Hoteliers in Singapore are beginning to see a slight softening in demand in the corporate sector and all are keeping a watchful eye on the situation to see how the next couple of months will play out.

Hoteliers interviewed by P@SSPORT at the Jones Lang LaSalle Hotels Investment Conference said that business in the past two to three months had been softer than anticipated.

"Rates are holding but occupancies are softer than budgeted," said one hotelier, who added that things also needed to be put into perspective. "Instead of doing 88%, we are doing 80% so things are not that bad."

At JW Marriott, General Manager Mr Greg Allan said May was marginally weaker than the previous four months. "We did not see the last minute pick-up in room demand that we have experienced in previous months."

Mr Patrick Fiat, General Manager of Royal Plaza on Scotts, said April and May were softer months than expected. However, he said that his hotel had put together a bullish 2008 budget based on last year's performance. To date, room revenues in 2008 are up 30% on last year, "mainly due to the healthy room rates", said Mr Fiat.

Both general managers attribute the slowdown to a variety of factors. Mr Allan cited "oil prices, credit crunch in the US, pending US election, earthquake in China" as some of the reasons. Mr Fiat mentioned the sub-prime crisis in the US.

"Travelling has also decreased as the global economy is not performing well. Business has been on a roller coaster ride," he said.

Said Mr Allan: "There is uncertainty in all markets with conflicting opinions about the depth and length of a possible slowdown. I think the key for hotel operators is to be able to react very quickly to sudden surges or drops in demand."

Asked if this could lead to a slowing down in rate increases in Singapore or some hotels dropping rates to gain market share, Mr Allan said: "I think it is a little early for us to be forecasting lower rates in the later part of 2009. Our approach is definitely to monitor trends and demand very closely. O ur experience in Singapore is that room demand tends to "switch on" very quickly."

Said Mr Fiat: "There is no panic among the hoteliers but some are giving discounts to keep their market share and this would bring the business back three to four years. Like what they say, it takes one day to discount and a whole year for it to come back to the same market rate."

He estimated that in 2009, rates would not rise more than 10-15% compared with the 30-35% growth in the last two years.