Singapore hotel sector is showing signs of improvement

Visitor arrivals to hit 15.8m in 2016.

A massive room supply is entering the market in the next 2-3 years but a spike in visitor arrivals will help alleviate its adverse impact, said CBRE.

As of May 2016, Singapore welcomed approximately 6.89 million international visitors, this represents a double-digit 13.3% growth compared with the same period last year. The increase is fueled mainly by a spike from the top visitor markets, most notably China.

As a result, hotel performance improved in the first five months of 2016 despite overall Revenue Per Available Room (RevPAR) declining 0.7% to $200.37 over the same period. In particular, CBRE notes that the gap between room nights sold (RNS) and room nights available RNA is closing. RNS increased 7.8% YoY while RNA grew 6.1% YoY.

According to CBRE, occupancy levels remain resilient with the economy segment showing the strongest growth of 2.3 percentage points to 78.2%. Overall occupancy for the study period was 84%

Should the pace of growth be sustained, CBRE Hotels expects visitor arrivals to increase to approximately 15.8 million in 2016. This is slightly above STB’s forecasts of 15.2 to 15.7 million arrivals (zero per cent to 3 per cent growth).

However, the market is anticipating the largest injection of stock in one year since the completion of the two integrated resorts in 2010 and 2011.

The first half of 2016 saw many mid-tier to upscale hotel openings. They include 298 keys at ibis Styles Singapore on Macpherson, 314 keys at Oasia Downtown, 451 keys at Holiday Inn Express Katong and others. From 2H 2016 to 2018, there will be approximately an additional 7,300 rooms entering the market, with 2017 having the largest increase in pipeline supply.

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