Mr Teo Chee Hean at the SHA 50th Anniversary Dinner, 9 June 2011

OPENING ADDRESS BY MR TEO CHEE HEAN, DEPUTY PRIME MINISTER AT THE SHA 50th ANNIVERSARY DINNER ON THURSDAY, 9 JUNE 2011, 7.30PM AT THE SHANGRI-LA HOTEL

Madam Kay Kuok, President of the Singapore Hotel Association

Ladies and Gentlemen

A very good evening to all of you

It is my pleasure to join you this evening as we celebrate the 50th anniversary of the Singapore Hotel Association and the launch of its commemorative book – “The Heritage of Hospitality – A History of the Singapore Hotel Industry”.

The Hotel Industry – Staying Ahead

The outlook for Singapore’s tourism sector is promising. Last year, we welcomed a record of 11.6 million visitors. Growth is expected to continue. Visitor arrival numbers for the first quarter of 2011 have already reached over 3.1 million. The Singapore Tourism Board projects that the total figure for 2011 will hit 12 to 13 million visitors.

Tourism Receipts for the first quarter of 2011 are estimated to reach nearly $5 billion, a 36 per cent growth from a year ago. All Tourism Receipt components saw positive year-on-year growth with accommodation posting an 11 per cent growth compared to 2010. Our hotel industry has certainly benefitted from the healthy growth. Average Room Rates reached $226, an increase of nearly 14 per cent, while Revenue Per Available Room (RevPAR) increased by about 16 per cent to reach S$191 in the same period.

Today, Singaporeans and visitors can choose from over 250 hotels with an inventory of more than 47,000 rooms. The hotel scene is also constantly re-inventing itself to keep up with the times and the rapidly changing consumer trends. Unique design elements, creative concepts, and a wide range of amenities and facilities are employed to achieve differentiation and provide value for the consumer dollar. The hotel industry has grown in strength, with the Singapore Hotel Association (SHA) as a key facilitator representing the industry.

Singapore Hotel Association – Taking the Lead

The Singapore Hotel Association has a crucial role in the growth of Singapore’s hotel industry. Back in 1961, the key players of the hotel industry saw the need to form an association to help shape the development of hotels. This vision led to the creation of the framework and foundation for growth of the hotel and tourism industry.

Today, SHA continues to lead its members in the quest to maintain competitiveness and business viability. One key initiative is to improve productivity levels in the hotel sector. Last year, SHA led the industry in the Hotel Transformation 2010 (HT 2010) Productivity Pledge. Working hand-in-hand with Food, Drinks and Allied Workers’ Union[1], Singapore Tourism Board and NTUC’s e2i (or Employment and Employability Institute), 72 hotels pledged their commitment at HT 2010 to enhance productivity framed by five key principles, namely Company Policy, Human Capital Management & Development, Productivity Improvement Measures, Contributing to the Common Effort and Sharing the Fruits of Productivity.

Building on this momentum, SHA is now leading a Productivity Steering Committee to spearhead productivity initiatives in the hotel sector. Recently, the Committee has conducted a review of hotel operations. It has published a very comprehensive report with recommendations on best practices and solutions at various levels. Recommendations include strengthening competitiveness through job redesign, building capabilities to improve operational efficiencies and strengthening the workforce though competitive remuneration.

SHA also plans to launch an online registry for casual labour for the hotel industry in July. With such a registry in place, hotels will be able to better augment their manpower needs. The Singapore Tourism Board is supporting SHA by building productivity toolkits and developing productivity benchmark indicators. These will help track improvements in the industry’s operational level. Nanyang Polytechnic and the Workforce Development Agency have also joined STB and SHA to develop a productivity manager training programme specifically tailored to the hotel sector.I hope that more hotels will seize this opportunity and participate in these initiatives and programmes.

Maintaining the Momentum of the Productivity Movement in the Hotel Sector

Our hotels will need to be flexible and adaptable to leverage on the buoyant tourism growth. One key challenge is to attract skilled manpower. The tight labour market will make it challenging to attract and retain valuable employees.The situation is made more challenging by the fact that average wages in this sector are currently amongst the lowest in the services industry[2].Innovative solutions are required to help reduce the reliance on manpower and move towards higher-skilled jobs. This will enable hotels to offer higher paying jobs which will in turn attract and retain talent.

This tight labour challenge is not unique to the hotel sector. Singapore’s economy is expected to grow by 5-7% in 2011 and unemployment is at a historical low.

The constraints in labour supply also mean that every sector, firm, manager and worker must focus on restructuring processes and jobs to make better use of better quality workers – in other words, productivity-driven growth. This will help us to make best use of limited resources, and will also help us to generate growth that can bring benefits to both companies and workers. For us to succeed, every individual has to take the initiative to improve and innovate in their jobs to create more value, and to make jobs more attractive and remunerative.

Changes in the National Productivity and Continuing Education Council

I had likened the productivity movement to brisk-walking earlier in Parliament this year.Anyone can brisk-walk, and everyone should. It can be a lifelong habit to keep you fit and healthy.Improving productivity is similar – it is a continuing process that needs to be a habit.If we are able to build up this habit, Singapore will remain competitive.

Towards this end, the National Productivity and Continuing Education Council was set up last year to galvanise the national productivity drive. The Council had 3 objectives: first, to prioritise and champion productivity initiatives at the sectoral, enterprise and worker levels; second, to develop a comprehensive, first-class national Continuing Education and Training system; and third, to entrench a culture of productivity and continuous learning and upgrading in Singapore.

Productivity roadmaps specific to 12 priority sectors, including the hotel sector, were developed to identify and bridge specific productivity gaps. We have made much progress and are now in the process of implementing the recommendations and solutions.

The awareness that boosting productivity is essential for sustainable growth is steadily gaining ground

With most of the productivity roadmaps now in place, the on-going work of implementing the various productivity initiatives will be ramping up. This is a suitable juncture for me to hand over the chairmanship of the National Productivity and Continuing Education Council. DPM Tharman Shanmugaratnam will be coordinating the government’s economic and social policies. It is apt that he takes charge of the council and guides it into the next phase.

I would like to take this opportunity to thank all the members of the council for their invaluable contributions. Their insights and experiences as leaders in the unions, private and public sector have been crucial in helping to map out the productivity strategies for the different sectors. I am confident that the momentum of productivity improvements will be sustained under DPM Tharman’s charge.

I would also like to urge all enterprises and workers in Singapore to continue to work hand-in-hand with the council and to press on to raise productivity. While we have schemes and resources in place, the drive must ultimately come from our companies and our workers themselves. Only then will we see the rewards of bigger markets and higher profits, and more secure and higher paying jobs.

Conclusion

Before I end, I would like to commend SHA on 50 years of tireless effort and partnership in helping to build up a strong hotel industry for Singapore. The productivity efforts led by SHA typify its importance and contribution to the industry. I wish SHA and all of you in the industry many more good years.

[1]Food, Drinks and Allied Workers’ Union

[2] Yearbook of Statistics Singapore, 2010, Table 4.15 : Average Monthly Nominal Earnings for the Hotel and Restaurants sector was S$1,463 in comparison overall Services $3,929, and national average of $3,872.