Inside Asian Gaming

INSIDE ASIAN GAMING | April 2010 32 MICE in Singapore in MICE capacity is going to do much to bring down Singapore’s high hotel room prices. In January this year the average daily room rate (ADR) in Singapore stood at S$187 (US$137). Macau’s ADR for January 2010 was 1,044 patacas (US$130). The Las Vegas ADR for that month was US$99.75. The cost of hotel accommodation is likely to have been a factor in the relatively shallow growth curve of Singapore’s MICE business between 2004 and 2008. Given the massive potential capacity at the new IRs for MICE attendees compared to their hotel room inventory, it’s likely that on site rooms during conference times will attract a premium, while many conference attendees unable or unwilling to pay a premium will have to stay off site. That kind of pattern has already been seen in Singapore’s existing MICE market. In March 2008, the travel industry publication Travel Trade Gazette Asia ran a story investigating why in some months Singapore had very strong business visitor numbers, but no corresponding hike in the average occupancy rate (AOR) of its gazetted hotels. It gave, as an example, July 2007, when Singapore had 25,000 business visitors—one of the highest numbers recorded in a single month up to that time. So why didn’t these 25,000 in theory ‘high- yield’ business visitors help boost the AOR of gazetted hotels that month? In fact, the AOR remained at July 2006 levels. A person responsible for organising accommodation at one of the July 2007 MICE events in Singapore told the publication: “We did not understand the profile of the delegates...To be honest, we over committed to [four- and five-star] hotels. In the end, we could not deliver the numbers. “Some delegates were willing to pay for rooms in these hotels. But most, who were footing their bills for the trip, were not. These cost-conscious delegates did not book rooms through us; they went directly to three- or even two-star accommodation.” Many delegates to Las Vegas conferences also find accommodation off site, but that’s common because most of the major properties on the Strip are clustered together. In Singapore, any conference attendees at MBS staying off site will have a short journey from downtown Singapore (typically 11 minutes and a S$7.50 taxi fare at 8.30am, according to the fare calculator taxisingapore.com ). But conference attendees at RWS will have considerably longer journeys. A taxi from Orchard Road in the centre of downtown Singapore to Sentosa Island isn’t expensive— about S$14 (US$10)—but at 8.30am on a weekday, will typically take about 25 minutes. Minister Lim’s assumption that giving more people more reasons to come to a destination will increase the size of that market seems a reasonable one. There are, though, some structural issues in the Singapore real estate market that could create a lack of correlation between the introduction of casinos and the growth of the local MICE market. What Minister Lim didn’t say in his statement was that some conference and exhibition organisers have been put off Singapore by the relative scarcity and expense of the city’s international standard hotel rooms. Room premium In March 2006, the Singapore Tourism Board ran a story on its website with the following editorial comment: “Bulk buyers such as tour operators and MICE customers have voiced concern that they are unable to get their room allotments from hotels, and where hotels are willing to commit rooms, they come with a higher price Average Occupancy Rate, Average Room Rate and Revenue Per Available Room Source: STB and Singapore Disembarkation/Embarkation Cards 100% 75% 50% 25% 0% Luxury Upscale Mid-Tier Economy $300 $240 $180 $120 $60 $0 AOR(%) AOR(%) APRR/Revpar(S$) APR/Revpar(S$) OVERALL, 2004-2008 By TIER, 2008 2005 2004 122 137 164 202 245 98 115 140 176 199 81 84 83 87 2006 2007 2008 Average Room Rate (APR) Average Room Rate (APR) Revenue Per Available Room (REVPAR) Revenue Per Available Room (REVPAR) Average Occupancy Rate (AOR) Average Occupancy Rate (AOR) 81 76 408 269 192 113 311 217 160 92 81 83 81 2008 vs 2007 Change AOR APR REVPAR %POINTS % LUXURY -5.4 15.4 7.7 UPSCALE -5.1 15.7 8.8 MID-TIER -5.6 16.4 9.0 ECONOMY -8.9 12.9 1.7 The venerable Fullerton Hotel Singapore