Hotel occupancy could bottom at 85%: Credit Suisse

Occupancy rate of Singapore hotels could bottom at 85 percent in 2016 to 2018 if visitor arrivals per year remain at the 16.2 million levels, revealed a Credit Suisse report.
However, the Swiss financial institution said occupancy rates could reach around 89 percent if arrival figures were to rise to 17 million.
“Based on our demand supply model, for every 100,000 tourist arrivals, occupancy would increase by 0.5 percent. As such, if tourist arrivals were to come in at a stronger-than-expected 17 million, the implied occupancy for 2016 could increase to 89.1 percent,” said Credit Suisse.
“This would create a much healthier environment for hoteliers to focus on yield management rather than focusing on maintaining occupancy.”
For the whole of 2016, the financial institution expects tourist flow to increase by 5 percent to 8 percent to 16 million to 16.5 million, higher than the Tourism Board’s growth forecast of 0 percent to 3 percent.
In February 2016, visitor arrivals increased by 12.3 percent on an annual basis, with the Chinese driving the growth, but there are doubts on whether this stellar gain can be sustained on the long-term.
“We expect Singapore to continue to benefit from the continued growth in Chinese outbound travel which is under penetrated vs the global average and still has scope to grow,” it noted.
“Improved air travel infrastructure will continue to unlock pent-up demand and the city-state will also benefit from regional spill over, as it is often seen as part of a regional tour involving Thailand and/or Malaysia.”
Malaysia and Indonesia—the two sources of tourists for the republic—also saw a stabilisation in their currencies this year after significant depreciation against the Singapore dollar in 2015.
Furthermore, the Singapore Tourism Board (STB) intensified its efforts to attract the growing middle-class and affluent consumers from Indonesia, as well as those in East Malaysia, added Credit Suisse.
Nikki De Guzman, Editor at CommercialGuru, edited this story. To contact her about this or other stories email nikki@propertyguru.com.sg

More from PropertyGuru:
Mothers being encouraged to join the real estate industry
A-REIT posts 15.3% rise in net property income
High EC e-applications won’t guarantee good sales
UK still a big draw for Asian property investors
Combining business and leisure travel