Pan Pacific Hotels Group Ltd., the hospitality company controlled by billionaire Wee Cho Yaw, will boost the number of rooms in Singapore’s Raffles Place financial district by 57 percent with its latest property.
The Singapore-based company’s 367-room Parkroyal on Pickering, located at the edge of Raffles Place, opens tomorrow in the area where banks including Morgan Stanley, Wee’s United Overseas Bank Ltd. and BNP Paribas SA have their key offices.
Occupancy rates in Singapore averaged 86 percent in the past three years, as a record number of visitors were lured to new attractions such as two casino resorts and a S$1 billion ($815 million) downtown park. The number of conferences hosted in the island-state jumped 46 percent in 2011, based on the latest figures available, particularly around events including the world’s first Formula One night race.
“A hotel like this will take about a year to stabilize,” Patrick Imbardelli, chief executive officer of Pan Pacific, said in an interview on Jan. 11. “We expect to be at Singapore levels within 12 months and we think we will outperform those levels after that,” referring to the city’s occupancy rates.
The hotel is next to the historic Chinatown and across from Hong Lim Park, where the city’s Speakers’ Corner is located. The 16-floor building is laced with garden landscaping that takes up 15,000 square meters (161,000 square feet) of space, and tropical trees shade half of the room corridors, it said.
Singapore was ranked Asia’s most-popular business destination in the first half of 2012, according to a survey of 2,500 people in nine countries by Accor SA. Conventions, conferences and tradeshows in Singapore rose 46 percent to 2,130 in 2011 from 2010, according to the Singapore Tourism Board.
“There is a real shortage close to the city with good demand and not a huge amount of supply in the short term,” said Robert McIntosh, Singapore-based executive director at CBRE Hotels Asia Pacific. “Properties close to the city center have performed better than the outer areas, and therefore Parkroyal has an excellent location relative to the city, where quite frankly there aren’t enough hotel rooms.”
About 4,500 to 5,000 hotel rooms are expected to be added in Singapore this year, a 10 percent increase to the current supply, according to CBRE Hotels. While hotels will still fill more than 80 percent of their rooms, “occupancy will suffer this year,” McIntosh said.
The opening of the hotel also comes as more banks move out of Raffles Place to a new financial hub around the Marina Bay area, which includes waterfront pedestrian areas and promenades, a freshwater reservoir, performance spaces, an art and science museum, tapas restaurants, an oyster bar and the $6 billion Marina Bay Sands casino resort.
Standard Chartered Plc relocated from 11 buildings across the city to one tower in Marina Bay in 2011, while Barclays Plc moved from six to two in the area, a 10-minute walk from the Raffles Place district first built almost two centuries ago.
The hotel is also opening as Singapore’s expansion eased to a three-year low in 2012. Gross domestic product rose 1.2 percent in 2012, and is expected to grow 1 percent to 3 percent in 2013, according to government estimates.
“We are conservative, there are too many things happening around the world which we have no control over and we are a by-product of it,” Imbardelli said. “We don’t open it for a year; we have a 30-year view.”
Pan Pacific manages more than 30 properties in the Asia-Pacific region and in North America. It runs 13 hotels under the Parkroyal brand, targeting both business and leisure travelers.
Pan Pacific shares were unchanged at $2.34 at the close in Singapore, while the city’s Straits Times Index dropped 0.3 percent. The stock gained 19 percent in the past six months, compared with the 6.7 percent advance in the benchmark gauge.
The Fullerton Hotel, the Fullerton Bay Hotel and Ascott Raffles Place are the key hospitality properties in the older financial district, with a total of almost 650 rooms. The new Parkroyal is hedging its bets with its proximity to tourist attractions such as Chinatown, Imbardelli said.
“If there is a downturn in the finance area in Singapore or globally, and if we are totally reliant on that business, it’s going to be tough,” he said. “There is no doubt that that’s going to be our bread and butter, but we are on a corner of Chinatown so that’s the leisure angle for weekends.”
Singapore ranked fourth among Asia’s cities for its hotel rates -- behind Sydney, Hong Kong and Tokyo -- and 18th in the world, according to a survey by London-based Hogg Robinson Group. Its average room rate of S$261.63 in the first 11 months of 2012 was a 7 percent increase from a year earlier, according to data from the tourism board.
Pan Pacific will charge S$238 a night at the new Parkroyal as an introductory rate, and eventually move to the S$300 range, Imbardelli said.
Business travelers to the island-state are increasing their hotel spending more than for any other country, budgeting 16 percent more per night in Singapore in the first half of 2012 compared with the same period in 2011, the Accor survey found. The island-city is estimated to add 17 percent more hotel rooms from 2011 through 2014, as visitor arrivals are expected to climb 20 percent in the same period, CBRE said.
“If we can get the balance of business and leisure right, which we will, I think we will be able to outperform some of our competitors,” Imbardelli said.