RB Capital emerged on the Singapore real estate scene when they began offering less expensive accommodations in a region where hotel rooms were rented for prices upwards of $150 USD per night. The company capitalized on a void and implemented a product development plan by setting up a hospitality branch of the business which offered lower cost hotels to a region where rooms were expensive and people wanted more options. After finding success – and stiff competition – with budget hotels in Singapore, RB Capital is looking to expand its moderately-priced accommodation offerings to the currently less competitive, less saturated European market.
RB Capital has seen financial success upon providing a new option to a group of consumers previously not targeted by both RB Capital and a majority of Singapore hotel companies. They expect to see continued growth with budget hotels in the Singapore market; however they also realize that competitors are understanding the room for growth here as well. As more and more budget airlines pop-up, bringing more travelers who want to pair their cheap flights with cheap rooms, RB Capital will continue to share the Singapore market with competitors who are also looking to take advantage of the travel trends. Branching out to Europe allows RB Capital to bring a profitable product into a new market where room for growth currently exists.
Although RB Capital is already a global company, with investments and assets in various industries, cultural differences between the Asian and European continents may pose challenges during the expansion. RB Capital must make efforts to understand the travel industry, and the consumer mindset of its new market, in Europe if it wants to see the same success that has been experienced in Singapore.
RB Capital is smartly working to solidify its position in the hospitality real estate industry by looking forward to new opportunities. Because they have had luck with the budget model, taking the successful product to a new market makes sense. However, while Europe may offer some reprieve from the competitive landscape seen in Singapore, there are certainly established chains already up and running that do threaten the growth potential of this market expansion venture.
RB Capital has likely considered myriad location options for expanding their property portfolio. Because the Singapore market has become saturated with hotel development, Europe could be the welcoming host the property company needs for a successful market development plan. However, as illustrated by the increase of competition in the Singapore market, other companies recognize the opportunity to move into the value hotel space; so while RB Capital may have booked early, its room in Europe is not guaranteed.
RB Capital will be playing in both Singapore and Europe – which are entirely different entities – so it will be important for the company to manage both locations without losing focus. RB Capital is currently looking to expand their real estate portfolio in the UK, so considering market expansion to other similar European locations should be a move that proves hospitable to RB Capital’s bottom line.
