Hospitality and Restaurant Management in Singapore

Introduction

The hospitality industry is one of the industries that is growing very fast due to the fast growth of economies that have necessitated the growth of this sector. Many investors opt to invest in this industry because it is widely known that, such businesses have considerable profits. Hospitality is the main service sector in the global economy. It contains different service industries among which are food service, the tourism, and the hotel sectors. The industry is divided into two parts.

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These are the entertainment part of the industry which houses clubs, bars, and the accommodation part that entails public houses, inns, resorts, hotels, hostels campgrounds, motels, and serviced apartments. Restaurants fall under the category of clubs and bars. Under the same category also fall nightclubs and fast foods (Barrows & Powers, 2009).

As per the recent forecasts in the economy, the room revenue was set to gain a 10 to 12% growth every year while the average occupancy of hotels was expected to be between 80 to 85% in 2011. The country receives a mixture of visitors. These visitors range from tourists to travelers. The visitors are jet setters, travelers on business missions, and humble backpackers. This implies a good business for luxurious hotels and restaurants (Eveland, 2011).

In Singapore, the hospitality industry has for a long time performed well and made considerable market gains. This business has continued to enjoy success. In a survey that was carried out in the year 2008 by the hotel industry in Singapore, it was deduced that the revenue from this industry has risen with most of the hotels recording increased revenues. The annual growth rate of this sector according to the 2008 survey was 8.1%; with all indicators pointing to a positive trend in the growth despite a slight drop in the year 2009.

The survey also indicated that there has been a rise in the number of visitors in the country. The number of visitors in the country has significantly remained on the ceiling. In the year 2008, the country received approximately 10.1 million visitors while in the proceeding year in 2009 the number of visitors was 9.7 million. The number of hotels has been on the rise since 2007 recording a total number of 226 hotels (Pang, 2010).

The restaurant industry is a component of the larger hospitality industry. It is the industry that is changeable in the external environment. For such an industry to remain relevant and competitive in the market, it has to be very flexible, and have the diversity to enable it to easily adapt to these changes. The Singapore Hotel Association was expecting to receive seventeen million visitors by the year 2015 and 30 billion Singapore dollars revenue from the industry (Montesano, Lee, and Institute of Southeast Asian Studies, 2011).

There is a lot of dynamics in the restaurant industry in Singapore. There is a big range of cultural boosts embedded in the food scene that reflects the global test in the restaurant business. Cuisines from all corners of the world are prepared in Singapore. These cuisines include American, Italian, Indian, Thai, Mediterranean, Brazilian, Malaysian, Mongolian, and Malaysian among many others. The local citizens of Singapore like different tastes. Also, the tourists add to this diversity in the tastes of cuisines prepared in the country. The nation has a general hobby of eating out. The majority of the young generation in Singapore do not prepare food at their homes, they prefer to eat out (Royle and Towers, 2002).

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Singapore’s Political Climate Restaurant Industry

Singapore has enjoyed stability in governance for the last three decades. The stable political environment has been argued as the main base on which the economy of the country has grown at a very rapid rate (Pecotich and Shultz, 2006). The country has been very competitive in enticing investors and investment in the country. In 2009, it was ranked the best country in terms of investment attraction and competition by the World Bank in a survey that it conducted called “Doing Business Survey”. This is because of government policies that fostered political stability favoring investment. Singapore is densely populated. It is one of the countries with a dense population. In 2011, it recorded a population growth rate of 2.1%. This population is inclusive of foreigners. The country has diversity in language, culture, and religion. However, English is the language that is used in administration (Tan and Institute of Policy Studies; Singapore, 2009).

Singapore has made tremendous growth in the economy. It has grown into an industrial economy with stability in politics and governance. It has a labor force that is highly trained and skilled. The political environment is supportive of a range of businesses including the hospitality industry (International Business Publication USA, 2007). In the Southeast Asian region, Singapore which has a larger economy compared to other countries’ acts as a main investment routein the region.

It is the major center for technology and finance in the region. However, it has limited space because it is a small country with poor terrain. Therefore, it has a limited capacity special capacity for large production. The country heavily depends on commerce; its ports are among the busiest ports globally. The country is naturally suitable for foreign commerce and investment. It has developed infrastructure and embraces the protection of intellectual properties skillfully. The country also has stable corporate governance (International Business Publication USA, 2007).

