TOURISM SECTOR

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TOURISM SECTOR:

(Monitoring of performance): 2.

Mr Gautam Banerjee asked the Minister for Trade and Industry (a) what action does the Government plan to take given the decline in both tourist arrivals and tourist spending in June this year; (b) how does Singapore’s performance compare with other tourist destinations and convention cities in the region such as Bangkok, Hong Kong and Macau; and (c) how much of an impact does the shortage of hotel rooms and the steep rise in hotel room rates have on turning potential tourists as well as conventions and conferences away from Singapore.

The Senior Minister of State for Trade and Industry (Mr S Iswaran) (for the Minister for Trade and Industry): Mr Speaker, Sir, my Ministry closely monitors the performance of the tourism sector together with the Singapore Tourism Board (STB). Visitor arrivals registered the first decline in June after 51 months of uninterrupted growth since February 2004 and fell by about 3.8% year-on-year in July. Visitor arrivals in Singapore have

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slowed in line with the slowdown in the global travel industry, arising from the weaker external macro-economic environment and rising fuel prices.

In the immediate term, STB will be working closely with industry partners to target key source markets using marketing initiatives such as the Uniquely Singapore Weekends campaign, which has been successful in drawing in visitors since its launch in August 2007. STB will also leverage on upcoming signature events, such as the inaugural Formula One race and the Singapore GP Season in September, as well as the year-end holiday season, to boost visitor arrivals and tourism spending.

The recent slowing of tourist arrivals to Singapore is also experienced by other regional economies. Singapore received about 5.1 million visitor arrivals in the first half of this year, registering a 2.9% growth when compared to the same period last year. This was on par with Malaysia’s visitor growth rate of 2.6% and better than the 0.5% contraction in Australia, though slower than Hong Kong’s 9% and Macau’s 18%. Hong Kong and Macau have registered strong growth, as they continue to benefit from rising tourism traffic from China. In Macau’s case, the opening of new casino resorts has also helped. However, the growth momentum of visitor arrivals has slowed down in both cases. Mr Banerjee has also asked about Bangkok. There are no city-specific data for Bangkok and Thailand has not released their first-half numbers for OATF.

Notwithstanding the slowing growth, Singapore remains a choice venue amongst business travellers. In the recently-released annual ranking by the International Congress and Conventions Association (ICCA), Singapore was again found to have hosted the third highest number of international meetings in 2007 – ahead of regional and international

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business capitals like Beijing, Hong Kong, Brussels, London and Paris. In fact, Singapore has remained within the top three positions in the city rankings in the past three years (from 2005 to 2007) with an average of about 120 meetings per year. Singapore has also consistently performed well under the Union of International Associations (UIA) rankings for international meetings. Singapore emerged as the top international meeting city in 2007 ahead of perennial favourites like Paris and Vienna – an improvement over our third place position in the 2006 ranking.

Mr Banerjee also asked about the impact of high hotel occupancy and rising hotel room rates on tourists and business events in Singapore. While we recognise that rising room rates may affect visitor arrivals to some extent, Singapore remains a competitive travel destination. Our average room rate of about S$250 in the first half of the year is comparable to Hong Kong and Tokyo, whilst still about 20%-30% lower than New York and London. At 82% to 84%, the average occupancy rate for Singapore hotels is also comparable with the average rate of other global cities and remains within the level for optimal service delivery for the industry. Hotel room supply is estimated to increase by 12,000 rooms over the next three to four years, and STB will continue to work closely with other Government agencies to ensure that hotel capacity does not constrain future tourism growth. STB has also been working with various stakeholders to profile the career opportunities in the hotel industry as well as with the WDA to put in place the training programmes to ensure that there is sufficient manpower to meet future tourism demand.

While there are challenging times ahead, the future outlook for the tourism sector remains positive. The diversity in Singapore’s tourism source markets has helped to cushion the impact of a slowing

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global economy, with key source markets such as China, India and Australia continuing to demonstrate good growth in visitor arrivals. STB’s efforts in developing emerging markets such as Vietnam, Russia and the United Arab Emirates have also paid off, with visitor arrivals from these regions registering strong double-digit growth in the first half of the year.

Besides the line-up of upcoming major events such as the Formula One race, the Volvo Ocean Race and the Youth Olympics Games, Singapore will be transformed with the completion of the two Integrated Resorts, Gardens by the Bay and the new International Cruise Terminal. All of these will add to the vibrancy of our city and allow Singapore to remain a compelling destination for different tourist segments.

Mr Gautam Banerjee (Nominated Member): Mr Speaker, Sir, I would like to thank the Senior Minister of State for the very comprehensive answer. We have a dearth of three- and four-star hotels and this could affect our competitiveness. As cost is an important factor, particularly for the new destinations such as China, India and Vietnam, should we have more three- and four-star hotels to make us more competitive?

Mr Iswaran: Mr Speaker, Sir, our approach towards the entire hotel room situation is to allow the market forces to determine the quantity needed and also the pricing to be determined by the balance between demand and supply. Mr Banerjee's point is whether we need more three- and four-star hotel rooms. It is not for the Government to assess this as much as the market – between the travel industry players and the hoteliers, and so on.

Having said that, we have made a significant number of hotel sites available. In this case, in the second half of this

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year, there will be 13 Government Land Sales (GLS) sites with a capacity for more than 5,000 rooms – if I remember correctly – and these are available for different quality hotels. Mr Banerjee might also be aware that there is a significant development, in fact, in the three- and four-star segment of our hotel industry today in several locations. For example, in the Serangoon area, there have been major developments, because that is one area where a lot of the three- and four-star type of demand is concentrated. That remains a major possibility – what is already in the pipeline and through the GLS sites. In addition, we also have some adaptive reuse kind of possibilities for disused Government buildings. Those are also available.

In sum, the supply is there and the potential supply availability can be boosted through this adaptive reuse and land sites. The important thing is for the market place to assess where these needs are and to respond to them.