Backpacker hostels in Singapore struggle to keep afloat amid COVID-19

Mr Adler Poh says hostel operators do not have deep pockets to sustain the business until tourism picks up again. The Straits Times/Asia News Network/SHINTARO TAY, MARK CHEONG

SINGAPORE — Staycations are keeping the cash registers ringing at local hotels amid the pandemic, but backpacker hostels are out in the cold.

Hostel owner Jacquelyn Chan put it in a nutshell: “Who goes to hostels for staycations? We don’t get anything out of it.”

Ms Chan, 36, director of The Hip and Happening Group that owns the Rucksack Inn, said it has been an uphill battle to keep her 160-bed hostel afloat since tourist arrivals dried up early in the year.

International visitor arrivals in Singapore have been at an unprecedented low, as travel restrictions worldwide have impeded the once-thriving industry.

There were 1.69 million visitor arrivals in January but that has become a trickle, with only 750 coming here in April and 880 in May.

A $45 million campaign by the Singapore Tourism Board (STB), Enterprise Singapore and Sentosa Development Corporation was launched last month to encourage domestic tourism, with offers for hotels, restaurants and attractions.

Some hotels that have since re-opened with safe distancing rules have reportedly been fully booked for staycations, especially during long weekends.

But backpacker hostels do not get a slice of this pie, said Ms Chan.

“This is our cry for help. We feel like we have pretty much been left to fend for ourselves.”

Ms Chan joined forces in April with two fellow hostel owners David Seah and Adler Poh to form the Singapore Backpacker’s Hostel Alliance.

Banding together

The group has discussed its specific needs with agencies like the STB but Mr Seah, 46, said nothing concrete has come out of the talks.

Hostel owners say there is a real risk that they could go belly up before international tourism returns.

Owners have pumped in cash and manpower to meet the safety measures required to fight Covid-19, such as ensuring more frequent cleaning and manning counters 24/7.

They have also reduced occupancy rates by half to comply with guidelines.

Mr Seah, who owns The Bohemian, Chic Capsule and Backpacker’s Hostel@The Little Red Dot, said the alliance allows a “vulnerable” segment of the tourism industry to amplify their voices.

The alliance now has about 40 hostel owners who run around 50 properties, representing about 60 per cent of the 9,000 or so hostel beds here, he added.

The Hotel Licensing Board noted that there are 57 registered backpacker hostels here.

But Mr Seah said there are more, as not all hostels or capsule hotels are registered with the board. To his knowledge, at least three hostels have folded during this period.

“If this continues, there’s no way we will be able to keep afloat. I’ve been making just enough to pay the rent and my employees,” said Mr Seah, who has not drawn a salary since the start of the year and has been living off his savings.

Fewer beds and lower rates

Like many other hostels, Ms Chan’s hostel accommodates mostly Malaysian workers who cannot return home due to travel curbs.

Most are either being put up there by their companies or have approached the hostels on their own while searching for a place to stay.

“Some hostels have connections with construction firms, so when they get leads on such groups, they will share them.

“So it’s been up to us to help each other hang in there and find business,” she said.

But this group, which makes up an estimated 90 per cent of all hostel occupants now, is not expected to stay for long, with cross-border movement slowly starting to resume, said Ms Chan.

She added: “It’s pretty scary living month to month. We cannot plan in advance and the changes are so unpredictable.”

To cut costs, she has put some of her staff on no-pay leave and she also had to step in to clean toilets and make beds.

Some hostels have also slashed rates by up to 70 per cent as Malaysian workers are not willing to pay daily rates that can go up to $50 a night, said Mr Poh, 32.

Mom-and-pop owners

Most, if not all, hostel operators are small and medium-sized enterprises or “mom-and-pop owners”, said Mr Poh, who runs the 40-bed Adler Hostel.

They do not have deep pockets to sustain the business until international tourism picks up again, which will not happen so soon, he added.

Mr Poh noted that some hostel owners were unable to get bank loans as they were deemed risky, being in the tourism sector.

Mr Seah also said most hostels have been either just breaking even or running at a loss, largely propped up for the time being by government initiatives like the Jobs Support Scheme (JSS), which helps co-fund the wages of local employees.

The JSS is set to end this month.

Government help

STB’s director of hotel and sector manpower Tan Yen Nee told The Sunday Times that besides measures like the JSS, it has waived license and renewal fees for licensed hostels until the end of this year, and gives grants to encourage staff development and innovation.

The alliance has asked for the 50 per cent occupancy cap to be lifted and for the authorities to consider generating a temporary economy for them, like the way hotels are used as dedicated stay-home notice facilities.

But the STB has taken a more cautious approach for venues like hostels where large groups are likely to come together in enclosed spaces for prolonged periods, said Ms Tan.

“This is to reduce the risk of a resurgence in community transmissions. Hence, it will take more time before safe management measures for backpacker hostels are eased, and they can accept bookings for leisure. We will… review these measures accordingly,” she added.

While hostels might not contribute as much in tourism receipts as larger hotels, Ms Chan said the niche sector has helped shape the industry.

“I think we have added value by catering to travelers who want to stretch their dollar. Singapore cannot lose the flavor that we bring to the industry.”