Complete Property Market Updates of Singapore

April 30, 2008

Leng Beng breaks the mould with business budget hotel

Filed under: 1 — Propertymarketupdates @ 2:55 am

No frills property at Mohamed Sultan Rd offers high-tech facilities

A ‘business budget hotel’ may sound like a contradiction in terms. But hotel and property tycoon Kwek Leng Beng is finalising just such a concept – and it’s aimed at executives who don’t want the frills but who do require high-tech amenities in their rooms.
 
The first such hotel here will be a 370-room property that will open at Mohamed Sultan Road early next year. It is being developed by Millennium & Copthorne Hotels (M&C), the London-listed hotel arm of City Developments Ltd (CDL), which in turn is the listed property arm of Singapore’s Hong Leong Group.

Elaborating on the new concept, Mr Kwek, executive chairman of Hong Leong Group, said: ‘It is high-end and I have called it ‘high-end budget’, so it sounds like a contradiction. But I would like to clarify. This niche is aimed at executives who want no frills but require high-tech amenities in their rooms which must meet certain standards, four-star or even up to five-star; they do not need the grand ballrooms or large function rooms or F&B outlets that may add to their bills unnecessarily.’

Yesterday was a proud day for Mr Kwek, 67, as he witnessed the official opening of St Regis Singapore, which will be his flagship hotel in Singapore. ‘We have many hotels around the world – M&C has 112 – but none as luxurious as this one. Normally, it takes a hotel about three years to stabilise earnings. However, for St Regis Singapore, I’m confident we can stabilise in a year’s time.’

The 299-room hotel, said to be worth about $1.2 million a room, as well as the next door 173-unit St Regis Residences, were developed by a joint venture involving CDL, Hong Leong Holdings Ltd and TID Pte Ltd. TID is a partnership between the Hong Leong Group and Japan’s leading real estate company Mitsui Fudosan.

To date, 157 of the 173 units at St Regis Residences have been sold.

‘The planning for a branded hotel and residences concept in the same development took about five years,’ Mr Kwek said.

‘I am quite excited, because this development was not acquired, but conceptualised and built from scratch.’

Mr Kwek started the group’s first hotel, what is now known as Copthorne King’s, at Havelock Road, in 1970. ‘When I was younger, I was bolder. In the early 1990s, the international hotels sector was competitive but it is very much more so today. There are more and bigger private equity funds among the major international players. The financial landscape is also much more different than when we went international over 14 years ago, or when we opened our first hotel more than 30 years ago.’

Mr Kwek acknowledged that the opening of the two integrated resorts will boost Singapore’s meetings, incentives, conventions and exhibitions business and pose a challenge to existing hotels and upcoming ones, but the market segments they cater to are not necessarily the same.

‘They will help make Singapore a tourism hub and ensure that Singapore is a key destination,’ he said. ‘Not forgetting that we have the new giant aircraft A380, and the increased popularity of budget airlines, so Singapore will have increasing numbers of visitors.’

He also said that talent is a key challenge ahead for the Singapore hotel industry. With India and China opening up, their hotels are taking up a significant portion of the global hotel talent.

‘Labour cost, which is a concern by itself, is bound to increase,’ he said. ‘In Singapore, because land is scarce, construction costs are high, and prices of building materials such as steel are also rising, so there is a challenge if one plans to build budget hotels, a sector which will be much needed here.’

Source : Business Times – 21 Apr 2008

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