Singapore staycations can’t fill US$20 billion hole in tourism industry

’Unless we have a return to international business, the hotel industry is going to be decimated,’ one CEO said

Other countries have tried to offset their losses by promoting domestic tourism but that may be a tall order for the tiny city state

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A staff member waits for visitors to the Universal Studios Singapore theme park on the resort island of Sentosa. Photo: AFP

Published: 11:56am, 7 Jul 2020Updated: 11:57am, 7 Jul 2020

In Indonesia, locals can soon fly from Jakarta to the beaches of Bali for a domestic vacation. Tokyo residents can escape the pandemic stress with a hike up Mount Fuji, and New Yorkers can head to the Hamptons on Long Island.

Residents of Singapore, a city state smaller than New York City, have few such options, presenting a massive problem for its battered tourism industry. With borders closed to foreigners, hotels and tourist attractions need to count on “staycationers” to plug the gap in an industry that brought in almost US$20 billion in revenue last year. It’s a tall order.

“Unless we have a return to international business, the hotel industry is going to be decimated as up to 90 per cent of our bookings come from international travellers,” said Michael Issenberg, chief executive officer of Accor SA’s Asia-Pacific unit, the largest hotel operator in Singapore.

While tourism everywhere has been hammered by the pandemic, the gradual opening of some domestic travel has given a shot in the arm to airlines and hotels in places like Australia and Vietnam. Rosewood Hotel Group has seen occupancy rates as high as 70 per cent at some of its China properties as leisure travel picks up, CEO Sonia Cheng said.

Singapore’s tourism sector faces a tougher challenge, as the hotels were just given a green light last week to request approval to welcome domestic tourists. Many locals like teacher Najeer Yusof prefer to save their money and wait for travel to resume in nearby hotspots like Thailand and Malaysia rather than spend it on a hotel down the street.

“There’s more to see and experience overseas at a cheaper cost,” Yusof said. “[There’s also the] awe factor – getting to see or experience something I won’t otherwise be able to in Singapore, like the mountains and national parks in Indonesia and activities like diving and surfing.”

Though the country of 5.7 million people has reopened its economy after a lockdown of more than two months, its borders are still largely closed. It recorded a historic low of just 750 foreign visitors in April, down from 1.6 million in the same month last year. May’s numbers weren’t much better, at 880.

“In the short-term, hotels, eateries and attractions can reorientate to draw interest to staycations, attractions or food discounts,” said Selena Ling, head of treasury research and strategy at Oversea-Chinese Banking Corporation. “However, our inherent small domestic market size implies it may not be a longer-term sustainable solution.”