Arrivals drop 80% in Singapore, inbound trade braces for gruelling 2022

IT’s a sign of how bruising it’s been for Singapore’s inbound industry that when news appeared in local media that visitor arrivals in 2021 had dropped more than 80% over 2020, one immediate comment was “it felt more than that”.

This week, the Singapore Tourism Board released preliminary data which
showed that about 330,000
international visitors arrived last year, a historic low (in 2019, it was 17
million), and visitor spending plunged by more than half to an estimated $1.9
billion. In 2020, visitor arrivals to Singapore stood at 2.7 million, and
tourism receipts came in at $4.8 billion.

The STB pointed
to encouraging signs of recovery, with year-on-year growth
in the last three quarters of 2021. “The introduction of various travel arrangements, such as Vaccinated
Travel Lanes (VTLs) has encouraged the gradual return of international
travellers. Domestic consumption has also been strong, as the tourism sector
pivoted to develop new and innovative experiences for locals.”

Nevertheless, the
inbound sector is bracing itself for a gruelling year ahead.

Arthur Kiong: “The manpower crunch, inflation, less government contract business, and fiscal job support schemes will make things more challenging.”

Arthur Kiong, CEO of Far East Hospitality Group, said, “We think it will be more
complicated than 2021. The manpower crunch, inflation, less government contract
business, and fiscal job support schemes will make things more challenging.”

On the tours and activities front, Chan Chee Chong, CEO and co-founder of GlobalTix, believes the first half of 2022 “will be very challenging indeed”.

“The industry
has relied on domestic for the last two years and there is only so much you can
do for a small market. International travel is only slowly recovering in the
first half hence sales numbers aren’t going to be great. On the cost side,
without the Job Support Scheme (JSS) to cushion the expenses, the travel trade
will probably face the toughest challenge this year. Hopefully they have
prepared themselves well for the last two years to get through first half of

Inbound’s return will depend on “significant shift” in
conditions of entry

Kerry Healy, Singapore-based chief commercial officer, Accor South-east Asia, Japan & South Korea, said, “Our forecast for 2022 remains conservative, and will continue to be so until there is a significant shift in the conditions associated with entry into Singapore, such as capacity limitations.

“As the region will continue to compete with many
other global destinations that are also reopening, it is vital that travellers
are not deterred by complicated travel conditions. A restrictive model will
hinder the recovery of the tourism sector, whereas a more flexible model
presents great opportunities for the industry. The biggest threat to hotel
recovery is if entry restrictions, processes and costs are too constraining.”

Last week, the government announced it would continue to maintain a 50% limit on VTL flight and bus tickets for entry into Singapore – a limit set with the onset of the Omricon variant. It did simplify entry requirements by requiring travellers to do unsupervised self-administered antigen rapid tests (ART) if they need to leave their accommodation from days 2 to 7 of their arrival.

Kerry Healy: “The biggest threat to hotel recovery is if entry restrictions, processes and costs are too constraining.”

Healy said she did not see business generated from MICE events and transiting leisure travellers, two historical segments, returning anytime soon in the current environment. “Furthermore, we don’t foresee any revenue coming in from traditional inbound markets such as Mainland China, as well as limited inbound business expected through VTLs with Australia, Europe, USA, Canada, South Korea, India and Indonesia or other SEA countries at least for the first half of 2022. Overall, we anticipate a slow and progressive recovery.”

Choe Peng Sum, CEO of Pan Pacific Hotels Group, said,
“For the first half of 2022, we will continue to focus on domestic demand
in Singapore, Australia and London, which contribute to 85% of our business.

“The majority of demand is still driven by the
domestic markets, and we will continue to build on our packages and products to
drive local demand through different channels – not just for stays, but also
for our restaurants, bars, and experiences. In the second half of the year, we
will turn our focus to drive more international arrivals in the region.”

Kiong said, “I am hopeful borders will
re-open, albeit slowly, after March and start gaining momentum as vaccination
rates improve in key viable markets and therapeutics are distributed more
equally worldwide. The uptick will be for essential business primarily, and
leisure is not expected to rebound until the region recovers palpably.”

Chan, “I believe
there will be a gradual return of inbound into Singapore albeit a much slower
pace for the first half of 2022. I hope that the second half of 2022 will
see much better recovery and we end up with decent numbers in November-December.”

Limited impact of VTLs so far, “a good start but
process needs refining”

VTLs, while welcomed, have had limited impact. Said Chan, “There is movement but it’s
mainly corporate business and VFR. In terms of leisure inbound, I think it’s
negligible. For VTL to have a more significant impact, it has to open up to
more flights as well as cheaper Covid tests. 

the high airfares of VTL flights and the expensive PCR tests are going to turn off
many tourists. They would rather visit other countries like Dubai and skip
Singapore. If we are not careful, we as a nation might completely miss out
on the revenge travel expected to take place in 2022-2023.”

Said Healy, whose group has 27 properties in Singapore, “Overall, VTLs did not bring the amount of business anticipated. These travel lanes were favoured essentially by travellers visiting friends and family in Singapore, hence mostly not requiring hotel accommodation.

“As an industry we need to work
together and be coordinated with clear messaging, building confidence on the
opening of Singapore overall, and not only selected to specific VTLs. VTLs are
a good start towards opening Singapore. It just requires refining the process
to cater to the sheer scale involved in supporting the hotel industry and
associated services.”

Choe Peng Sum: “We see tangible pick-ups, though they remain low compared to pre-Covid levels.”

