Report

Singapore Hotel Market

Singapore’s tourism industry performed significantly better in 2018, with visitor arrivals exceeding earlier forecasts and its hotels reversing a persistent downward trend.

Visitor arrivals hit a record 18.5 million, driving occupancy levels (86 percent) that helped raise RevPAR to SGD189.

As the Singapore hotel market enters a period of compression and supply growth remains slow, how will the market respond to the changed dynamics?

Tourism Trends and Visitor Arrivals
Visitor arrivals have consistently been a strength of Singapore’s tourism sector, which has faced few contractions since 2000. Promotional campaigns and the development of Singapore as a leading MICE (Meetings, Incentives, Conferences, and Exhibitions) destination have driven demand. In 2018, visitor arrivals grew to an estimated 18.5 million, surpassing official estimates, partly due to the Trump-Kim Summit and the popularity of the film ‘Crazy Rich Asians.’

Source Markets and Market Shifts
China became the largest source market in 2017, surpassing Indonesia, and contributed 19% of demand in 2018. Other significant markets include India, which rose to an 8% market share. The US and Vietnam also entered the top ten source markets. The introduction of new direct flight routes has increased US visitor numbers, while Vietnam’s economic development has boosted outbound travel.

Tourism Receipts and Spending
In 2018, total tourism receipts reached SGD 27.1 billion, though per capita spending hit an eight-year low at SGD 1,464, reflecting a trend of lower spending from emerging markets. This trend has impacted business performance and room rates.

Hotel Market Performance
Between 2009 and 2018, room nights demand grew by 74.6%, outpaced by an 85.5% growth in room nights available. This disparity, particularly from 2014 to 2017, led to room rate reductions to maintain occupancy rates. In 2018, average daily rates (ADR) recovered to SGD 219 from a low of SGD 216 in 2017. RevPAR improved across all hotel segments, with luxury and economy hotels performing notably well.

New Developments and Brands
2018 saw the entry of new brands such as Six Senses and Capitol Kempinski Hotel, indicating a trend towards lifestyle and experiential stays. The year also marked a period of consolidation with slower supply growth and increasing demand.

Future Outlook
Several new hotels are set to open in 2019, including midscale and upscale properties in Sentosa and a golf-course related hotel in the east. Beyond 2019, the market will continue attracting new brands, focusing on lifestyle and eco-friendly developments. Key rejuvenation projects for Orchard Road and Sentosa will further enhance Singapore’s tourism appeal.

Macro Economic Outlook
Key threats to Singapore’s market performance include currency appreciation, the US-China trade war, and potential rising interest rates. These factors could impact Singapore’s affordability and attractiveness as a travel destination, as well as business demand.