Impact of Falling Rupiah

The Indonesian Rupiah remains weak amidst the weak global oil prices. Since its peak in March 2014, the Rupiah has weakened by 5.7% against the Singapore dollar. This weakening of the Indonesian currency raises concerns for the medical tourism sector in Singapore as 61% of the segment originates from Indonesian arrivals to Singapore. In 2013, medical tourism constituted 3% (S$832 million) of the total tourism receipts in Singapore. Singapore has long been regarded as one of the preferred medical destinations for the region. In recent times, however, growing competition from neighbouring countries has emerged with increased efforts to attract this sector. Malaysia has plans to develop Mediplex, the country’s first healthcare and retail centre, as well as provide tailored services for passengers arriving at Penang and Kuala Lumpur Airport. Indonesia, on the other hand, has plans to turn Bali into an enclave for wellness, and a destination for surgery and convalescence.

Jokowi’s Ban on Hotel Meetings

In an attempt to reduce the budget deficit, Indonesia’s new president Joko Widodo banned civil servants from hosting meetings in hotels and spending lavishly on entertainment, since he came to power in October 2014. These cuts in expenditure are estimated to save the country 24 trillion Rupiah (US$1.9 billion) in 2015. The ban, however, has left many hotels in tertiary cities struggling as government meetings contribute up to 60% of hotel demand in Bogor and 70% in Makassar. Cities such in Sulawesi, Lampung and West Kalimantan were amongst the most affected; occupancy rates dropped by 11 – 17 percentage points in December 2014, in comparison to 2013. Though directly addressing excessive government expenditure, analysts are weary of the multiplying effect this ban may have on the hospitality and tourism industry of the country.

Plaza Premium Singapore Changi Airport

The Plaza Premium Company that currently operates Plaza Premium Airport Services (Airport VIP Services), The Green Market (restaurant), Terminal 2’s Wellness Spa and the upcoming airport lounge in Changi Airport Terminal 1, has set its sight on opening a transit hotel in Singapore. The company’s first airport hotel is expected to open by the end of 2015 and will house between 50 to 70 rooms. In wake of growing competition, airlines may lose interest in city hotels that previously attracted air crew, in favour of hotels within closer to the airport, such as the Crowne Plaza, Yotel and Plaza Premium.

Danang New Entertainment Park

Helio Center, a new entertainment park, will be the latest tourism destination in Danang, central Vietnam. The US$20 million-entertainment park will feature 10 amusement rides & games, a games arcade, restaurants and event spaces. Helio Center, targeted at increasing domestic tourism to the area, flows in line with the government’s overall tourism master plan. Currently, Danang acts as a major gateway to central Vietnam for tourists eager to visit UNESCO sites in neighbouring Hoi An and Hue, with no major attraction of its own besides the long stretch of coast line and beachfront to the South China Sea. This new tourism development may prove viable at extending the stays of domestic travellers visiting the region.

HVS Releases “In Focus: Tokyo”

As one of the key global financial hubs relaying Asia’s economy to the rest of the world, Tokyo has seen a revival in its economy after a prolonged economic stagnation. The city has received attention from both foreign and domestic investors looking for opportunities to tap on its revitalization. Tokyo is known to be a reliable and stable hotel market due to Japan’s historically steady political climate and stable economic environment. The high barriers to entry, such as high development costs and limited space, have allowed hotels in Tokyo to benefit from increased demand with relatively little new supply. With Tokyo under the spotlight for the upcoming 2020 Olympics Games, and the increase in international visitation as compared to other regional cities, tourism outlook for Tokyo is positive and investment interest is expected to remain strong.

Absolute Share Price Performance, as on 20 February 2015