Despite the steady supply of hotels in the pipeline that will continue to put pressure on occupancy and ADR, hotel performance is likely to improve.
Benefiting from its position as a global and regional transit hub, Singapore has a well-developed tourism market with great tourism infrastructure, an efficient transport network and extensive choice of accommodation, all of which make Singapore’s hotel market as competitive as regional rival Hong Kong.
In the past decade, arrivals have grown at a cumulative average of 6%; however, this average has been fuelled by abnormal growth from 2009 to 2013 by a succession of new, high-profile events and opening of attractions, including
- the Formula 1 Singapore Grand Prix (2008);
- two Integrated Resorts (2010);
- Universal Studios (2011);
- Gardens by the Bay (2012); and
- Marina Bay Cruise Terminal (2012).
After achieving a record high of 15.6 million visitors in 2013, Singapore saw a decrease of 3.1% in arrivals in 2014 (about 15.1 million total visitors), according to the Singapore Tourism Board. This drop was caused by the number of declining visitors from the top four markets—Indonesia, China, Malaysia and Australia.
The tourism sector continued to face headwinds in the first quarter of 2015, primarily due to the appreciation of the Singapore dollar, which affected the affordability of regional travel, together with the decline in travel following several high-profile air travel disasters.
However, the country has started to see some positive signs with international arrivals registering growth from May 2015 onward. As of year-to-date September 2015, Singapore welcomed approximately 11.4 million visitors, representing only a 0.3% decline year over year, according to the Singapore Tourism Board.
The top five source markets represented approximately 53% in year-to-date arrivals as of September 2015, with Indonesia being the largest source market, followed by China and Malaysia. Since the second quarter of 2015, arrivals from China have quickly recovered, as visitor numbers rose 21.1% year over year to as of year-to-date September 2015 and the number is expected to improve further. Singapore also registered growth in tourist arrivals from other Asian markets, including India, Taiwan and South Korea.
Hotel market overview
Despite low arrival volume, overall roomnight demand from January to September 2015 increased 5.6% year over year, according to the Singapore Tourism Board. Tourism receipts remained comparable to the previous year at a steady 23.8 billion Singapore dollars ($16.9 billion), suggesting visitors stayed longer and spent more during their stays.