena area is expected to benefit from such synergy as the government works to bring more medical tourists to Singapore.

In January, a hotel site aimed partly at medical tourism was sold to Far East Organization for $131.1 million. The Sinaran Drive site is close to Tan Tock Seng Hospital and Far East’s Novena Medical Suites.

‘As the medical tourism sector develops, more properties such as that proposed by Far East could be contemplated,’ says Scott Hetherington, Asia managing director at Jones Lang LaSalle Hotels.

This, he says, will allow Singapore to compete with Thailand, which has many facilities that combine medical procedures with tourism.

Elsewhere at one-north, which will be home to corporate headquarters of many prominent biotech and pharmaceutical research companies, UE has started building its Park Avenue Vista hotel.

Scheduled for completion by 2011, the hotel, which is expected to have about 370 rooms, will mainly serve travellers for nearby educational institutions such as the National University of Singapore, medical institutions such as National University Hospital (NUH), high-tech corporations and biomedical research institutions.

And it also hopes to cater to general tourists. ‘We anticipate demand from the growing number of medical tourists at NUH and also students attending short-term, postgraduate courses at nearby educational institutions,’ says Mr Yap.

Another potential goldmine for a ‘hub hotel’ is the upcoming Singapore Sports Hub, with a ready catchment of spectators and administrators who can be expected to come whenever Singapore hosts a major sporting event.

But ‘hub hotels’ that get most of their patronage from certain types of tourists will not be able to survive unless they draw visitors from other, more common segments, observers say.

‘They (hotels) may have to focus on a particular direction, but that does not mean that business is going to come solely from one segment only,’ says Mr Hetherington.

Source : Business Times – 9 Jun 2007

Carlton group tops bids for hotel site

HONG KONG tycoon Li Dak-sum’s Carlton group yesterday emerged as the top bidder for a 99-year hotel site at Gopeng Street next to the Amara Hotel in the Tanjong Pagar area. Carlton put in a $123 million bid.

The only other offer for the site came from Republic Hotels and Resorts, part of Millennium & Copthorne Hotels plc, which bid $118.21 million.

Carlton’s bid works out to $573 psf per plot ratio, which market watchers say is the highest for a 99-year hotel site in recent years.

In November last year, Hong Leong Group bagged a site at Mohamed Sultan Road for $518 psf per plot ratio.

In January this year, Far East Organization paid $501 psf ppr for a hotel plot next to Novena MRT Station.

Mr Li’s son, Richard, who is managing director of Carlton Hotel (S) Pte Ltd, yesterday evening told BT that the group expects to pump a further sum of $140 million in construction costs and fees for its proposed hotel development at Gopeng Street, bringing the all-in cost to around $263 million.

‘We are looking at two scenarios – a limited service hotel with about 400 rooms or a more up-market, hip hotel, with about 380 rooms,’ Richard Li said, indicating that for now, the group is more inclined towards the former option as ‘there are not many of this type of hotels’.

If the group goes for a 400-room hotel, the break-even cost would be $657,000 per room, which hotel analysts say is one of the highest for a hotel development or transaction in Singapore in recent years. ‘For instance, the Intercontinental Singapore last year changed hands for $611,000 per room, and the recent sale of Novotel Clarke Quay was reported at $552,000 per room,’ HVS International Singapore managing director David Ling observes.

Carlton’s bid reflects its confidence in the Singapore tourism sector, he said.

‘The market is conducive for new hotel developments now that we have concrete plans going ahead – two integrated resorts with casinos, Formula 1. These are all positive demand generators coming on line,’ Mr Ling reckons.

Mr Li of Carlton Singapore acknowledges that his group’s bid at yesterday’s state tender was high but ‘we wanted to get the site’, he said.

‘We basically want to do another hotel in Singapore,’ he said. ‘Of course, based on today’s room rates, the venture is not very profitable. But we expect demand to be higher in the years to come.’

Mr Li indicated the group does not have plans for further hotels in Singapore for the time being.

In early 2005, Carlton clinched a plot next to its Carlton Hotel at Bras Basah Road for $55.6 million. It recently began construction on the site for a 300-room extension to the existing hotel.

The total cost for developing the new wing (inclusive of the land price) is about $175 million, reflecting a cost per room of about $583,000. The extension is expected to be ready around 2009.

The 25,543 sq ft site site at Gopeng Street can be developed up to 30 storeys high.

It could be completed around 2010.

Source :  Business Times – 29 May 2007

Paramount Hotel site being sold for $200m

PARAMOUNT Hotel and Paramount Shopping Centre are up for sale at an indicative price of $200 million through a public tender exercise.

