Unveiling the future of budget hotels in Singapore

• Main Authors: Chua, Hwee Lian, Kew, Wong Yip, Soh, Wee Li
• Other Authors: Nanyang Business School
• Format: Final Year Project
• Language: English
• Published: 2014
• Subjects: DRNTU::Business
• Online Access: http://hdl.handle.net/10356/55767
• Institution: Nanyang Technological University

Oflate, soaring numbers of budget-conscious tourists from China, India and the ASEAN region have revived the demand for budget accommodation. Much coverage by the media and the related authorities have also brought into light recent developments of budget hotels that are geared towards the satisfaction of this upcoming need. In response, this project aims to uncover the underlying reasons behind this phenomenon and to provide an in-depth analysis of the forces of demand and supply behind the budget sector of the local hotel scene. The latter involves the use of factors like visitor arrivals, their lengths of stay and the room-sharing ratios to anticipate the future level of demand. This forecast is then matched to that of supply, which is obtained from the Urban Redevelopment Authority. The ultimate purpose of employing these analytical tools is to aid in predicting the sustainability of the demand for budget hotels in five years' time. To complement the mainstream analysis of this study and to give recognition. to the importance of service, some marketing aspects of this subsector are examined as well. These include using Porter's five forces model to define the external environment in which budget hotels operate and a SWOT analysis to function as an internal check. The findings of this study point towards a shortage of budget hotels that is likely to persist till 1995. However, an intermediate reversal would occur over the next two years, after which deficiency would again set in. A record-high shortage is expected in 1999 and this promises a vast pool of potential that awaits to be exploited. This final issue of the degree of exploitability is tackled through the utilisation of marketing strategies like the overall cost leadership, product differentiation and focus strategies. Based upon the operating environment and the strengths and weaknesses of budget hotels, some recommendations are drawn. These require close coordination among the URA, the SHA, the STPB and the budget hotels. First of ali, the URA would have to allow more budget hotels to be constructed. The SHA can assist by providing ample staff training support, and the STPB could ensure adequate publishing and dissemination of information concerning budget hotels. Lastly, it is up to the budget hotels themselves to embrace the focus strategy in attempting to carve out a niche in the local hotel industry.