Strong arrivals to help absorb hotel supply: report

The strong tourist arrivals in Singapore in recent times may help support a bottoming of the RevPAR declines that have plagued Hospitality REITs since 2013, according to a Credit Suisse report released on Monday (13 June).
In the recent figures from The Singapore Tourism Board (STB), tourist arrivals in the republic increased by 14.4 percent year-on-year to 1.38 million in April, bringing visitor arrivals in January to April to 5.53 million, or up 14.1 percent year-on-year.
“We believe this supports our view that tourist arrivals could reach a record high of above 16 million in 2016,” said Credit Suisse.
It noted that the increase was driven by strong growth in Chinese tourists, which rose 74 percent year-on-year in April and 53 percent year-on-year in January to April.
In April, industry RevPAR also rose four percent year-on-year, which is the strongest increase since February 2014.
RevPARs of mid-tier hotels climbed in tandem by 11 percent year-on-year to S$177.5 while upscale hotels’ rose seven percent year-on-year to S$228.9. RevPARs of economy hotels increased by six percent year-on-year to S$83.3 while luxury hotels were flat at S$361.
“We believe this was due to the Food & Hotel Asia conference and Easter holidays in March rather than April this year. Other upcoming medical congresses in May and CommunicAsia in early June will help attract more visitors,” it said.
Looking ahead, Credit Suisse expect 3,930 rooms, or an increase of 6.4 percent, to enter the market this year, while so far total visitor days were up 5.4 percent year-to-date.
“Comparatively, in 2015, hotel room supply grew 7.2 percent, while total visitor days were down two percent year-on-year.”

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