Pan Pacific’s Choe said the VTLs did bring Pan Pacific a gradual increase in bookings. “In Q4
2021, international travellers from the VTL markets contributed about 10% of
our total bookings in Singapore – this may not seem like a large portion, but
compared to December 2020 before the VTLs opened, we were seeing more than
triple the number of non-domestic guest nights.

“This was especially beneficial
for our Serviced Suites, which has seen good demand coming from US, Japan and
Korea. These mostly comprise project groups and business travellers booking
long stays with us.

“We see tangible pick-ups, though
they remain low compared to pre-Covid levels.”

Sarah Wan, general manager, Singapore, Klook said
that globally, the company has observed promising signs for cross-border
tourism worldwide during the year-end holiday season. “We saw a 4.5x surge in
inbound bookings from November to December to Western markets (US, Australia,
New Zealand, Europe), while inbound bookings to Asia saw about a 3x surge
during the same period”.

added, “With the world at our
fingertips, tourists can afford to choose where they want to travel. There are
various factors a tourist will take into account, such as their personal
preference and even the destination’s overall appeal. Particularly for
Singapore, a major consideration would be the market’s overall attractiveness
as a destination compared to its neighbours in the region or across the globe.
Singapore’s appeal as a destination is contingent on a few factors, including
COVID social restrictions, testing, and even the types of experiences.”

Local stays prop up hotels but “staycations may take a back seat” in Singapore

For the short term, the reality is Singapore hotels
will still have to rely on the domestic market. However, Kiong, whose group operates
25 properties in the city state, believes that staycations “will take a back
seat as we expect Singaporeans to holiday abroad when borders re-open rather
than stay at home. I think they had enough of staycations over the last two

Sarah Wan: “Singapore’s appeal as a destination is contingent on a few factors, including COVID social restrictions, testing, and even the types of experiences.”

Wan said, “From
our perspective, domestic travel is here to stay. Long gone are the days when
merchants could rely on one or two inbound markets. Having a baseline of
domestic demand will help safeguard businesses from cross-border fluctuations.

“We’ve seen
local players continuously innovate and develop their offerings to tap into the
domestic market, and this will have to continue in 2022. We will also continue
to see an accelerated shift towards digitalisation with many merchants going
digital, using contactless technologies, and even implementing API integration
with partners.”

At Accor, the
overall shift to domestic across the region has been significant. Said Healy, “We’ve seen our domestic
business grow from 37% of our overall business in 2019 to now 84% of the hub’s
business in 2021. This is an incredible shift in our business focus.

“Our total
room revenue last year mostly came from staycation business as inbound volume
was very limited. We expect this demand to remain strong this year as we will
still rely heavily on domestic demand. However, we are cognisant that this
segment may drop significantly as borders re-open and VTLs increase with South-east
Asian countries.”

She said
Accor would continue to innovate staycation offerings to engage local markets.

Pan Pacific will pursue a similar strategy.
Said Choe, “We have been fortunate to remain EBITDA positive last year, with the
majority of our hotel business contributed by domestic bookings – on average
more than 90% of our room nights came from local stays. For the fourth quarter
of 2021, our properties took in up to 90% occupancy, spiking during the
December holidays. We also received bumper weekend bookings for weddings
throughout the year.

domestic continuing to be a focus while skies are closed, we are rolling out
more creative partnerships and promotions this year. It is now more important
than before to create immersive, experiential stays that extend beyond just the
room nights.”

“Survival of fittest” when it comes to manpower shortage

Most worrying
of all though is the manpower shortage which Kiong described as acute and “most
worrying”.  “It will simply be the survival of
the fittest as we compete for staff. There may be some unintended positive
effects in that hotels will not be so quick to discount as competing on
occupancy is not sustainable.”

Healy said the restrictive labour
market in Singapore had been a challenge long before the pandemic but “as we look forward to the gradual business resumption with more VTLs
opening up in time, manpower shortage will need to be addressed”.

“We value our
employees hugely but the severity of the situation in our industry, and the
fact that the pandemic is still ongoing, led to the necessity to downsize and
cut costs. As a result, hotels are running on low on manpower to see them
through the current and upcoming levels of business.”

Many of its
hotels have tapped on technology, and implemented management traineeship to
attract new talent. Said Healy, “We intend to further explore other Job
Redesigning opportunities within the operations to enhance and improve
productivity, whilst at the same time training and hiring talent with special
needs, and continuing to attract seniors with permanent part-time work, back-to-work
mothers with flexi-reduced hours to promote work life and wellbeing to make our
industry more appealing and compelling.”

Choe said, “The VTLs slightly alleviated this (challenge) as staff were able to enter Singapore for work, but this is one of the pain points that has no easy solution as long as the skies remain shut.

“Covid-19 has compelled us to rethink and reset our approach, taking the best practices from other industries and adapting them to our needs. By investing in constant training and building internal capabilities, we will be ready to leap back into action when recovery arrives.

“For example, we introduced job redesign training through upskilling and reskilling – such as combining security and concierge services – and improved our central reservations system. We achieved cluster arrangements for resources such as engineering, sales and marketing and finance. We have also leveraged technology and innovation, rolling out our digital concierge at our properties to streamline the guest experience and alleviate the strain on manpower.”

To address manpower issues, the STB, together with various agencies, will launch the Tourism Careers Hub in 2022 to provide training and skills upgrading for tourism workers and businesses, as well as support for individuals interested in pursuing tourism careers.

Tourism Careers Hub will focus on three areas: job matching within the tourism
sector; developing industry-specific capabilities to prepare the tourism
workforce for recovery; and encouraging technology transformation and business
innovation to seize new growth opportunities.

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