The property has a combined land area of about 102,710 square feet and a plot ratio of 3.0 with a maximum gross floor area of 308,130 sq ft. At the indicative asking price, this works out to about $650 per square foot per plot ratio.

The site is being marketed by Cushman & Wakefield, whose managing director Donald Han said it can be developed into a retail and hotel development with 450-600 rooms.

Perhaps even more attractive to potential developers is the fact that the site is under the government’s ’safeguard list’. This means there is a possibility of converting the site to residential development instead.

Indeed, Mr Han believes that based on current prices for new property launches in the East Coast area, this could prove to be the better option. ‘Prices for recent residential projects like CapitaLand’s The Seafront on Meyer and GuocoLand’s The View @ Meyer transacted between $1,500 and $1,800 psf, reflecting a new high in the Katong, Meyer and Amber Road residential enclave,’ he said.

Based on the possible redevelopment of the site into a condominium with a plot ratio of about 2.1, Mr Han estimates that a developer might pay $830 psf per plot ratio for the site. ‘The breakeven cost could be around $1,100 psf,’ he added.

There is also potential for a hotel development. ‘The property is situated next to Grand Mercure Roxy Hotel, which is operated by the Accor Group. Accor recently announced that they will be relocating their Asian headquarters from Sydney to Singapore to take advantage of the growing tourism market in Singapore and in the region,’ noted Mr Han.

Source : Business Times – 24 May 2007

HGC tops bids for Little India site with $48.89m

The sizzling hot Singapore hotel market has drawn out listed Hotel Grand Central Ltd (HGC) – which, to date, owns only one hotel here – to emerge as the top bidder for a 99-year leasehold ‘white’ site at Belilios Road in the Little India area with a $48.89 million bid.

Assuming it is awarded the site, the group plans to develop a 350 to 400-room hotel targeted at the ‘mid-market segment of travellers who seek value’, an HGC spokesman told BT yesterday.

The group is also planning to include some retail space for its proposed development, possibly on the ground floor on the side facing Serangoon Road, he added.

He declined to give any estimate for the all-in investment in the project, but said HGC hopes to complete the development around early 2009.

The other four bidders for the site, which was offered under a state tender that closed yesterday were: a Hotel Royal Ltd subsidiary ($43.39 million); Soilbuild Group ($41.86 million); Bishopsgate Developments, part of the BS Capital group ($35.18 million); and Lee Han Boon ($29.9 million).

Assuming the Urban Redevelopment Authority (URA) awards the site to HGC, it will be the group’s first major hotel investment in Singapore in around 30 years. It currently owns just one hotel in Singapore – the namesake Hotel Grand Central at Kramat Lane in the Orchard Road vicinity, behind Le Meridien – which it completed in the early 1970s and expanded in two later phases.

‘Our bid for the Belilios Road site reflects our confidence in the Singapore tourism sector,’ HGC’s spokesman noted.

The group’s proposed hotel at Belilios Road will target primarily Indian travellers but HGC is also gunning for other Asian travellers, including those from Indonesia and the Philippines. Another group will be travellers from Australia, New Zealand and the United Kingdom ‘who wish to sample Indian culture without going to India’.

‘The site is in a really interesting location which will appeal to tourists. Belilios Road was named after a cattle rancher from Calcutta and it is also next to a Hindu temple dedicated to the goddess Kali,’ HGC’s spokesman said. The site can be developed into a project with a maximum gross floor area of 116,282 sq ft. As a ‘white’ site, the possible range of uses allowed for the plot include hotel, retail, dining, entertainment, office and residential, URA had said earlier.

Although mainboard-listed HGC now has just one hotel in Singapore, it has a sizeable chain overseas, comprising more than 20 hotels in Australia, New Zealand and Malaysia, most of which are owned and managed by the group under brand names like Hotel Grand Chancellor and Hotel Grand Continental.

Source : Business Times – 23 May 2007

CDL H-Reit buys Clarke Quay hotel

CDL Hospitality Real Estate Investment Trust (CDL H-Reit) has purchased the Novotel Clarke Quay in a deal that prices the 398-room hotel at $219.8 million or about $552,000 per room.

The amount comprises a purchase amount of $201 million and assumption of potential liability of about $18.8 million. The hotel site has a remaining lease of about 70 years.

For the seller, a Lehman Brothers entity, the divestment represents a doubling of its investment. Lehman bought the hotel, then known as Hotel New Otani, in 2004 for $82 million from a Wuthelam Group-controlled entity and spent a further $19 million renovating it, resulting in an all-in investment of around $101 million. It later appointed French hotel chain Accor to manage the hotel under the four-star Novotel brand.

