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Tourism targets may not be met
By Lim Wei Chean

THE global economic slowdown, rising inflation and high oil prices have put the brakes on Singapore's tourism industry, causing the tourism board to express concern that it could fail to meet this year's target of 10.8 million visitors.

After 51 months of consecutive growth in tourist arrivals, Singapore saw its second year-on-year decline for July.

Last month, 916,000 foreigners visited the Republic. Though the highest number to date this year, and better than June's 817,000, it was a drop of 3.8 per cent from last July's 953,000 visitors.

There are more reasons to worry: Only four of the top 15 visitor-generating countries saw growth compared with the same period last year.

The four, according to the latest report released yesterday by the Singapore Tourism Board (STB), are: Vietnam (17.3 per cent growth, with 29,000 visitors); Germany, (8.3 per cent growth, 13,000); India (7.1 per cent growth, 63,000); and Australia (5.1 per cent growth, 80,000).

Singapore's top tourists, the Indonesians, dropped in number to 167,000, down 13 per cent from last July, and the No. 2 market, China, dipped 4 per cent to 105,000.

The weakening of the industry can be traced back to April when visitor arrivals expanded at a slower rate of 0.8 per cent over the previous year, the lowest growth in 51 months.

Industry players say the global economic slowdown along with high fuel prices are reasons for tourists staying away.

Mr Michael Soh, who runs Diamond Tours specialising in the China market, estimated that the decline in business from Chinese tourists could be as high as 40 per cent.

He said the Sichuan quake saw the local government cutting back on official travel. Other factors include the Beijing Olympics and commercial flights from China to new destinations like Taiwan.

Hotels, which experienced a boom with record room rates and occupancy in the last two years, have been hit by the drop in arrivals.

Said Shangri-La Singapore's general manager Thierry Douin: 'We did so well last year that this is unexpected. We are definitely not seeing the figures we hoped to get for this year.'

July's average room occupancy was down 5.7 percentage points to 85 per cent. The STB reported that average room rates were up from last July by 14.3 per cent at $238. And revenue was estimated at $180 million, up 6.2 per cent from last year.

Hotels from The Sentosa Resort to Meritus Mandarin cited the softening of corporate travel as a major factor for the decline as corporate clients are the ones who can afford to pay the more expensive rates now commanded by Singapore hotels.

Companies have cut both the number of employees travelling as well as the number of days spent travelling, the hoteliers said. At the Shangri-La, corporate demand has dropped by 10 to 15 per cent over the same period last year. At the Royal Plaza on Scotts, corporate business has fallen from 90 per cent of overall occupancy to 85 per cent.

But hoteliers are expecting demand to pick up in the second half of the year with events like the world's first Formula One night race next month.

The STB said in its statement that the downward trend for June and July 'reflects the challenging global economic environment and outlook for the tourism sector, which may continue into 2009'.

Although Singapore may fall short of its arrivals target, STB is trying to hit its tourist spending target of $15.5 billion. A spokesman said it is boosting efforts in marketing Singapore in traditional source markets with big spenders, like Indonesia, and promoting major events like Christmas in the Tropics.