Retail Areas vs. Leisure Resorts: Which is the Best Location for Hoteliers in Singapore?

When selecting locations, hoteliers often face the dilemma: Should they invest in traditional retail areas or opt for locations near leisure resorts like Sentosa, which attract both local and international visitors? Additionally, the question arises about which type of hotels perform better during peak seasons or festive periods. Another critical consideration is the hotel's positioning. Some hotels cater to families, while others focus on their dining experiences. Does offering better amenities help keep guests within the hotel?

To explore these questions, we used the Chinese New Year (CNY) period as a quasi-experiment. During CNY, many families dine out for reunion dinners, and numerous corporations host lunches for clients and staff to celebrate an auspicious start to the year. We analysed daytime device pings during the 15-day CNY period, noting when footfall numbers exceeded the 80th percentile threshold. 

The area shaded blue in Figure 1 highlighted the overnight footfall during the 15-day Chinese New Year Period. Likewise, the Daytime Footfall is described in Figure 2, with the Chinese New Year period highlighted blue.

Figure 1: Overnight footfall analysis for weekends with holidays highlights

Figure 2: Daytime footfall analysis for weekends with holidays highlights

Proximity to CBD/Offices Boosts Footfall During CNY

For Ritz Carlton, the daytime footfall consistently exceeded the 80th percentile threshold for the first five days of CNY, indicating that its proximity to the CBD and offices in the Suntec/Bugis area boosted its dining traffic. This proximity hypothesis is further validated by the high footfall observed at Hilton Orchard and, to a lesser extent, Shangri La. 

In contrast, Capella Sentosa, with its more isolated location, only saw peak footfall in the first two to three days, with more stable and well-distributed day footfall thereafter. The exclusivity of Capella makes it less likely for individuals to visit casually.

Stronger Overnight Stays at Hilton and Shangri La During CNY

Overnight stays were stronger at Hilton and Shangri La during CNY, with more nights exceeding the 80th percentile threshold. These hotels benefit not only from daytime vibrancy but also manage to attract high occupancy rates. Capella, though stable, charges higher rates and offers a unique exclusive experience. Its footfall remains steady throughout the first four months of 2024, without significant peaks.

March Holidays: Day vs. Night Footfall Analysis

During the March Holidays, proximity to retail and shopping amenities significantly boosts day visits. Hilton and Ritz Carlton, located in large retail clusters (Orchard/Taka and Suntec/Marina Square), benefit from the spillover footfall. These hotels see more daytime visitors compared to those in exclusive locations. In Figures 1 and 2, the March Holiday period is highlighted by the yellow box.

In terms of overnight footfall, Ritz Carlton, Shangri La, and Hilton recorded numerous nights above the 80th percentile threshold. Capella's numbers continued to trend upwards, but peaks were more evenly distributed outside the March holiday period.

Key Conclusions

• Proximity to Key Areas: Hotels near CBDs, offices, and retail clusters benefit from higher footfall during both daytime and nighttime, especially during festive periods.
• Family-Oriented Amenities: Hotels with family-friendly amenities tend to see higher overnight stays. For instance, Shangri La's nighttime footfall surpasses Hilton’s despite lower daytime footfall.
• Exclusive Resorts: Locations like Capella, though more stable, do not benefit from the clustering effect seen in more accessible areas. These hotels rely on their unique, exclusive experiences to remain competitive.

Ultimately, hoteliers should carefully consider their target audience and location to maximise footfall and occupancy rates. Whether leveraging retail areas or positioning near leisure resorts, understanding these dynamics can significantly enhance hotel performance.

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This article is part of a three-part series. Stay tuned for the upcoming instalment.

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