Jones Lang LaSalle Hotels brokered the latest sale.

CDL H-Reit is part of a stapled group, CDL Hospitality Trusts, which is listed on the Singapore Exchange.

Singapore-listed City Developments Ltd’s London-listed hotel arm, Millennium & Copthorne Hotels (M&C), has a 39 per cent stake in CDL Hospitality Trusts.

The yield-accretive acquisition of Novotel Clarke Quay will boost CDL Hospitality Trusts’ Singapore hotel room count by around 20 per cent to 2,324, making it Singapore’s biggest hotel owner, in terms of number of rooms. The acquisition will also see the value of the trusts’ properties grow from about $1.1 billion to $1.3 billion.

CDL H-Reit will enter a lease agreement appointing the hotel’s incumbent manager Accor SA to manage and operate the hotel under the Novotel flag until end-2020, for a fee that works out to a tad below 10 per cent of the hotel’s gross operating profit. The projected annualised property yield of the hotel for this year is about 5.5 per cent, higher than the 3.9 per cent implied property yield for CDL H-Reit’s current portfolio for the current year.

The acquisition is forecast to boost annualised 2007 distribution per unit (based on Q1 2007 results) by 8.9 per cent, from 7.10 cents to 7.73 cents. Vincent Yeo, CEO of M&C Reit Management Ltd, the manager of CDL H-Reit, said that assuming the acquisition of Novotel Clarke Quay is fully funded by debt, the trusts’ gearing ratio will increase from 35 per cent to 46 per cent. He said that while the trust is on the lookout for more hotel acquisitions in the Asia-Pacific – in countries like China, India, Philippines and Vietnam – Singapore still remains one of his favourite markets because of its growth potential and risk profile.

For Q1 2007, CDL Hospitality Trusts’ Singapore hotels achieved a 25.4 per cent year-on-year increase in revenue per available room (RevPar). ‘Based on the strong performance so far in the second quarter, the industry players expect a much higher year-on-year RevPar growth in Q2. And we expect that to be the same for the hotels in the CDL Hospitality Trusts.’

The acquisition of Novotel Clarke Quay will increase CDL Hospitality Trusts’ exposure to the strong Singapore hotel market, which is expected to benefit from continuing strong growth in visitor arrivals and minimal new hotel room supply this year and next.

Source : Business Times – 18 May 2007

Accor to bid for Tanjong Pagar hotel site

EUROPEAN hotel company Accor says it will put in a bid for a government land sales hotel site in Tanjong Pagar and will consider bidding for another site nearby.

Accor said it plans to build a 538-room Ibis hotel on the Bencoolen Street site it won in a public tender in December last year together with joint venture partner LaSalle Investment Management.

The Ibis Bencoolen Street, in which Accor has a 30 per cent stake, will cost $145 million and will be the largest Ibis hotel in the world outside Paris.

Other Accor hotels in Singapore include Grand Mercure Roxy and Novotel Clarke Quay.

Making the announcement yesterday, Accor Asia Pacific managing director Michael Issenberg said the company had decided to move its Asia Pacific headquarters from Sydney to Singapore.

Saying that Accor has 100 hotels under development or in advanced stages of planning across Asia, Mr Issenberg added that ‘Singapore is the perfect base to build and operate that network’.

Accor’s hotel brands include the deluxe Sofitel, upper-scale Novotel and mid-scale Mercure. Ibis is Accor’s economy hotel brand.

Mr Issenberg said that a flagship Sofitel in Singapore would be ideal, but Accor’s key priority was to be financially prudent.

Accor may expand its time-share Accor Premiere Vacation Club here, and is considering buying properties in Singapore to do this. Mr Issenberg said that Accor has had discussions with developers although nothing has been finalised.

For Accor, economy hotels are viable as the company believes that people in the fastest growing markets such as China and and India are more likely to looking for quality three-star accommodation.

‘There are many hotel projects in the pipeline in Singapore, but of the 7,200 rooms committed, only 10 per cent of this supply is in the economy segment, while 43 per cent is committed to the mid-tier segment and 47 per cent to the upper-tier sector,’ he said.

Mr Issenberg said that when Ibis Bencoolen Street opens in 2009, room rates are expected to be between $100 and $110.

Ibis is Accor’s fastest growing brand in Asia Pacific, with 35 hotels already operating and over 50 under development. In India alone, plans are under way to build up to 20 Ibis hotels in the next five years. Globally, there are 750 Ibis hotels in 38 countries, and the brand is set to grow by up to 50 hotels per year.