Foreign direct investment in the country measures the number of investments by non-citizen investors in their country affiliates where the 10 percent rule makes them own at 10% of the paid-up capital. This rule is recognized and recommended by the international monetary fund’s balance of payments manual. This is found in the fifth edition of the manual. Foreign investments in companies that belong to the country that has less than 10% equity interest are considered to be foreign portfolio investment. The country has good trade relations with other countries and attracts foreign investors in their country to catalase economic growth (Francois, Rana, and Wignaraja, 2011).

The government had a plan to make the country a gastronomic capital in the region by 2010. Both the government and the agencies that partake in the food industry have worked on the promotion of the industry and making it to be one of the best. They have worked to promote an innovatory spirit and safety standards. Therefore, the quality of service in the sector has been improved over time. Several programs and schemes have been put in place to aid the food and beverage sector; investors in the sector to develop businesses, and increase profits from this sector (Montesano&Lee and Institute of Southeast Asian Studies, 2011).

At the beginning of 2007, 12 million Singapore dollars were set aside under the program known as the Capacity Development Program to aid the developmental capacity in the food and beverage sector. The program has aimed at developing innovative concepts in this sector by aiding small and medium enterprises in this sector to develop their potentials and raising their efficiency and service levels.

During the recent economic crisis which affected most of the sectors of the economy from 2007 to 2010, the food service was able to maintain its performance. Numerous food outlets were opened taking advantage of the lowered rental rates for food and beverage spaces. The ministry of manpower of Singapore gives room for employing foreign workers in the foodservice sector. Work passes for these workers are, however, provided based on a quota system based on several local citizens that have been employed in the food sector. The country has created a favorable environment for willing investors in the food and beverage industry (World Economic Forum, 2008).

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The Tourism Board of Singapore supports, and even funds the creation of recreational facilities. The government of Singapore has made achievements in spearheading social and economic attributes. The country was recently ranked second globally by the World Economic Forum for the support of social and economic projects in a survey called the Global Competitiveness survey. The government has diverted a lot of efforts in supporting recreational development.

The government has of late embraced direct funding to capitalistic and private firms in the recreational sector. In the latest plans, the government has plans to release 50 million dollars as a direct investment. This money is planned to be distributed to approximately one hundred companies over five years. Due to the policies set by the government in this sector, each year records many foreign investors who come from the West and across the world to Singapore. The investors cum risk-takers come with fresh investment ideas and seek funding. If the government ascertains that foreign investment has the potentials of boosting the economy, the government supports it (Ryder, K., 2011).

Emmons, 2011 observes that Singapore is one of the tourism hubs in the Southeast Asian region. The country has an attraction to visitors from across the globe. Many international events and businesses and business events are based in the country. In recent times, the good outlook of the tourism industry in the country has baited investors and developers from within and without the country. The developments in the tourism sector have reinforced the position of the government to embrace the country as a tourism destination basing on the dynamism for visitors who visit the country from across the world.

The country has put up iconic attractions and is still putting up more. This is raising excitement in tourism. Examples of the iconic attractions include the Singapore Flyer which is among the world’s largest wheels, Marina Bay Sands which is a flagship resort of Las Vegas Sands, and the Resorts World which houses the only universal studios of Southeast Asia. This is located in Sentosa. All these developments in the tourism sector are expected to transform the country’s leisure landscape making the country become Paradise for Tourists (Emmons, 2011).

The government unveiled a plan called Tourism 2015 in January 2005. The plan explained targets of increasing revenues from tourism to the US $21.2, and ensuring that the number of tourists grows to 17 million. In the plan, the government also planned to employ 250,000 workers in the industry (ASEAN, 2008). Singapore is deficient in natural resources. Most of the food and food products are imported. The country imports about 90% of its food requirements. Agriculture is absent, farming in livestock and aquaculture that can satisfy the demand of the population coupled with the population of tourists. These are imported from neighboring countries (Chandrappa, 2011).

Direct sourcing is provided by the country and it is also a distribution center for many food and food products that are sold in the region. This is done through re-exporting and/or through processing the foods for value addition. Singapore’s role in Food trade in the region is projected to continue to grow relative to the growth of the economy of the region. Although Singapore deals in the manufacturing of food products that are exported to neighboring countries, it has to import the majority of manufacturing ingredients. The government of Singapore promotes the improvement of imports and the re-exporting of numerous food products to the entire Asian Market. This is an effort to enhance diversity in exports (International Business Publications USA, 2008).

