Outlook for Singapore hotel sector positive: Report

The overall outlook for the hotel sector in the Republic this year appears positive, according to the latest report by real estate services firm Cushman & Wakefield.

After a challenging year in 2014 when hotel occupancy rates fell, Cushman & Wakefield said it expects demand to recover in the short term.

Geopolitical tensions in the region and a spate of aviation incidents last year dampened the demand for hotel rooms in Singapore.

The occupancy rate fell to 84.3 per cent from 86 per cent in 2013 – due to the decline in tourist arrivals and a growing supply of rooms. But Singapore still topped the region in terms of room rates.

It saw an average room rate of US$207 in 2014, with Hong Kong trailing behind at US$193.

With Singapore celebrating its golden jubilee this year – coupled with the South-east Asian Games, market watchers said they expect to see a 4 to 5 per cent climb in tourist arrivals.

Momentum in the luxury segment, in particular, is forecast to be strong.

Said Mr Robert McIntosh, Executive Director of CBRE Hotels Asia Pacific: “Over the last few years, luxury has been the one area that has really stood out. Room rates and occupancy are both increasing very strongly – that’s partly because we went from 2009 when people were not prepared to spend any money on luxury hotels, and now they are, and because there has been a relatively lack of increase in the supply in the luxury segments – whereas the mid-tier and the upscale hotels actually had a decline overall in the revenue per available room.”

With Singapore being a key regional hub, inbound business travel is expected to remain strong.

Said Ms Sigrid G. Zialcita, Managing Director, Research Asia Pacific of Cushman & Wakefield: “Singapore fared among one of the best in terms of office occupancies. A lot of the sectors have grown and what we have seen is actually a snowball effect on the hospitality sector. Looking at the luxury or the upper upscale segments where corporate demand is a significant driver of activity, they have fared quite well over the past years.”

As geopolitical tensions ease, experts said continuing investment in infrastructure and visa facilitation measures will further propel growth.

They warned however that slowing GDP growth in Singapore could potentially weigh on corporate demand, while regional leisure visitor numbers could be hurt by the strength of the Singapore dollar in relation to its regional peers.

Source : Channel NewsAsia – 8 Jan 2015

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