In Parliament yesterday (26 Feb), Member of Parliament Denise Phua questioned the government on its recent announcement to reduce the foreign worker quotas for companies and businesses.
She said the move would raise business and labour costs for the service sector. She said that unlike in construction and manufacturing, the service sector has not benefited in the same way from automation and digitalisation efforts. The hospitality, food and beverage, arts, entertainment and other lifestyle sectors will likely be hit hardest, she added.
She then cited the predicament of Cube Boutique Hotel, whose owner Benedict Choa has adopted an innovative hotel model, automated its check-in system and worked with government agencies to transform some of its processes.
Addressing Mr Choa by his first name in Parliament, MP Phua said, “Ben is all ready to employ any local staff willing to work, if he can only find them.”
In other words, she is saying that the boutique hotel owner cannot find Singaporeans willing to work at his hotel.
How can the Government help such companies that are aligned with the national direction and yet still face manpower challenges, MP Phua questioned the government.
Denise Phua is the MP for Kampong Glam ward, forming part of Jalan Besar GRC.
Cube Boutique Hotel could be earning as high as $150K a month
According to an interview given by Mr Choa in 2017, he started his unique hotel business in 2015.
Its website said that it is the “only hotel that combines hotel favourite features that everyone loves with the friendly atmosphere of a sharing community, and a capsule sleep experience that is bucket-list worthy”. That is to say, there are no rooms but multiple cubicles like capsules are created for customers to sleep in, thereby creating more space to make money.
Currently, according to the website, Mr Choa operates his hotel business in 2 places: Chinatown and Kampong Glam. He is looking for more places to build his hotel chain.
The place in Chinatown was originally a shophouse also operating as a hotel. He converted it from an old 22-room hotel to a 78-bed “luxury capsule” hotel. He told reporters that demand for beds has been “overwhelming”, with European travellers accounting for 60 per cent of its guests.
The average rate ranges from $50 to $75 a night, and unlike typical low-cost accommodation, Cube offers an array of services, including a 24-hour concierge, an airport transfer shuttle, housekeeping, laundry services and free Wi-Fi.
Taking the average of $50 and $75 at $62.50, with 78 capsules, his hotel at Chinatown could be drawing as high as $5K a day or $150K a month.
Mr Choa told ST in the interview that his firm is focused on acquiring or renting “tired properties in good locations” on long leases.
“It’s a two-pronged strategy that allows us to benefit from the capital appreciation after the property has been renovated, as well as tap the potential of the luxury hostel business,” he said.
Potential properties he is looking to acquire are shophouses near MRT stations with a price tag of between $5 million and $20 million.
His near-term goal is to eventually have 8 “capsule” hotels with a target of 800 beds. Assuming each hotel can generate around a maximum of $150K a month or $1.8 million a year, his hotel chain might hit a revenue of $15 million a year in total, if he can achieve his goal.
Apart from running the hotel business, his company also owns two serviced office units in GB Building in Cecil Street.
In any case, according to MP Phua, Mr Choa has problems recruiting Singaporeans and she is questioning the government on the need to reduce foreign worker quota, which would hurt Mr Choa’s business.