According to International Business Publications USA (2008), Singapore has allowed free importation of food products and supplies. Since the country has a good reputation for food safety, the country has strict regulations on imports in ensuring that imported food products are safe for consumption. Major bodies that govern food trade in the country are, the ‘Agri- Food and Veterinary Authority of Singapore’ and the ‘Food Control Department’ (AVA). Food exports to the country are governed by the regulations that are imposed on the importers. There are stricter regulations that govern the importation of already processed food.

Importers of such kinds of foods are obliged to look for these products from regulated places. These establishments have to possess the capacity of producing food by observing high standards of sanitation. It is mandatory for traders and manufacturers who aspire to join the industry to hold to procedures that appertain to quality assurance that are accepted by AVA (International Business Publications USA, 2008). The policy on food import guarantees the steadiness and sufficiency of a healthy food supply from many food-exporting countries. It is the only liquor that has been tariffed. There are no restrictions on the quantities of food imports and exports. These restrictions only apply to the importation and exportation of rice (Francois, Rana, and Wignaraja, 2011).

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Singapore Economy and the Restaurant Industry

Singapore has attained tremendous growth in its economy. The economy of Singapore has developed over time, though the growth in the economy was accelerated towards the end of the 20th century through boosting the policies of the government to great extent. The country has grown from a developing economy to an almost industrialized economy. In southeast Asia, the economy is the kingpin of the region. The economy of Singapore is capitalistic. It is a mixed economy.

The government has ownership in firms comprising approximately 60 percent of the Gross Domestic Product through different entities. Singapore has a liberal business environment that is devoid of corruption. The country has lower rates of taxation. Its taxation rate is at 14.2% of its Gross Domestic Product. This rate of taxation is very low compared to that of other developing economies. The GDP of the country is among the leading per-capita in the world.

The domestic market in Singapore is relatively small. The country has opened up its economy to markets outside its borders. The effects that come up with this have necessitated the enactment of economic policies that protect the country from the impacts of the global market (Tanaka and Organization for Economic Co-operation and Development, 2010). The majority of companies in the country are registered as ‘private limited- liability companies’. Private limited companies are separate legal institutions in the country. The country has the busiest world-class port. This port has aided the country in competing with its neighboring states.

According to the latest economic statistics, the country has the fastest growing globally. The percentage growth rate of the country was stood at 17.9% in 2010. The country is strategically located on major sea lanes. Moreover, it has a very hardworking population. These factors make the country be an economic icon in the region (Tanaka and Organization for Economic Co-operation and Development, 2010).

Tourism is one of the major industries in Singapore. It is one of the biggest contributors to the economy. By the year 2010, the industry had recorded 11.638 million tourists. This was a 20 percent increase compared to the preceding year. This figure was very high and almost doubled the population of the state. In 2010, expenditure in the tourism sector grew by 8,834 percent (Singh, 2011). Tourism in the country has led to growth in the hospitality and restaurant businesses. The government has dedicated efforts to boost the growth of the sector has realized that the sector contributes enormous revenues to the economy.

To boost the tourism industry, the government opted to develop integrated resorts to help attract the longevity of visitor stays in the country. The integrated resorts are expected to attract more tourists which in turn will support the other service sectors in the economy such as the hotel, the food, and beverage industries. The resorts are expected to boost the job market in the economy. In 2009/2010, the economy of Singapore benefited from the construction of integrated resorts. This was the period when the world was experiencing a recession due to the global financial crisis (Singh, 2011).

Social Climate and Restaurant Business

Singapore has tripartite labor relations amongst the labor unions in the country and between workers and the government. The National Trade Unions Congress is the central labor agency. The agency has had good working relations with the government. They do share common objectives of keeping good work relations for development. The country has an employment act that covers all the workers in the country irrespective of the countries where they come from.

The worker must be in contract with an employer. During 2009, the Food and Beverage sector employed a total of 91,300 employees (Davidov and Langille, 2011). It is affordable to establish a business in Singapore. The country has a fairly subsidized taxation regime. There is plenty of labor force in Singapore. The current recession in the world economy impacted negatively the growth of Singapore’s labor force. Business enterprises care for the welfare of their employees.

