This report was commissioned to examine why the number of tourist arrivals to Singapore has dropped over 2009 and the recommend ways of increasing the number of tourist arrivals to Singapore.
Tourism is the world’s largest industry. Tourism provides governments with the substantial tax revenues as well as offers the greatest global employment prospects. Based on the Media Release from Singapore Tourism Board (STB) on 23 April 2009 and 27 October 2009, the number of tourist arrivals to Singapore has declined compared to 2008. The overall of gazetted hotel industry performance also drop compared to a year ago. The reduction of the total number of tourist arrivals to Singapore was caused by swine influenza or pig flu which attack Singapore in 2009. Another reason for the decline in number of tourist arrivals to Singapore was the global economy crisis which affected all sectors around the world.
The report finds that STB can do more to attract more tourists to come and spend in Singapore.
Recommendations discussed include:
engage with tour operators and travel agencies in overseas
practice the revenue management system in hotels
promote Singapore by publishing advertisements in overseas
2. Problem Identification and Analysis
According to the statistics on April 2009, from Media Release by Singapore Tourism Board (STB), the overall number of visitor arrivals to Singapore has dropped to 790,000 in March 2009, which were about 13.2% compared to the same month in 2008.
The overall gazetted hotel industry performance also drop compared to 2008. The Average Room Rate (AOR) decreased by 13.1% with total 74% for March 2009. The Average Room Rate (ARR) for March 2009 was estimated at S$196, which was 18.5% decrease compared to a year ago. Revenue Per Available Room (RevPar) was reached S$145, posting a 30.9% decrease against March 2008. Hotel room revenue was expected to reach S$125 million, representing a 33.3 percentage point decrease in March 2009.
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Swine influenza or also called by pig flu is one of the reason which affect the reduction of total number of tourist arrivals to Singapore. As of 21 June 2009, based on Ministry of Health website, there were 142 reported human cases of swine flu in Singapore (SMF, 2009). Another key influence can be caused by the financial crisis in 2007. The global economy crisis has resulted in the collapse of large financial institutions, downturns in stock markets, and bailout of banks by national governments around the world.
Refers to the statistics from October 2009, the visitor arrivals to Singapore registered an increase number to 799,000 or about 7.1% in September 2009. Indonesia, People’s Republic of China, Australia, Malaysia, and India were the top five visitor-generating markets in Singapore for year 2009.
The increase of total number of visitor arrivals to Singapore can be due to Formula 1 (F1) Singapore Grand Prix which was held from 25 September to 27 September 2009. F1 had attracted a lot of visitors to come to Singapore to watch and enjoy the race. The other factor that influence the total number of visitor arrivals to Singapore is the public holidays, e.g., Hari Raya holidays and Japan’s five days Silver Week.
3. Statement of Key problem and Issues
Based on the Media Release from STB, currently there are four types of hotel tier in Singapore. The hotel tier system is used to categorise the different hotels in Singapore by STB into tiers based on a combination of factors that include location, average room rates, and product characteristics (STB, 2006). The four types of hotel tiers are economy, mid -tier, upscale, and luxury.
Economy tier includes hotels in the budget segment and are generally located in outlying areas (STB, 2006). In March 2009, hotels in economy tier achieved the smallest decrease in ARR and RevPar compared to March 2008.
Mid – tier includes hotels which are primarily located in prime commercial zones or immediately outlying areas (STB, 2006). Hotels in mid – tier recorded the highest and the least decline AOR compared to other three tiers in March 2009. The most decline AOR in March 2009 was achieved by economy tier hotels.
Based on the statistics in September 2009, the AOR of all tiers increased compared to the same month last year. It was represent the growth of the total number of tourist arrivals to Singapore.
Upscale tier includes hotels in the upscale segment and are generally in prime locations or hotels with boutique positioning in prime or distinctive locations (STB, 2006). Hotels in upscale tier achieved the smallest decline in RevPar and ARR in September 2009 compared to a year ago. Hotels in upscale tier also recorded the largest growth of more than 5% compared to other tiers in September 2009. This indicates that hotels in upscale tier are not having a significant impact compared to hotels in economy-tier, mid-tier, and luxury-tier.
