SINGAPORE: hotel industry is likely to feel continued pressure this year, as a slowdown in the growth of visitor arrivals, economic headwinds and increasing hotel supply keeps hoteliers on their toes.
Still, the influx of visitors for this year as a whole is expected to surpass – or in the worst case, match – the 15.2 million travellers that came to Singapore last year, say market watchers.
Preliminary data from the Singapore Tourism Board (STB) showed that industry-wide hotel occupancy for the January-to-July period remained strong at 85 per cent, inching up 0.6 percentage point year on year.
However, average room rate (ARR) slipped 3 per cent to S$235, which resulted in revenue per available room (RevPAR) dropping roughly 2 per cent to S$199. In terms of RevPAR, midscale hotels were the only one to post marginal growth of 0.3 per cent; economy hotels experienced the biggest dip – 2.2 per cent – among the hotel categories.
A spokesman from CDL Hospitality Trusts (CDLHT) said: “Given the weak economic sentiment, the trading environment for Singapore hotels is likely to remain competitive for the rest of the year.”
The spokesman pointed out, however that healthy occupancy levels and the growth in visitor arrivals were bright spots. The Royal Plaza on Scotts hotel, for example, maintained its occupancy level, though its room rates have fallen 3-5 per cent from 2015. Visitor arrivals to Singapore between January and July rose in the double-digits, expanding 11.5 per cent year on year to 9.79 million.
However, there are signs that the growth in arrivals from China – Singapore’s biggest source market this year – has slowed down since April. The number of visitors from China expanded only 26 per cent year on year in July, versus 75 per cent in April, 65 per cent in May and 53 per cent in June.
It remains to be seen whether September will register the same bump in tourist arrivals as previous years, given that attendance at this year’s Singapore Formula One Grand Prix slid some 15 per cent on average. Tourists typically make up over 40 per cent of race-goers. Meanwhile, data from Changi Airport Group this week showed that passenger traffic dipped 0.6 per cent in August, marking the first decline in traffic since January 2015.
Daiwa Capital Markets’ analyst Royston Tan said passenger throughput at Changi will grow at a more benign pace of 2-3 per cent in the second half of the year; in the first half, it had grown 8 per cent.
CBRE Hotels executive director Robert McIntosh said: “The combination of a slower growth rate in arrivals, the increase in number of rooms and a shorter length of stay by some guests suggests continued pressure on hotel revenues, but not as much as in 2015.” For the full year, CBRE projects RevPAR to be at between S$200 and S$206, down from nearly S$209 last year.
“If a growth rate of over 8 per cent (in visitor arrivals) can be maintained, it will alleviate the pressure on occupancy levels,” added Mr McIntosh. “However, the arrivals appear to be more cost-conscious than before.”
