Off the wire
• China's coal output continues to drop  • China, India need open domestic market wider to each other: expert  • Palestinian attack wounds 4 Israeli soldiers in West Bank  • Gender reassignment, transgender people recognized in Vietnam  • First Confucius school for migrant workers inaugurated in east China  • Vanuatu's parliament dissolved  • Foreign exchange rates in India  • Premier Li says China willing to participate in Slovenia's port renovation  • Chinese, 16 European leaders discuss cooperation in E China  • 15 punished for NW China college dorm blast  
You are here: 　 Home

News Analysis: Singapore hospitality sector faces uncertain outlook amid slowing regional growth

Xinhua, November 24, 2015 Adjust font size:

While international visitor arrivals (IVA) in Singapore grew year-on-year in recent months, analysts said the local hospitality sector outlook still looked set to remain uncertain amid slowing economic growth in the region and new room supply in the sector.

According to the Tourism Statistics released early this month by the Singapore Tourism Board (STB), IVA in September posted a growth of 3 percent compared to the same month last year, marking the fifth consecutive month of year-on-year growth.

The main contributor to the growth in the last few months came from China, with India also being a contributor. Total IVA in the third quarter increased by about 225,800 on-year. India supported the IVA growth with a 10.7 percent on-year growth in the three months ending September.

But analysts highlighted concerns over the impact of other aspects of the latest statistics. OCBC Investment Research said Singapore hospitality sector outlook remain challenging, as visitor arrivals from Indonesia to Singapore continue to be lackluster, as illustrated by the 9.2 percent dip for September.

As one of the main sources of visitors for the city-state, Indonesian visitors could contribute as much as around 25 percent to 30 percent of room nights occupied in some major hotels. OCBC believed the drop in Indonesian visitors can be attributed largely to Indonesia's slowing economic growth and the relatively strong Singaporean dollar.

Phillip Capital also pointed out the fall in average room rate (ARR) in the third quarter, which was its sixth consecutive quarter of on-year decline, may have been due to the relatively strong Singapore dollar that had made visitors more budget-conscious in hotel selection. The supply of new rooms also created intensive competition that prompted hoteliers to lower prices. In addition, a subdued global economy had also led to weak corporate and leisure demand.

However, Phillip Capital expected IVA will still be able to achieve STB's projection of zero to 3 percent growth. While there has been an across-the-board decline from Indonesia, Malaysia and Australia year-to-date, Phillip Capital observed that the slowdown from these markets appears to be showing signs of tapering off.

More important, the gamut of sporting, exhibition and conference events, and other initiatives may help the local hospitality sector to ride out the current difficult operating conditions. The examples of events include the Singapore Airshow in February 2016 and the Rugby Sevens Series in April next year. STB has also entered into several partnerships to market Singapore as an ideal destination for leisure and meetings, incentive travel, conventions and exhibitions.

Indeed, Phillip Capital estimated the hotel room supply in Singapore will grow at a compound annual growth rate (CAGR) of between 5.9 percent and 6.6 percent over the next three years, while IVA in Singapore has a 10-year CAGR of 6.1 percent. As such, Phillip Capital concluded the room oversupply issue may not last as the growth in IVA and room supply in Singapore would potentially be consistent with one another. Endit