There are many learning institutions in Singapore that train people in hotels and tourism. These institutions give high-quality training. The training that is offered by the institutions is classified into ‘Competency SkillsBased Training’; it happens at the Diploma, as well as at the Graduate and Post Graduate levels of study. The need for workers varies according to the level and skills as per the requirements of the investors. Investors are at the freedom to inquire from institutions about the kind and levels of training that is offered and make employment choices (ASEAN, 2008).

There has been a continuous growth in the awareness of corporate social responsibility and its implementation has been taking place in the last four years. The country formed a body known as ‘Singapore Contact’ that oversees the promotion of corporate social responsibility activities in the country. CSR in Singapore centers on long term business strategies and business activities with values that respect universality in achieving positive results, which are also sustainable for all actors in the business world.

These include customers, suppliers, workers, shareholders, communities, as well as the general environment. CSR is working positively for companies and business establishments in the country. The benefits that come with social responsibility may be tangible or intangible. Most benefits are intangible, for instance, improvement of the reputation and image of the business or company. Around 240 establishments have joined the ‘Singapore compact’ and the companies are working to implement CSR activities. The organizations entail large corporations, Small and Medium Enterprises, unions, cooperatives, and nongovernmental organizations among others (Tay, 2010).

Small and Medium Enterprises have a huge contribution to the growth and transformation of the economy of Singapore. SMEs in the country build capacities for themselves. About 99% of all business enterprises in Singapore fall under the category of Micro, Small, and Medium Enterprises. These enterprises employ a very big population of about 62% of the workforce. These enterprises are constrained by increased competition, issues to do with manpower –hardships in employing and maintenance of talents, high costs of operation of these enterprises among others like financial and budgetary constraints. The government of Singapore has worked to give incentives to the SMEs to aid them to operate in a competitive environment (Spring Singapore, 2011).

The restaurant business has no big environmental impacts. The government of Singapore has regulations that ensure that the restaurant business heeds environmental conservation issues. The quality of food that enters the country is scrutinized to ensure that they abide not only by hygiene but also by environmental standards (Enz and Cornell University, 2010).

Competition and Sustainability of the Restaurant Industry

The restaurant business is very competitive. Macdonald’s restaurant performs very well in the country and, therefore, any business person who wishes to invest in this industry has to be ready to withstand the competition from Macdonald. Macdonald was ranked among the leading ten employers in the country. The restaurant was ranked fifth. This is a strong boost to the restaurant sector in the country; however, when it is looked at from another angle, it puts other competitors in the sector on their toes. The other restaurants have to work hard to enhance worker incentives and treatment which pushes operational costs of the restaurant business to the ceiling (Needle, 2010).

The industrial development of Singapore is highly pegged on foreign investment. However, there is a growing concern for dependency on foreign direct investment for the growth of the economy. It is argued that this kind of investment hinders local investment due to maintaining a dual approach to industrial manufacturing structure. Due to the speed and high rate at which the economy of Singapore is growing, there is an increasing interest for multinational companies, more so, from the developed world to invest in the country (Organization for Economic Co-operation and Development, 2011).

The hospitality industry has remained sustainable in the country, and its strength and relevance in the economy have continued to rise. The industry is projected to register tremendous growth. Even in the economic recession that the world has been experiencing since 2009, the negative consequences to this industry in Singapore have remained insignificant and ignorable. The industry has stood still, and endured the shocks that accompanied the crisis. This signifies a lot of hope for investors in all sectors of the industry.

French cuisine is common in many of the restaurants in the country. French food is widely popular because of its taste. Singapore is the third leading consumer of French cuisines coming behind France and the United States. Restaurants that cook French cuisines fall under various categories. Some specialize in preparing traditional food. Many people like the cuisine that is integrative. Such cuisines mix the traditional French food with Asian food (Richmond, 2003).

Conclusion

The growth of Singapore into an industrial power has come with many benefits to investors who are eager to invest in the country. The country has vast investment opportunities. With the rise in the number of tourists visiting the country from the region and its surroundings, the improvement in the tourism industry in the country, the hospitality business has opened numerous opportunities. Singapore’s government has supported the tourism industry through the increase of tourist attraction sites, as well as favorable policies to boost the sector. Moreover, the hospitality industry, the restaurant business in specific, is favored by the culture of the population.

