SINGAPORE: With tourist arrivals still in the doldrums, hipster hostels in Singapore have focused their attention on a whole new clientele – the thousands of Malaysian workers in the country, unable to commute daily across the Causeway because of travel restrictions.
“It’s the only thing keeping us afloat, apart from wage support and rental waivers,” said Jacquelyn Chan, director of The Hip and Happening Group that owns the Rucksack Inn.
“Out of the guests we have now, 95 per cent are Malaysian,” she said, adding that the 160-bed backpacker hostel can only operate at half capacity due to safe distancing measures.
Hostels that CNA spoke to said they had to change tack fast once borders closed and it became clear that netting this group would be their lifeline in the absence of leisure travellers.
For Charles Lumanlan, the owner of Hipstercity Hostel, that meant switching markets from millennial travellers willing to fork out extra for private rooms, to workers in need of cheap bed space.
“The normal price is $50 a night but now we charge $25 … My competition is no longer just other hostels, it’s everyone else (in Singapore who has a room to spare). I have to compete with those prices,” the boutique hostel operator told CNA.
"DON’T TALK ABOUT PROFIT": OPERATOR
This has kept beds full - as far as restrictions allow - but it is not enough.
"Even though demand meets the 50 per cent operating capacity allowed, the prices are not there, so we sacrifice in terms of revenue. I need to have occupancy at 80 or 90 per cent to breakeven at this price,” said Joyce Kay, Chief Executive Officer of K2 Guest House.
“We are surviving … but don't talk about profit – there’s no profit at all. It’s like we’re doing charity work,” said Ms Kay, who has 270 beds across two branches.
On top of that, establishments must grapple with the extra costs of more frequent cleaning and manning a 24-hour reception to handle crowd control.
They are also unable to cash in on the staycation craze, because only guests with valid reasons are allowed to book a stay.
According to the Singapore Tourism Board, these reasons include having a home environment that is “not available or accessible” due to renovation works, for example.
Other valid reasons involve “work or domestic conditions”, such as domestic disputes at home, or wanting to stay closer to one’s work place to cut down on commute time.
It is a big pinch for Mr Lumanlan, who said he gets at least 20 requests for staycation bookings every month, all of which he must reject.
MIXED FEELINGS ABOUT BORDERS REOPENING
While extended border closures have hurt hostels' business, operators have mixed feelings about the prospect of travel restarting.
“If borders open, the Malaysians will go back, but not enough people will come back in fast enough … The hostels are going to be wiped out,” Ms Chan warned.
They would also be the last to be filled up, she said, as they have shared facilities which many people would avoid amid a pandemic.
“And the people who would be travelling at this point – there are a lot of costs involved with COVID tests for example – they are not our target audience,” she told CNA.
Mr Lumanlan, however, believes there will be immediate demand for affordable short-term accommodation.
“If your flight is so expensive, you would want to save on your stay,” he said.
He cited how when Singapore began openings its borders, his 16-bed hostel quickly began receiving reservations from business people from Vietnam.
“So we’re trying to hold on as long as we can until that moment comes. I know for sure when a vaccine is out or if travel bubbles increase, business will definitely come in.”
FINDING OTHER WAYS TO SURVIVE
The Singapore Backpacker Hostel’s Alliance was formed in April and according to Ms Chan, a founding member, they have had about five meetings with authorities so far.
She said the overarching message has been: “Pivot, prepare to shut down or hang in there”.
The hostels agreed that government support such as wage offsets and rental rebates have been a big help, but the worry is how long they can survive after that help comes to an end.
In the meantime, they are trying to find other ways to prop up business.
K2 Guest House is renovating the F&B outlet within its premises to make it a standalone store, which would allow it to open for business and augment revenue.
It is also casting its net wider.
“We might have to rent out to local Singaporeans who can't work at home, whose houses are too small, who are squeezed into a shared room with noises and they need a time out,” said Ms Kay, while reiterating that regulations must be adhered to.
For the Rucksack Inn, Ms Chan said they are hatching plans to implement technology for crowd management, which would help cut manpower costs.
“We’re also looking at using more energy-saving measures. We are thinking of post-COVID already, so there’ll be efficiency in place when travellers come back,” she added.
TAKING IT ONE DAY AT A TIME
The hostels told CNA they are steeling themselves for a rough road to recovery, but there is reason to be optimistic.
With travellers trickling in, Mr Lumanlan said: “I don't expect the industry to recover next year, but at least hopefully it will be better than this year.”
“With Phase 3 starting hopefully soon, if authorities are able to reduce the safe distancing measures for hostels so we can increase capacity, then I think we have a chance to survive,” Ms Kay told CNA.
Ms Chan also said: “We do see light at the end of tunnel with the news that a vaccine will be coming out soon … We believe in the long run, tourism will be back. I just hope we will be there to see it.”