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Despite the success of some hospitality pods here, analysts believe that Singapore is still trailing behind its regional peers in capsule-themed hotel adoption.
This comes as the city-state lacks the available sites where these pods could attract significant footfall, said Edmund Tie & Company CEO Ong Choon Fah.
UK-based Yotel, which opened its first capsule hotel in Orchard Road only last October, now plans to expand in the new Jewel Changi Airport by Q4 2018, reported Singapore Business Review.
Originally set up to offer cheap overnight accommodation for business travellers, the clientele of capsule hotels has now expanded to include backpackers, travellers in transit and millennials who value new experiences, said Deloitte Southeast Asia transportation, hospitality and services sector leader James Walton.
Forbes reported that Southeast Asia will likely take the lead in the adoption of capsule hotels, given that the region accounts for the second largest share of tourists in the world.
Colliers International executive director Govinda Singh, however, feels the city-state will not account for a “sizeable share” of the capsule hotel market due to its limited size.
“Countries like Japan, Hong Kong, China, Vietnam, and Malaysia would perhaps enjoy the lion’s share of this.”
Capsule hotels in Singapore also face stiff market competition, with boutique hotels posing a bigger threat due to their value propositions such as unique cultural experiences and affordable luxury, said Walton.
“Major competitors would include budget chains such as Hotel 81 and Fragrance that seem to be rebranding to offer affordable, fuss-free accommodation for both singles and families alike.”
Met A Space Pod general manager Carine Ng noted that while the market’s growing demand saw capsule hotel operators raise their rates, it has also resulted in more launches in Singapore.
“Therefore, finding the balance between price-competitiveness, business profitability and product offering has been one of our operational difficulty that we are constantly working on,” she said.
Regulations also pose a challenge for capsule hotels given that they are still required to follow industry standards created for bigger and traditional hospitality establishments.
“Additional operational and regulatory factors will include access especially when there are direct links to transport hubs, and even more so when airside,” said Singh.
Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg
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