Tourism surge may cause hotel room shortage

Observers said there could be a shortage of hotel rooms in the next six to 12 months because of more visitors coming to Singapore.

In the first half, tourist arrivals grew 23 per cent on-year, but the supply of hotel rooms rose just 16 per cent.

6.5 million visitors arrived in Singapore in the last seven months.

Observers said Singapore also has a fairly large captive market, with some three billion people living within a six-hour flight radius.

They expect more people to come to Singapore and said tourist arrivals could go up by 30 per cent in the second half.

This could create a near-term shortage of hotel rooms.

“This undersupply situation is going to lead to occupancy crossing the 90 per cent level, but what we have heard on the ground is that some hotels are even doing in excess of 90 per cent at this point.

“(Technically this is going at full) capacity at this point. I believe it is going to stay at that level because (in) 2011 we are only going to see a three per cent increase in supply of new rooms and eight per cent in 2012,” DMG & Partners assistant vice president, research Jonathan Ng said

For this year, experts said occupancy rates could hover above 85 per cent.

And room rates may rise 15 per cent this year and about seven per cent in 2011.

Meanwhile, the growth in low cost travel is also likely to drive up demand for certain types of accommodation.

“The quality economy hotels have performed very well and there seems to be a shortage in supply of those, that is a real opportunity.

“In fact most of the new hotels in the luxury or upscale segments, provided they keep the quality of their products high, I can see those performing pretty well.

“If there’s going be any concern it is going to be the mid-tier unbranded un-refurbished properties. But if the occupancy stays above 80 per cent, they will not have serious problems,” CB Richard Ellis executive director, Asia Pacific Robert McIntosh said.

Travellers are also spending more time in Singapore.

Experts said the average length of stay could increase from four days currently to 4.5 days next year as more attractions come on stream.

The two integrated resorts are expected to boost tourist numbers in coming years.

Analysts said the opening of the Venetian and Sands in Macau in 2004 and 2007 saw a 40 per cent spike in arrivals.

And it’s possible for Singapore to see similar growth next year, if the economic recovery holds up.

Source : Channel NewsAsia – 18 Aug 2010

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