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4. Generation and Evaluation of Alternative Solutions
STB can engage the tour operators and travel agencies in overseas which cooperate with Singapore to promote the Singapore’s tourism sector to their countries. The tour operators and travel agencies may promote Singapore by organizing either “free and easy” or tour packages to Singapore as the destination to spend their holidays with couple and family.
Hotels also may practice the revenue management system in their hotels. Revenue management system is used in a hotel to calculate the room rates in order to maximize the revenue as well as the profit. Rooms in a hotel are the perishable products and any rooms which unsold in a night are calculated as a loss. With the revenue management system, hotels can calculate their rates to be offered to their guests.
STB also can promote Singapore by publishing advertisements in the foreign countries, e.g., South Korea, Taiwan, United Kingdom, and many others. The advertisements can be used to promote the major events in Singapore in order to attract more tourists to come and visit Singapore.
5. Implementation of Recommendations
STB was announced BOOST (Building On Opportunities to Strengthen Tourism) in 2009. STB provided S$90 million to help the tourism sector ride through the challenging times. The aims of BOOST are to boost the demand of tourists to travel to Singapore, the government’s funding support to the tourism sector, as well as the future of the tourism sector (STB, 2006).
Tourism industry will bring the multiplier effect when the money are being spend by the tourist to travel, to stay in a hotel, and to eat in a restaurant. The money is recycled by the travel agency, hotel, as well as restaurant to purchase more goods and even to hire more people. Employees of the businesses which are the local community also will spend a higher proportion of their money locally on various goods and services.
In the tourism industry, each tourism segment also need to acknowledge the interdependency between the various segments of tourism, for example: lodging, travel, food service, and attraction or recreation place. With the interdependency, those businesses can create more profits by attract more tourists to come to Singapore and spend more in Singapore. For example: travel agency in Singapore can coordinate with hotel, restaurant, as well as the attraction place to provide tourists who come to Singapore by a tour package. Travel agency can create a package with a combination of air ticket, accommodation, dining, and city tour.
6. Current and Future Trends of Singapore Tourism
Integrated Resort
Resort World Sentosa and Marina Bay Sands are the two integrated resorts in Singapore which had opened in 2010. Resort World Sentosa was developed by Genting Singapore while Marina Bay Sands was developed by Las Vegas Sands. The completion of Resort World Sentosa and Marina Bay Sands are expected to boost the tourism sector in Singapore.
Formula One (F1) Singapore Grand Prix
Formula One (F1) Singapore Grand Prix is the major event in Singapore which started in 2008. The first race was held at the new Marina Bay Street Circuit and it was the first night-time event in F1 history (Wikipedia, 2010). Singapore Tourism Board (STB) was signed a five year deal with Singapore GP Pte Ltd. and Bernie Ecclestone in order to boost the tourism sector in Singapore by attract fans of F1 and foreign tourists to come to Singapore as well as enjoy the Singapore’s lifestyle.
Great Singapore Sale (GSS)
Great Singapore Sale (GSS) is an annual shopping event which organised by Singapore Retailers Association, under support from STB and Spring Singapore, in order to promote the tourism sector in Singapore. GSS is conducted in the end of May to the end of July every year in Singapore. During GSS, there are many special privileges that malls, stores, and retail companies offer to tourists, for example: late midnight shop, gourmet dining, wellness, and nightlife experience (Wikipedia, 2010).
Gardens by the Bay
The Gardens by the Bay is the combination of three major parks around the Marina Bay and it is expected to be complete by the end of year 2011. The three parks will be at Marina Centre, Marina South, and Marina East. Gardens by the Bay will be serving as the second Singapore botanical garden which allocate of 94 hectares of prime waterfront land for park space (Wikipedia, 2010). The expectation for the development of Gardens by the Bay is to attract more tourists to come to Singapore.
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