The majority of the country’s population, more so the youths, like eating out, therefore, restaurants benefit a lot from this culture. Also, the foreign investor relations of the country are fairly good. This favors individuals or corporates who wish to set up a business enterprise in the country. As observed above, the restaurant business in the country has been doing well in that the revenue from this sector has continued to grow. With few challenges ranging from competition to other issues such as the recent concern about foreign investment in the country, it remains a favorable place for people who want to invest in the hospitality business.

Recommendation

Establishing any business comes with its risks and uncertainties. The hotel and hospitality industry in Singapore is doing well at the moment; and both the political and economic environment for the restaurant business remains favorable, though with minor limitations. Most restaurants in Singapore embrace French cuisine. People like French cuisine across the world and therefore, it has to be part of any new restaurant business that is going to be established in Singapore.

The adoption of modern technologies should be emphasized to allow companies to develop innovative products and marketing strategies. This will help attract customers from different countries. As such, customer satisfaction will help increase the level of customer loyalty in the industry. This strategy will improve the profit level, and the sales levels made by companies in the industry.

Reference List

ASEAN, 2008, ASEAN Tourism Investment Guide ASEAN.National Tourism Organisations.Web.

Barrows, C. W, and Powers, T. F., 2009, Introduction to the hospitality industry.Hoboken, N.J: John Wiley & Sons.

Chandrappa, R, 2011, coping with climate change: Principles and Asian context. Berlin: Springer.

Davidov, G., &Langille, B., 2011, The idea of labour law. Oxford: Oxford University Press.

Emmons, R.,2011, Frommer’s Southeast Asia. Hoboken, N.J: Wilely Pub.

Enz, C. A. and Cornell University., 2010, The Cornell School of Hotel Administration handbook of applied hospitality strategy. Los Angeles: SAGE.

Eveland, J.,2011, Frommer’s Singapore & Malaysia. Hoboken, NJ: Wiley Publ.

Francois, J. F., Rana, P. B.andWignaraja, G., 2011, National strategies for regional integration: South and East Asian case studies. London: Anthem.

International Business Publications, USA, 2007, Singapore Research & Development Policy Handbook.USA: Intl Business Pubns.

International Business Publications USA, 2008, Singapore: Customs, trade regulations and procedures handbook. Washington, DC: International Business Publications.

Montesano, M. J., Lee, P. O and Institute of Southeast Asian Studies., 2011, Regional outlook: Southeast Asia, 2011-2012. Singapore: Institute of Southeast Asian Studies.

Needle, D, 2010, Business in context: An introduction to business and its environment. Andover: South-Western Cengage Learning.

Pang,J.M., 2010, Perceptions of the tourism and hospitality industry by Singapore polytechnic hospitality students: An exploratory study.Las Vegas.University of Nevada.

Pecotich, A and Shultz, C. J., 2006, Handbook of markets and economies: East Asia, Southeast Asia, Australia, New Zealand. Armonk, N.Y: M.E. Sharpe.

Richmond, S, 2003, Singapore: [breezy shopping and riverside bar hopping]. Melbourne [etc.: Lonely Planet Publications.

Royle,T and Towers, B., 2002, Labour Relations in the Global Fast-Food Industry. London: Rutledge.

Ryder, K., 2011, Can Singapore engineer creativity? Web.

Singh, D., 2011, Southeast Asian Affairs 2.Singapore. Asia: Institute of South East Asian Studies.

Spring Singapore, 2011, Assistance Programs for SMEs. Web.

Tan, T. H. and Institute of Policy Studies, 2009, Singapore perspectives 2009: The heart of the matter. Singapore: Institute of Policy Studies.

Tanaka, K., & Organisation for Economic Co-operation and Development.2010, SoutheastAsian economic outlook 2010. Paris: OECD.

Tay, E, 2010, Corporate Social Responsibility in Singapore: Awareness and Implementation. Web.

World Economic Forum., 2008, the global enabling trade report. Geneva: World Economic Forum.

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StudyCorgi. (2021, March 12). Hospitality and Restaurant Management in Singapore. Retrieved from https://studycorgi.com/hospitality-and-restaurant-management-in-singapore/

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