Complete Property Market Updates of Singapore

May 1, 2008

Plans for $200m hotel in S’pore Sports Hub shelved for now

Filed under: 1 — Propertymarketupdates @ 2:53 am

Analysts believe business decision is behind the move

PLANS for a $200 million hotel in the new Singapore Sports Hub appear to have been canned, even though preferred bidder Singapore Sports Hub (SSH) consortium said options to build the hotel at a later stage remain open.

Genting International, which was in discussions with the consortium about the proposed hotel, said in an announcement yesterday that it has ‘discontinued discussions with the consortium for the proposed construction of the hotel as it has been informed that the Singapore Sports Council (SSC) has decided not to have a hotel in the Singapore Sports Hub at this point in time’.

A Genting spokesman declined to comment beyond saying that ‘the ball now lies in their court’ regarding the proposal.

This is the first time news has broken that the hotel option would not be included in the deal. SSC did not respond by press time.

SSH consortium head Ludwig Reichhold said the proposed hotel was only an option and was ‘not confirmed’ at the time of bidding. ‘We are busy finalising the main contract with them now and as things were already running ahead with the main contract, negotiating more with the hotel factored in would have delayed the work,’ he added.

Analysts believe a simple business decision is behind the move. While there have been reports of strong demand for rooms, there are also a lot of hotels in better locations coming up in the years ahead. The floor area available could be much better used as retail space.

Hotels are a bit more complicated to run than retail and office space, Knight Frank director (research and consultancy) Nicholas Mak pointed out. Sharply fluctuating rates and branding and operational costs all add to the business risks. In the end, they need to make a ‘balanced decision’, he said.

The Sports Hub, whose construction was originally scheduled to begin last year, is already running late.

According to reports, the reason for the delay is that the paperwork for the nearly $2 billion public-private partnership project has not been completed. The latest sudden revelation suggests that more work is in store.

Earlier reports estimate the completion date will stretch from the end-2010 original date to at least 2012.

Source : Business Times – 30 Apr 2008

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