‘Rotate, prepare to shut down or hang in there’: hostels cling to Malaysian customers for survival

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SINGAPORE: With tourist arrivals still in the doldrums, trendy Singapore hostels have focused their attention on a whole new clientele – the thousands of Malaysian workers in the country, unable to cross the causeway daily due to travel restrictions .

“It’s the one thing that keeps us afloat other than salary support and rental waivers,” said Jacquelyn Chan, group manager of The Hip and Happening, owner of the Rucksack Inn.

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“Of the guests we have now, 95% are Malaysian,” she said, adding that the 160-bed hostel can only be half-functioning due to safe distancing measures.

Youth hostels TBEN spoke to said they need to change course quickly once borders are closed and it became clear that this group’s net would be their lifeline in the absence of leisure travelers.

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For Charles Lumanlan, owner of Hipstercity Hostel, that meant shifting markets from millennial travelers willing to fork out extra for private rooms to workers in need of a cheap bed.

The interior of a room at Hipstercity Hostel along Circular Road in Singapore. (Photo: Auberge Hipstercity)

“The normal price is $ 50 a night but now we charge $ 25… My competitors are no longer just other hostels, it’s everyone (in Singapore who has a room to spare). I have to compete with those prices, ”the hostel operator told TBEN.

“DON’T TALK ABOUT PROFIT”: OPERATOR

This has kept the beds full – as far as restrictions allow – but it’s not enough.

“Even if the demand matches the 50% authorized operational capacity, the prices are not there, so we are sacrificing in terms of revenue. I need to have an occupancy rate of 80% or 90% to break even at this price, ”said Joyce Kay, Chief Executive Officer of K2 Guest House.

“We survive… but don’t talk about profit – there is no profit. It’s like we’re doing charity work, ”said Ms. Kay, who has 270 beds in two branches.

On top of that, establishments face the added costs of more frequent cleaning and running a 24-hour front desk to handle crowd control.

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They also can’t capitalize on the stay craze, as 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 renovations, for example.

Other valid reasons involve “working or domestic conditions”, such as domestic disputes at home, or the desire to stay closer to one’s workplace to reduce commuting time.

It’s a big pinch for Mr Lumanlan, who said he receives at least 20 requests for stay reservations per month, all of which he has to reject.

MIXED FEELINGS ON THE REOPENING OF BORDERS

While prolonged border closures have hampered hostel operations, operators have mixed feelings about the prospect of a travel restart.

“If the borders open, the Malays will come back, but not enough people will come back fast enough … The hostels are going to be wiped out,” Chan warned.

They would also be the last to be filled, she said, as they have shared facilities that many people would avoid in the midst of a pandemic.

Rucksack Inn Hostel

Staff at the Rucksack Inn, a youth hostel along Lavender Street in Singapore. (Photo: Backpacker Inn)

“And the people who would be traveling at this point – there are a lot of costs associated with COVID testing for example – are not our target audience,” she told TBEN.

However, Lumanlan believes there will be an immediate demand for affordable housing in the short term.

“If your flight is that expensive, you would want to save on your stay,” he says.

He cited how when Singapore began to open its borders, its 16-bed hostel quickly began to receive bookings from Vietnamese businessmen.

“So we try to hold out as long as possible until that moment comes. I know for sure that when a vaccine is out or the travel bubbles increase, business is sure to come in. “

FIND OTHER WAYS TO SURVIVE

The Singapore Backpacker Hostel Alliance was formed in April and, according to founding member Ms. Chan, they have had about five meetings with the authorities so far.

She said the main message was, “Pivot, prepare to close or hang on.”

The hostels agreed that government support, such as wage compensation and rent rebates, had been of great help, but the concern is how long they can survive after that support ends.

In the meantime, they are trying to find other ways to support the business.

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Interior of K2 Guesthouse Capsule hostel

The interior of K2 Guesthouse Central, a capsule hostel in Jalan Besar in Singapore. (Photo: K2 Guesthouse)

K2 Guest House is renovating the F&B point of sale on its premises to make it an independent store, which would allow it to open its doors and increase its income.

He also widens his net.

“We may need to hire from local Singaporeans who can’t work from home, whose houses are too small, who are stuck in a shared room with noise and need some downtime,” Ms. Kay said, while reiterating that regulations must be observed.

For the Rucksack Inn, Chan said they are considering implementing crowd-management technology, which would help reduce labor costs.

“We are also planning to use more energy saving measures. We are already thinking about post-COVID, so the efficiency will be in place when travelers return, ”she added.

TAKE ONE DAY AT A TIME

Hostels have told TBEN they are preparing for a tough recovery, but there is reason to be optimistic.

With the arrival of travelers, Mr Lumanlan said, “I don’t expect the industry to recover next year, but at least I hope it will be better than this year.

“With the start of phase 3, hopefully soon, if the authorities are able to reduce the safety distance measures for the hostels so that we can increase the capacity, then I think we have a chance of surviving” Ms. Kay told TBEN.

Ms. Chan also said, “We see the light at the end of the tunnel with the news that a vaccine is coming out soon… We believe that in the long term, tourism will be back. I just hope we’ll be there to see it.

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