By Lim Wei Chean

This time last year, the tourism industry was giddy with success. A record number of tourists came and spent record sums of money, and hotel occupancy was up.

The industry was cashing in and operators were reaping the bonuses.

Twelve months on, the mood has sobered. Gone are the fat bonuses. Now the focus is on cutting costs to ride out what the industry expects to be a tough time ahead.

The storm has hit everyone from hotels to tour operators. Ducktours, for example, has suffered a drop in business of at least 30% in the last month.

Even QF International Marketing says sales of its Merlion-shaped chocolates have dipped 30 to 40% in recent months.

Hoteliers say the monthly occupancy rates this year have been at least one percentage point lower than last year's for every month. September was down 12 percentage points, bringing occupancy down to 75%.

Occupancy and room rates are expected to remain flat, or even fall in the coming months, said Ms Chee Hok Yean, the executive vice-president of Jones Lang LaSalle Hotels, a hotel consultancy.

The general manager of three-star Bencoolen Hotel, Ms Gay Kay Eng, said: "It is very bad. Since September, I have been unable to meet monthly targets."

That month, widely expected to be the star performer because of the excitement over the first night-time Formula 1 race held here, turned out to be a dud. It has had the worst monthly arrivals this year to date.

The first signs of trouble surfaced in June, when the first year-on-year slide in arrivals began, following 51 straight months of growth. Since then, every month has under-performed in comparison with last year.

Between January and September, 7.6 million tourists came to Singapore. With three months to go, the Singapore Tourism Board has conceded defeat in meeting this year's targets of 10.8 million visitors and $15.5 billion in tourist spending.

Last year, Singapore welcomed a record 10.3 million visitors who spent $13.8 billion, which more than met the targets of 10.2 million tourists and $13.6 million in tourism receipts.

For the industry, the worst thing about the current downturn is that no light gleams at the end of this tunnel.

Traditionally, November and December are the peak tourist months, with 1.8 million visitors last year.

But attractions, travel agents and hoteliers told The Straits Times they had more bookings at this time last year than now. Even their hopes of a late surge to make up for the poor performance are beginning to dim.

With the financial crisis spreading its taint throughout the world, industry players say they are waiting for the other shoe to drop.

A Ducktours spokesman said it projected that the full impact of the financial crisis will be apparent from January.

Business travel, usually dependable, is one of the hardest hit. Companies are pulling back on travel spending, said Abacus International vice-president for South Asia Kenneth Low.

In the coming months, he said corporate travel will decline by the same or at a greater rate than the downturn in economic activity.

To pull through, various companies are adopting different strategies.

Some hotels are refocusing to concentrate more on leisure travellers.

Travel agents have noticed the change in tack among the hotels. One who declined to be named said: "In the past, when we called them, they would be too busy to even take our calls. Nowadays, they will ring us up, buy us tea and ask us for business."

Hotels and in-bound travel agents are also marketing themselves more aggressively to regional tourists, who are less hit by the economic downturn. Some companies, like Ducktours, are also looking at trimming staff, to keep "lean and effective".

Mr Francis Phun, who heads the Association of Singapore Attractions, said the association is polling its members on their performance and what they are doing to ride out the downturn. Nobody knows who will survive.

He said: "Now is the time for all of us to cooperate and help each other through the bad times."

weichean@sph.com.sg

This article was first published in The Straits Times on Nov 17, 2008.

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