Still room for hotels growth in Singapore to meet ‘frustrated demand’

02 May 2018 2124 | World Travel News

Concerns over the large supply of hotel rooms in Singapore has receded amid stronger tourist arrivals and stabilising corporate demand driven by firmer economic outlook, according to the Colliers International’s Hotel Insight 1Q2018 report.

The Singapore Tourism Board (STB) projects international visitor arrivals to Singapore to rise by up to four per cent to reach 18.1 million this year, following a record-breaking 2017 where the city-state received 17.4 million visitors.

This year, Singapore’s hospitality sector looks brighter and experts think that ADR will see an improvement

This growth represents a compound annual growth rate (CAGR) of four per cent between 2011 and 2018 (forecast). The stronger tourism performance was largely underpinned by an increase in visitation from North and South Asia, and in particular China, Indonesia and India, STB figures show.

Govinda Singh, executive director of valuation & advisory, Asia, at Colliers International, said: “Hoteliers in Singapore have weathered the lean years – particularly 2015 and 2016 – admirably, and the hospitality sector outlook is decidedly brighter this year as market sentiment turns up.

“Considering the data from STB, it suggests that Singapore still requires a significant amount of hotel rooms to accommodate its visitors, with growth in visitation being tempered by the low level of room supply especially at the mid-market to lower end.”

While Singapore has in recent years seen substantial increases in room supply – by over 5,500 rooms in 2015, 2,567 in 2016, and 3,400 last year – Colliers projects that this will slow dramatically to 628 rooms in 2018, and 1,300 rooms in 2019, which would allow the recently added rooms to be absorbed into the market.

Colliers anticipates the average hotel occupancy rate in Singapore, even taking fresh inventory into consideration, to remain at more than 84 per cent. A closer look at the room stock versus demand suggest that hotels in Singapore are full almost all the time during peak periods, and especially during Mondays to Thursdays, and Saturday nights.