Singapore Restaurant Mogul Says Industry Will Be Forever Changed by Covid
(Bloomberg) -- It’s hard to think of someone who would have their finger on the pulse of Singapore’s hospitality industry better than Loh Lik Peng.
Loh’s Unlisted Collection is behind some of the best known restaurants in Singapore as well as boutique hotels and dining establishments in major cities around the world like London and Shanghai. In Singapore, the group boasts Zen -- which just earned its third Michelin star on Wednesday -- and one-star Michelins Basque Kitchen by Aitor, Nouri and Burnt Ends.
He’s also chairman of the Singapore Cruise Centre and the Asian Civilisations Museum, among numerous other posts, giving him a vantage point on dining and tourism amid the coronavirus pandemic.
He spoke to Bloomberg News recently about these topics and more. Responses have been edited for length and clarity.
What’s your outlook for restaurants?
Inevitably, restaurants are going to have to make some big changes. Anyone who assumes that things will go back to normal is probably in for a rude shock.
I am taking nothing for granted. We have plenty of contingency plans, in terms of what we need to do to pivot to takeout, in terms of lowering costs very quickly if the need arises. I can foresee even places with high vaccination rates possibly needing to go into lockdown for fairly extended periods for a number of years.
I’m encouraging all my restaurants to build a bigger cash buffer into all their business contingency plans. The typical restaurant would have one and a half to two months of cash flow in their accounts. My assumption now is that we need to keep minimum three months.
And making sure the staff are psychologically prepared. Everyone gets very tired by this stage. You tell them “oh, we’re going into lockdown again,” you can see everyone is just deflated.
One of the things we are looking at as a group, too, is to do a cloud kitchen. Those revenue streams in theory should be able to continue.
What about the outlook for tourism in Singapore?
It’s going to be 2023 before we start seeing a normalization. The Chinese are not going to come back in big numbers -- I don’t think the Chinese government is confident about letting their citizens out -- and the Indonesians are certainly not coming back. If you see a recovery it may be from pockets of Europe, pockets of other East Asian economies like possibly Korea or Japan.
I’m chairman of the Singapore Cruise Centre so we control all the ferry ports here. And so we studied that situation very closely. Given the infection rates and vaccination rates, we don’t really see 2022 being a year of recovery. So the broader tourism market in Singapore will remain highly challenged well into next year.
That’s very disappointing, but it’s realistically the view that a lot of us who are doing this close, detailed scenario planning are taking.
What do you think about the outlook for the cruise industry?
The Cruise to Nowhere is doing as well as it possibly can. They are running at 50% capacity and they are filling up the ships. And if they were allowed to run at 75% capacity, no doubt it would be full.
We just had our AGM with the Asia Cruise Terminal Association, and we are briefing some of the cruise lines, and they have a full order book for 2022. They have ships coming online from the shipyards and they are filling up all their passenger slots. If they are allowed to operate anywhere close to a normal environment, they will be doing quite well in 2022.
Their fear for the cruise lines is which terminals are going to let them in at all, rather than that the business is there. But I suspect that countries like Singapore, Taiwan, Korea, Japan will allow sailings because they will be able to control the passengers going on board as well as have strict protocols for what happens in an emergency.
And you’ll see the European and American markets recover because of that reason, too. I think the more remote places – say you want to sail to Bali and offload passengers, the answer is probably no. But if they have other itineraries they will do sailings and you might have to look at your destinations on the ship, things like that.
What are you seeing in terms of food trends?
The upscale category has been the most resilient coming out of this. Our restaurant in London is going gangbusters, you have reservations full for the next three months. Again, the high end in Singapore where we’ve been allowed to reopen is the fastest recovery, and people are quite happy to come and spend, too. It’s not just that they’re coming to restaurants, they’re buying more alcohol, they’re buying more wines, better wines, everything. So your average spend is up.
It was interesting to me, and counterintuitive. I thought maybe we would have to rely more on the affordable range, but it seems to be the other way, that the higher-end restaurants have bounced back literally like a rubber ball.
Which I guess tells you that the rich have gotten richer and they are willing to spend because they are bored. They can’t spend on other stuff.
What do you see as offering optimism for Singapore?
What gives me optimism, certainly in the hospitality industry, is that the stronger players have really thrived. Les Amis, Odette and all these places are doing really well.
And then you have that middle of the crowd who are really struggling. I think some of them in the next six months will not make it.
Some of the hotels in London will not reopen. In places like Australia a lot of hotels that were on the drawing board are just canceling their plans. And funders have withdrawn the funding for these projects.
So if a recovery comes, the stronger incumbent players are going to have a field day for at least the next two to three years. If you can survive this period, whichever end of the hospitality spectrum you’re in, you’re likely to do quite well. It has removed a whole layer of people who were planning to do stuff or some of the marginal players.
Any thoughts about listing Unlisted Collection?
It’s very unlikely. It’s not really my mission.
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