Accor also has plans to develop its other brands in Asia. Mr Issenberg said that it will invest US$200 million to do this. Opening in August will be its flagship hotel in China, the Sofitel Wanda Beijing.

Source : Business Times – 11 May 2007

Tanjong Pagar reserve hotel site attracts $61m bid

A COMMITTED bid of $60.888 million has been received for a hotel site on the Government Land Sales (GLS) reserve list at Tanjong Pagar Road/Tras Street. The site will now be put up for public tender in about two weeks’ time.

Based on the committed bid price, the 30,844 sq ft site, which has a plot ratio of 5.6 and a maximum gross floor area (GFA) of 172,728 sq ft, works out to cost $352.5 per square foot per plot ratio (psf ppr).

Knight Frank head of research Nicholas Mak believes that the site could eventually fetch around $500 psf ppr.

The site is close to the Tanjong Pagar MRT station as well as office buildings like Capital Tower, Temasek Tower and Springleaf Tower. ‘A new hotel here will probably cater to cost-conscious business travellers and mid-tier tourists,’ Mr Mak said. The hotel could also be positioned as a four-star hotel with about 300 rooms.

Mr Mak said that the committed bid price appeared to be in line with those for other sites that have been put up for public tender recently. This is the second hotel site on the reserve list to be put up for tender this year. The first was in Tanjong Pagar Road/Gopeng Street last month, when the trigger price was $370 psf ppr.

In the West Coast, the Urban Redevelopment Authority has put a residential site at West Coast Crescent on the GLS reserve list.

The 129,166.8 sq ft site has a plot ratio of 2.8 and a maximum GFA of 361,667 sq ft. URA estimates that a development with 290 units can be built.

Colliers International director for investment sales Ho Eng Joo reckons the site could receive bids of $260 to $290 psf ppr. The break-even cost for the new development is likely to be around $600-$630 psf, depending on the cost of materials, he said.

The West Coast, particularly areas close to educational institutions like the National University of Singapore, has seen an influx of developments including Varsity Park and more recently Carabelle. Blue Horizon, which is next to the new site and was launched several years ago, is now selling for over $600 psf on the secondary market.

Source : Business Times – 27 Apr 2007

Lavender hotel site for sale

The Urban Redevelopment Authority (URA) is calling for bids for a reserve site along Rochor Canal earmarked for hotel development.

Located at the junction of Victoria Street and Jalan Sultan, the 99-year leasehold land parcel has a maximum permissible gross floor area of about 30,696 square metres, the URA said yesterday.

The site, near Lavender MRT station, measures 0.68 hectares and has a gross plot ratio of 4.5.

“Its dual frontage along the major thoroughfares creates an opportunity for a distinctive hotel development,” said the Government agency.

The maximum building height permitted for the new hotel would be a part four-storey and part 25-storey building that does not exceed 153 metres.

Under the reserve list system, a site would be put up for tender only if a developer’s indicated minimum bid price is acceptable to the Government.

The Victoria Street land parcel is one of three new hotel sites listed in the Government Land Sales Programme for the first half of this year.

Last week saw a New Bridge Road site put up for application, while another hotel site at the junction of Victoria Street and Jellicoe Road will be made available next month.

Source : Today – 26 Apr 2007

Hotel site put on reserve list

A PROMINENT site for hotel development at the junction of New Bridge and Cantonment roads has been put on the reserve list of the Government Land Sales programme.

It is the first of three new hotel sites to be released by the Urban Redevelopment Authority for the first half of 2007.

The site is 0.45 ha, has a plot ratio of 3.5, and maximum gross floor area of 15,687 square metres.

CBRE Research executive director Li Hiaw Ho reckons a 315-room hotel can be built on it.

Highlighting the proximity to Outram MRT station, and niche hotels like New Majestic Hotel and Hotel 1929, Mr Li believes potential hoteliers will likely develop a mid-tier outlet catering to business travellers who want a reasonably-priced hotel on the fringe of the CBD and tourists who want to be close to Chinatown.

In view of this, and the recent upswing in the hospitality sector, Mr Li believes the site could fetch between $450 and $480 per square feet per plot ratio or between $21.7 million and $23.2 million.

Noting the increasing interest from foreign hoteliers, he pointed out that LaSalle Investment Management and the Park Hotel group have been actively acquiring sites here.

So far this year, LaSalle has bought the Swissotel Merchant Court and a 50 per cent stake in LC Development’s Changi Airport hotel project at Terminal 3.

Source : Business Times – 20 Apr 2007