Struggling to survive, small hotels house long-term guests,…

SINGAPORE – A termite infestation in some rooms and its restaurant. Patches of waterlogged carpet and a broken glass panel in a room.

That was the extent of disrepair that front office manager and shareholder Chieng Chiew Huang discovered when he took over Hotel 1929 this May.

The hotel located along Keong Saik Road was previously run by Q Loft, a budget hotel chain. It had been leasing and operating the hotel, formerly known as Q Loft Hotel1929 @ Chinatown, since 2019.

Business was good before the pandemic and rooms were always full, says Ms Ariel Chen, one of Q Loft Hotels’ directors.

But when occupancy fell to 30 per cent due to Covid-19, the company broke its lease about six months early.

“We are a small player and didn’t have deep enough pockets to carry on,” says Ms Chen of the company, which began running budget hotels here in 2018. She adds that the company gave up one hotel to save its other three in Bedok, Geylang and near Rochor.

With leisure travel largely on hold for the past 18 months, small hotels have been hit hard.

In the first quarter of this year, economy and mid-tier hotels saw their revenue per available room (RevPAR) fall by 56 per cent to 58 per cent year on year, according to figures released by the Singapore Tourism Board. This was a sharper drop than upscale and luxury hotels, whose RevPAR fell by 52 per cent to 54 per cent.

RevPAR is an industry term used to measure the overall success of a hotel, and refers to its ability to fill available rooms at an average rate.

Reasons for the drop are manifold.

Unlike larger hotels that lean on food and beverage offerings and can house guests on stay-home notice or quarantine order, small players without an in-house restaurant rely mainly on room rates – and have slashed these heavily to remain competitive in a market segment that was price-conscious even before the pandemic.

Despite their best efforts, staycationers have slowed to a trickle as the pandemic wears on.

Luxury and budget hoteliers alike agree that staycation fatigue is a real threat, though it seems to have hit harder for the latter.

Mr Adil Mubarak, vice-president of operations for hotel management and booking platform RedDoorz, says: “Hotels like us are not the first choice. It is understandable because we don’t have facilities such as in-room dining or bathtubs.”

These factors have led to multiple properties shuttering over the past year.

RedDoorz, which leases and operates budget hotels here, is down to six properties in Singapore compared with 17 last March.

GPS Alliance Holdings, which deals with real estate, also ran into trouble operating Hotel 1887 in Chinatown. It gave up the hotel in May this year after losses of $100,000 to $110,000 each month.

The company currently owes a seven-figure sum to its landlord at Hotel 1887, says Mr Ben Tan, one of the company’s directors. He is also one of the shareholders of Hotel 1929.

‘Dealt very bad cards’