MARKET REVIEW
MARKET REVIEW
readiness, prioritisation of travel and tourism, international
openness and infrastructure pertaining to air and surface
transport and tourist services. MICE visitors will continue
to contribute strongly to the international visitor arrivals
number given the sustained strong interest in the growing
Asia market, with Singapore poised to capture a slice of this
positive trend.
HOTEL MARKET PERFORMANCE
With the operating environment becomingmore challenging
from declining visitor arrivals and increased competition,
Singapore hotels still saw considerably healthy demand in
2015. According to STB, the AOR in 2015 stood at 85.0%,
marginally lower than the AOR of 85.5% from a year ago.
ARR declined by 4.8% from a year ago while RevPAR
declined by 5.4% yoy. Overall hotel revenue performance
in 2015 weakened arising from increased competition due
to additional supply of hotel rooms in the market, uncertain
geopolitical tensions, declined visitor arrivals due to the
disappearance of MH370 and a strong Singapore dollar.
ARR of the various hotel tiers declined across the board.
Mid-tier hotels saw the greatest yoy drop by 5.6% while
upscale hotels registered the least decline by 0.6%.
The ARR of luxury and economy hotels declined by 2.8%
and 4.5% yoy respectively. Luxury hotel occupancy rates
is the highest for 2015 at 86.5% marginally lower than the
87.5% a year ago. Occupancy rates for Upscale, Mid-Tier
and Economy hotels are at a healthy 86.1%, 85.5% and
79.3% respectively, not far from a year ago.
EXISTING SUPPLY
According to STB, the hotel stock is estimated at 60,908 in
2015 with an expected net total of 3,736 added in 2015.
According to URA, major construction completions in 2015
included the 557-room Genting Hotel Singapore, 262-room
Hotel Grand Central, 69-room Hotel Yan, 450-room Park
Hotel Alexandra, 488-room Hotel Chancellor @ Orchard,
654-room The South Beach, 1,500-room Hotel Boss,
314-room Sofitel Singapore City Centre and 157-room
The Patina.
FUTURE SUPPLY
Moving forward, an estimated 8,451 new hotel rooms
are expected to commence trading from 2016 to 2019
cumulating to a future hotel stock of about 69,359 rooms
in 2019. This represents a 4-year CAGR of approximately
3.3%. In 2016, another 3,930 new hotel rooms are expected
to open including the 314-room Oasia Downtown Hotel,
225-room InterContinental Singapore Robertson Quay and
400-room Mercure Singapore at Middle Road.
HOTEL MARKET OUTLOOK
Whilst the government expects a slowdown in visitor arrivals
growth rates, investment in the tourism industry is not likely
to decrease. In addition to the existing tourism infrastructure
such as Gardens by the Bay – Bay South, Marina Bay Cruise
Centre Singapore, the River Safari and the Marine Life
Park, the Singapore Sports Hub and the National Gallery
Singapore, significant tourism infrastructure projects coming
on-stream include the announced expansion of the
Singapore Zoo and the integration of Jurong Bird Park to
the Mandai area. These projects 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 are expected to be completed
in 2017/2018. 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 the most able and inclined to take advantage of
Singapore value proposition. This includes intensifying
marketing efforts to reach out to more tier-two cities
in China, India and Indonesia. A good tourism product
pipeline is necessary to attract new and repeat visitors.
The 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. STB’s S$10 million Experience
Step-Up Fund aimed to get businesses to develop new
tourism experiences and they have adjusted its funding
methods for the Leisure Event Fund and Business Events in
Singapore Fund.
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 the lower Dependency Ratio Ceiling. Recent policy
shifts may benefit the hotel sector which has become the
first sector to get a dedicated five-year manpower strategy,
under a national drive to equip students and local workers
with industry-relevant skills as announced by the Ministry of
Manpower in October 2015. These include more structured
internships, an Earn and Learn programme for polytechnic
and ITE students, and a framework of new skills needed and
career progression opportunities from operations level to
senior management roles. The strategy is aimed to align
manpower with the number of hotel rooms here which are
due to rise by 20% by 2020. The manpower plan is targeted
to make hospitality careers more attractive to reduce the
likelihood of staff switching out to other sectors.
For 2016, we expect the occupancy rates to be healthy,
trending about the long term average of 85% mark.
Operating environment is nonetheless expected to
be competitive arising from the expected opening of
3,930, 2,727 and 652 new rooms in 2016, 2017 and
2018 respectively. The performance of the hospitality
industry should be bolstered by continued growth of the
meetings, incentives, conventions and exhibitions industry.
Overall, given Singapore’s enhanced offerings in the
tourism industry, the outlook for the hospitality sector
is still positive, albeit with intensifying competition from
the region and a higher cost of operations arising from
the higher foreign labour levy and the government’s
continual push for productivity.
29
Annual Report 2015
