Budget accommodation options on the rise in Singapore, surpassing pre-pandemic levels

SINGAPORE: Budget accommodation in Singapore has rebounded with a vengeance, after losing lustre during the COVID-19 pandemic.

The availability of such options now exceeds pre-COVID levels by 7.3 per cent, according to data from the Singapore Tourism Board (STB).

There were 123 licensed economy-tiered accommodation operators when Singapore shut its borders in March 2020.

When the country reopened its borders to travellers again, allowing fully vaccinated travellers to enter from April 2022, just 110 operators remained.

However, by November last year, the total number had grown to 132, exceeding pre-pandemic numbers.

Budget accommodation operators have been lured by the promise of a travel recovery this year, but they now have to deal with more traditional challenges.

This includes differentiating themselves from the competition by providing unique offerings to attract guests.

PANDEMIC CRUNCH

One budget hotel that managed to weather the pandemic slump is The Pod Capsule Hotel in Beach Road.

For as little as around S$50 (US$38) a night, guests can catch some shut-eye in minimalist surroundings well equipped to get a quality snooze, with fluffy pillows, sateen sheets and fresh towels.

The hotel is now operating at near-full capacity, hitting 86 per cent occupancy in December last year.

The hotel’s sales and account manager Barbara Eu told CNA that its average daily occupancy rate has increased by 21 per cent from 2017.

It has also experienced an 8 per cent increase in revenue in the same period.

MORE COMPETITIVE LANDSCAPE

However, 2024 is expected to see the budget accommodation sector get more competitive, as operators jostle for a slice of the tourism pie.

“We could have flexible payment terms with refunds, refundable terms, or different types of rates given to guests depending on their needs,” said Ms Eu on potential ideas to draw customers.

“We will still try to see where we can fit in additional services that can make them feel that this is home, and not just a place where you can just sleep and get out the next day.”

Betel Box Backpackers Hostel in Joo Chiat Road is another operator which survived the pandemic crunch, after it pivoted to providing housing for vulnerable Singaporeans.

It has now returned to being a home away from home for backpackers visiting Singapore.

To stand out in an increasingly crowded field of budget accommodation options, it has also diversified its offerings, picking up a tour operator licence.

"We have a tours department that creates our award-winning food tours. The latest creation that they had is a musical tour. It is very much like La La Land and it's very exciting,” said hostel manager Johnian Ng, referring to the 2016 musical film starring Ryan Gosling and Emma Stone.

By using Joo Chiat's heritage buildings as the backdrop for its street theatre performances, Betel Box has attracted not just tourists, but locals too.

The performances were held from June to November in the past two years, with about three shows weekly, each lasting two hours.

Such a strategy has proven useful amid inconsistent occupancy rates, said Mr Ng.

Before the pandemic, Betel Box enjoyed “quite stable numbers”, with occupancy rates typically between 70 and 80 per cent, he said.

“Now, we are having days whereby it's just half the occupancy because everyone is moving around so much,” said Mr Ng.

POTENTIAL SPIKE IN DEMAND

Mr Ng said he anticipates a spike in demand for accommodations in the period surrounding major concerts held in Singapore this year.

Among the global acts stopping by are British band Coldplay, which will perform for six nights at the National Stadium later this month, and American singer Taylor Swift, who will hold six sold-out concerts at the same venue in March.

“So we are trying to forecast and price accordingly to stay competitive within our industry,” said Mr Ng.

The return of Chinese travellers is also seen as a potential gamechanger for those in the budget accommodation industry.

With 2024's economy still uncertain and geopolitical conflict threatening to force travellers to tighten their purse strings, innovation will be key for low-cost accommodation sector players.

"Budget-friendly tourists today are those that are very budget conscious, not necessarily that they don't have money to spend. They are just a little bit more careful in what they are going to be spending their money on,” Mr Christopher Khoo, managing director of hospitality and leisure consultancy MasterConsult Services, told CNA.

“So these are people really worthwhile reaching out to, because they can spend if they see there's a lot of value (in what) they get for the experience, for what they are going to be paying up."