Singapore Markets closed

Visitor arrivals to grow 7.7%: DBS

But travelers have turned more cautious in spending.

Notwithstanding a slow start, DBS believes Singapore’s tourism sector in 2013 continues to hold promise with the opening of new major attractions like the Marine Life Park, River Safari and the International Cruise Terminal anchoring Singapore as a regional holiday destination. Moreover, our
top visitor markets like Indonesia and China (c30% of total visitors), continue to grow strongly.

It expects visitor arrivals to grow 7.7% to15.3m in 2013 vs the expected14.2m visitors in 2012.

Here's more from DBS:

New rooms added; industry occupancy levels to remain fairly stable. We expect the operating environment to remain competitive coming from 4,028 new rooms (1,572 rooms in 2012, remaining 2,456 rooms over 2013). Despite that, our base case scenario of 15.3m visitors should translate to record stable occupancies of c83%. Upside will hinge on the average length of stay (LOS) profile, which could increase if visitors extend their holidays to cover the full range of attractions available. We estimate that a 0.1 day extension in the LOS results in a 2 ppt increase in occupancy rates.

Moderating trends in recent months points to weaker visitor spending. After a strong start in 2012, we sense that travelers have turned more cautious in spending from the (i) weaker average spending per visitor in recent quarters and (ii) the relative weakness in the luxury and upscale hotel segments, implying that travelers, are trading down to cheaper accommodation. Thus, going forward, with competition from newly opened hotels, we expect hoteliers to focus on maintaining occupancies and see limited opportunities in raising average daily rates (ADRs). 

We expect the industry to record a 3% y-o-y growth in RevPAR (vs 5% before) in 2013.

More From Singapore Business Review