Strong festive season for consumer sectors, but cautious optimism for 2022

Singapore

THE festive season has brought cheer after a turbulent year for the hospitality, food and beverage (F&B) and retail sectors. But businesses remain cautiously optimistic heading into 2022, with the rise of the Omicron variant and an uncertain operating environment caused by fluctuating measures.

Industry players told The Business Timesthat some business has returned with the resumption of activities like weddings and live events, as well as the recent increase in tourism, thanks to the Vaccinated Travel Lanes (VTL).

Although new Covid-19 variants are cause for concern, higher vaccination rates also provide some relief, with some 87 per cent of Singapore's population fully vaccinated.

Chief executive of Timbre Group, Danny Loong, said that the risks of the pandemic have been mitigated by the vaccines and government measures, which has given more confidence to consumers. "We (Singapore) are managing this situation, in my personal opinion, a lot better than a lot of countries," he added.

A merry Christmas?

Industry players to which BT spoke largely reported positive consumer sentiment and business performance for the festive bookings this year.

General manager at Shangri-La Singapore, John Rice, said that the hotel's restaurants and bars have always been popular dining destinations during festive seasons. "Many of our restaurants are at close to full capacity on Christmas Eve and Christmas Day," he added.

Earlier in the year, the F&B and hospitality sectors had greeted the establishment of VTLs with trepidation, as it was unclear whether tourist inflow would make up for the loss of domestic spending as Singapore's consumers head overseas. With travel rules in flux, the picture remains mixed.

Gino Tan, country general manager at The Fullerton Hotels & Resorts, said that since the VTLs were announced, enquiries and bookings for stays have increased. "We expect many of these bookings to materialise in the first quarter of 2022," said Tan.

Meanwhile, Raffles Hotel Singapore is still seeing strong domestic demand. Managing director Christian Westbeld said that his hotel's businesses continue to be "on top of the market's mind" as travel restrictions are still in play, while uncertainty looms in long-haul travel.

"We are seeing very high demand for our Western venues as well as staycations at the highest levels towards the end of the year as the domestic market is looking to spend the holidays in the most festive surroundings and atmosphere," said Westbeld.

A spokesperson from the Restaurant Association of Singapore (RAS) said that the current dine-in allowance of fully-vaccinated groups of 5 is timely, providing the "much-needed opportunity" for family and friends to meet up, rebuild ties and rejuvenate relationships.

Having said that, the safe management measures do not allow restaurants to operate at full capacity as the number of tables and diners are limited, said the spokesperson.

On the retail front, shopping malls are buzzing with crowds, with online sales going strong too.

Department store operator BHG Singapore said it saw great results for its double-date sales this year, reporting "double-digit growth in sales" for its 12.12 sale, compared to last year.

"We have already seen an upward trend in average order value and have recorded the biggest basket size in comparison to the previous double date sales," said BHG.

It also saw at least a 28 per cent year-on-year sales growth for the first 11 months of the year, and is currently undergoing a digitalisation revamp of its business which it started in late 2020.

"Experiential shopping journeys and a robust e-commerce infrastructure will be key to success in the retail industry," the spokesperson added.

Costs and qualifications

But this exuberance comes after a tough year of fluctuating Covid-19 curbs - and not everyone is necessarily seeing much-brighter prospects. Pandemic uncertainty and rising costs continue to be major threats going into 2022.

Chef-owner of Burnt Ends Hospitality Group, Dave Pynt, said that the reduced government support for restaurants this year has caused his group to perform "a lot worse" than last year, on top of dine-in restrictions.

He noted that costs of goods have "gone up considerably" with some products doubling in price.

"The risk of another lockdown is not out of the question with Omicron and I believe a lot of people in Singapore will look for better living conditions abroad again," Pynt added.

Chef Emmanuel Stroobant, chef-owner of Saint Pierre, a 2-Michelin star French outlet, observed a drop in restaurant bookings when the VTLs were announced as Singaporeans started to travel overseas.

Bookings bounced back up on news of the Omicron variant as many cancelled their trips. Yet the overall picture is still subdued.

Said Stroobant: "Personally, the sentiments were more positive last year. This year, there seems to be Covid fatigue and the negativity of it all has set in with the patrons."

Fluctuations were a major theme of 2021, as Covid-19 curbs on dining-in and events oscillated throughout the year.

"As we were able to host weddings this year, business has seen an improvement from last year," said Capella Singapore general manager Yngvar Stray.

"However, this was still heavily impacted by the Heightened Alert measures which resulted in the closing of restaurants earlier this year, as well as the 2 to 5 person dining guidelines," he added.

All this comes even as costs keep rising. Supply chain disruptions have caused a rise in the price of food ingredients, while higher demand for labour coupled with a resource crunch has increased the costs of third-party vendors for hotels' business, said Stray.

Raffles' Westbeld shared similar cost concerns: "It is inevitable that the costs of produce and raw materials have increased due to the impact of the pandemic. This has been felt and directly affects our margins, adding another layer of complexity to the current climate."

Looking forward

Rose Tong, executive director of the Singapore Retailers Association (SRA), echoed that business costs have "gone up signficantly", and the outlook for 2022 is uncertain.

"The freeze on ticket sales on all VTL flights will hopefully help retailers regain the loss of domestic spending," she added, referring to the suspension of new ticket sales for VTL entry to Singapore up to and including Jan 20.

But the VTLs have also brought in foreign spending. Steven Goh, managing director of Orchard Business Road Association, said: "We are heartened to see many, both locals and tourists, returning to Orchard Road this festive season.

"There is definitely an air of optimism," he added. "Shoppers are spending and giving a timely boost to the businesses on Orchard Road. With this optimism, we look forward to an even better year ahead."

Amid uncertainty, some see innovation as the way forward.

Raffles Hotel Singapore has adopted an all-rounded strategy that covers the local and overseas markets, and is "ready to continue altering (its) business direction as necessary in this current volatile environment", said Westbeld.

Tan is cautiously optimistic for 2022, as The Fullerton taps into new opportunities to grow and enhance guest offerings.

"We place a strong emphasis on enriching our guests' stays through a variety of Fullerton Experiences - from guided heritage tours to cooking workshops conducted by our chefs - and we continue to expand this range of experiences."