June 24 (Bloomberg) -- Prashant Changrani and his family were looking forward to a week-long holiday in Singapore that was set to start yesterday. That was until the island state was engulfed in hazardous fire haze wafting across from Sumatra.
“Health comes before holiday,” businessman Changrani, 41, said in a phone interview from Mumbai after canceling the trip and room at the Orchard Scotts. “My twin girls are just 26 months old and they would never have been able to take this.”
Forest fires raging on the neighboring Indonesian island sent Singapore’s Pollutant Standards Index to a record 401 on June 21, a level deemed hazardous, according to the National Environment Agency. Singapore’s air quality has improved after the haze shifted north into Malaysia. A state of emergency was called in parts of Johor yesterday, and pollution rose to hazardous levels in Port Dickson on Malaysia’s west coast this morning, while areas around Kuala Lumpur were deemed unhealthy.
The haze may prompt more visitors to reconsider trips to Singapore, which was ranked Asia’s most-popular business destination in the first half of 2012 with hotel occupancy rates averaging 86 percent in the past three years.
“It’s a bit early days at the moment, but if it goes on any longer, it must have some adverse impact on tourism numbers,” said Robert McIntosh, Asia Pacific executive director at CBRE Group Inc. “Anything that impacts the environment like this, particularly for a place so well-regarded for its clean environment, must have some impact and inevitably it means a fall-off in visitor arrivals.”
The pollution will hit tourism-related industries in Singapore, which make up as much as 6 percent of the economy, as well as construction, Joey Chew, an economist at Barclays Plc, said in a research note on June 20. A disruption for one week could cost the economy about $1 billion, Barclays economist Wai Ho Leong said in an e-mail on June 19. Dry weather in 1997 fed blazes that caused $4.4 billion in damages, according to the World Wide Fund for Nature.
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 trade shows rose 46 percent to 2,130 in 2011 from 2010, according to the Singapore Tourism Board.
The haze has prompted daily health warnings in Singapore and forced some tourist attractions to shut.
The Singapore Flyer, which operates the city-state’s ferris wheel, suspended operations last week, while Gardens by the Bay, a newly built botanical park near the Marina Bay financial district, halted some outdoor activities. The four attractions run by the Wildlife Reserves Singapore, including Jurong Bird Park and Singapore Zoo, observed a “a small dip” in visitor numbers, according to an e-mailed statement.
“The impact on our business at this point is hard to quantify,” said Bas de Graaff, director of business development at Hilton Singapore. “It’s still a very new situation. A lot of our guests come from overseas, so they may not be fully aware yet of the situation, of the duration that’s expected or how serious it is at this time.”
Hilton has been at close to full capacity for most of last week because of the CommunicAsia conference, Asia’s largest communication technology event, said de Graaff.
Fairmont Singapore and Swissotel The Stamford have received queries from clients and guests expressing concern about the haze situation, Lim Ee Jin, director of marketing communications, said in response to Bloomberg News queries.
“In terms of overall business, we see a slower pace in dining reservations,” Lim said. “There have also been a few cancellations of room bookings as a direct result of the haze situation, but it is too early to tell if it will have significant impact on the business.”
Pan Pacific Hotels Group Ltd., which owns and manages eight hotels and serviced suites in Singapore under the Pan Pacific and PARKROYAL brands, is seeing some cancellations, said Hans Heijligers, the group’s area vice president.
“The impact has been minimal at this stage,” he said. “We’ll continue to closely monitor the business impact of the haze situation and take appropriate responsive measures.”
With air pollutants reaching record levels in Singapore, some tourists will probably plan to cut short their stays, Sarah Ong and Carey Wong, analysts at OCBC Investment Research said in a note to clients on June 21. The haze will probably weigh on the performance of Singapore hotels through part of the third quarter, according to the note.
“A relative weakness in bookings is likely given that the haze could last at least several weeks,” according to the OCBC note. “The haze could exacerbate the situation with organizations possibly canceling outdoor events.”
Genting Singapore Plc, one of two casino operators in Singapore, fell 2.6 percent to S$1.325 at the close of trading, its lowest in six months. Hotel Properties Ltd., the hospitality operator partly owned by Wheelock Properties (Singapore) Ltd., slumped 4.9 percent to S$3.14, its biggest drop in 19 months.
The Singapore agency’s measure of fine particulates that pose the greatest health risks was more than 10 times the healthy level given in World Health Organization guidelines.
The Ascott Ltd., which operates five serviced residences under three different brands of Ascott, Citadines and Somerset, has made available masks to guests, briefed its staff to advise guests on precautionary measures, said Tan Boon Khai, the company’s regional general manager for Singapore and Malaysia.
Ascott’s residences in Singapore are running at almost full occupancy, and there have been no cancellations of apartments so far, he said June 21.
While pollution levels declined in Singapore over the weekend as winds shifted, Malaysian Prime Minister Najib Razak declared a state of emergency in parts of the southern state of Johor yesterday as the Air Pollution Index exceeded 750, according to a statement from the government.
Malaysia called for a meeting of Southeast Asian ministers as early as next week. The meeting was originally scheduled for Aug. 20-21.
Some inhabitants of Singapore, which number 5.3 million with foreigners accounting for about a third, are trying to escape the island state. Skyscanner, a global travel search website saw a 22 percent increase in outbound flight searches last week compared with the same period in the previous week, according to an e-mailed statement from the company.
Airlines are using the haze to sell flights. Singapore Airlines Ltd.’s budget carrier Scoot ran an advertising campaign titled “What The Fog” enticing Singapore residents to “Get Outta Here,” offering flights to Bangkok from S$88 ($69), and to Sydney and the Gold Coast for S$178.
Jetstar Airways, the budget carrier owned by Quantas Airways Ltd., offered fares to Bangkok from Singapore starting at S$78 with a campaign saying “You can’t vacuum the haze away and you can’t stay indoors forever.”
Lower visibility from the haze prompted Singapore’s Changi Airport to increase the time between aircraft takeoffs and landings, the aviation authority said in an e-mailed response to Bloomberg News’s queries. The island’s secondary airport at Seletar in the northeast said it closed on June 20 because of “prolonged poor visibility.” It resumed services the next day.
The direct and immediate effect will be manifested in the food and beverage and tourism-related industries, said Irvin Seah, a senior economist at DBS Bank in Singapore.
“If the tourism industry is affected there will be a spillover effect on other sectors like retail and hotels,” he said. “A lot depends on how serious the problem gets and how long the haze will last.”
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