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CDL
HOSPITALITY TRUSTS
87.4% in 2014 as compared to its five year average of 83.3%.
Current occupancy rates for Upscale, Mid-Tier and Economy
hotels are at a healthy 87.3%, 84.9% and 79.9% respectively.
Notably, the gap of the RevPAR between luxury and other
hotel tiers widened significantly since 4Q 2012, a strong sign
of uptick for the hospitality sector.
EXISTING SUPPLY
Based on STB data, the hotel stock is estimated at 57,172 in
2014 where some 2,154 hotel rooms were completed during
the year. Major completions in 2014 included the 442-room
Holiday Inn Express Singapore Clark Quay, 502-room Hotel
Jen at 277 Orchard Road, 134-room Sofitel So at 35 Robinson
Road and 244-room One Farrer Hotel and Spa at 1 Farrer Park
Station Road.
FUTURE SUPPLY
Moving forward, an estimated 8,703 new hotel rooms are
expected to complete from 2015 to 2017 cumulating to
a future hotel stock of about 65,875 rooms in 2017. This
represents a 3-year CompoundAnnual Growth Rate ("
CAGR
")
of approximately 4.9%, within STB’s expected tourist arrivals
growth rate. In 2015, an estimated 3,481 new luxury, upscale
and mid-tier hotel rooms are expected to be completed.
Selected major completions in 2015 are expected from the
654-room The South Beach, 550-room Genting Singapore
Hotel at Jurong Gateway, 450-room Park Hotel Alexandra
and 400-room Midlink Hotel at Middle Road. In 2016, another
3,660 new hotel rooms will be completed including 451-room
Holiday Inn Express Katong, 300-room Park Hotel Farrer Park
and 300-room Premier Inn Singapore at Beach Road.
HOTEL MARKET OUTLOOK
Whilst the government expects a slowdown in visitor arrivals
growth rates, investment in the tourism industry are not
likely to decrease. In addition to the Gardens by the Bay –
Bay South, Marina Bay Cruise Centre Singapore, the River
Safari, Marine Life Park and the Singapore Sports Hub,
others significant tourism infrastructures are also coming on-
stream. These include the Pinacothèque, National Gallery
Singapore and KidZania on Sentosa. The year in 2015 also
marks an important anniversary – the country’s 50th – as an
independent nation. Many celebratory events are expected
to be carried out to commemorate the nation’s birthday.
These projects and events are expected to boost visitors flow
into Singapore.
Additionally, in anticipation of increased air arrivals, the
construction of Changi Airport Terminal 4 and Project Jewel
was announced and expected to complete in 2018. This will
coincide with the strong growth for low-cost carriers which is
anticipated to bring more visitors into Singapore.
Meanwhile, the STB also aims to boost the tourism sector
by introducing new strategies. It focuses on a yield-driven
marketing approach to reach out to the target audience who
are most able and inclined to take advantage of Singapore
value proposition. This includes consumer-centric marketing
campaigns in the respective target markets of Australia, the
Philippines, Thailand and China. A good tourism product
pipeline is necessary to attract repeat and new visitors.
MICE sector remains an important tourism segment. STB
acknowledges that Singapore is not a low-cost Asian
destination but it will compete in terms of value for money.
Tourism programmes will also be enhanced, especially in
business and leisure events to differentiate itself from regional
competition. The STB established a new Kickstart Fund with
an initial funding of S$5 million, to support lifestyle concepts
with strong tourism potential and scalability, such as pop-up
entertainment, dining, retail or arts events. The scheme will
also provide entrepreneurs access to business advice from
experienced mentors from the industry.
Positive results are expected from government initiatives on
the tourism industry. However, in the short term, manpower
issues are expected to remain as a bugbear for the service-
intensive sector, exacerbated by higher foreign worker levies
and lower Dependency Ratio Ceiling. Higher salaries and
flexible working hours will have to be introduced to attract
and retain service staff, which will add to the cost factor,
particularly for upscale and luxury hotels which demand high
quality staff.
For the year 2015, we expect the occupancy rates to be
healthy, trending above the long-term average of 85% mark.
The expected better performance arises from new tourism
offerings and the series of planned celebrations for the
nation’s 50th birthday. Operating environment is nonetheless
expected to be competitive arising from the expected
completion of 3,258 new rooms in 2015. The performance
of the hospitality industry should be bolstered by continued
growth of the MICE industry. Overall, given Singapore’s
enhanced offerings in the tourism industry, the outlook
for the hospitality sector is still positive, albeit intensifying
competition from the region and higher cost of operations
arising from higher foreign labour levy and government
continual push for productivity.
MARKET REVIEW
Singapore Hotel Property Sector as of 1 March 2015
