VISITOR arrivals to Singapore rose 4.4 per cent year on year in the first four months of 2017, with China emerging as the top source market for travellers.
According to preliminary figures from the Singapore Tourism Board (STB), Singapore received around 5.79 million visitors during that period, of which 1.1 million were from China.
The STB’s marketing strategy of reaching out to its top five source markets and expanding its focus to Tier 2 cities in these countries – especially China – was cited by market analysts as a factor for growth.
The STB has also been inking memorandums of understanding (MOUs) with online travel services and social review sites in China to promote Singapore, the latest being with tech giant Tencent.
Arrival figures from China – which outperformed last year’s leading feeder market Indonesia – were up 8.3 per cent for the first four months of this year. The burgeoning flows of visitors have made China a major source market for Singapore in recent years. According to hospitality consultancy HVS, arrivals from the country have expanded at a compound annual growth rate of 23 per cent for the past four years.
Leisure and business travellers from Indonesia totalled over 968,000, translating to a 5.3 per cent rise, for January to April this year. “The strengthening of the Singapore dollar is expected to persist this year, and this could continue to deter some Indonesians from travelling to Singapore,” commented Christine Li, Cushman & Wakefield’s research director.
While the STB doesn’t release estimated tourism receipts, “receipts should be able to hold steady for Q1”, reckoned Robert McIntosh, executive director at CBRE Hotels (Asia-Pacific). In the first quarter of 2016, tourism receipts totalled S$5.4 billion.
In the hotel sector, total room revenue for the industry slid 2 per cent year on year to about S$1.06 billion for the first four months of this year.
Average room rates (ARR) dipped 2.3 per cent to about S$233, with upscale (-4.6 per cent) and mid-tier hotels (-4.1 per cent) suffering the biggest declines.
Luxury hotels, on the other hand, bucked the trend and racked up a 5.2 per cent increase in ARR.
“As the demand and occupancy level for luxury hospitality accommodation has not declined significantly from last April, ARR for these luxury hospitality accommodations was able to increase,” said HVS Asia-Pacific’s managing partner Chee Hok Yean.
Average occupancy for the luxury sector inched down a marginal 0.6 percentage point to 85.3 per cent in the first four months of the year.
She went on to add: “Most of the new supply which opened in 2016 were mainly in the upscale and mid-tier segment, which resulted in great competition in ARR among these segments.”
Meanwhile, the industry-wide average occupancy rate strengthened one percentage point to 85.6 per cent.
“Generally, there is still (downward) pressure on room rates … partly due to reduction of corporate budgets amid the softer economy and partly due to the new supply that had come on to the market in 2016,” noted Mr McIntosh.
He went on to point out that occupancy rates in Singapore are already among the highest in Asia, as are the room rates. “This makes further growth problematic in the short term.”
“Average room rates are still falling, due to the surge of hotel rooms added last year,” Ms Li said, sharing a similar perspective. “Operators succumbed to lowering their room rates to compete for higher market share.”
As at end-2016, Singapore had 413 hotels with 63,850 rooms.
Weaker ARR contributed to the decline in revenue per available room (RevPAR), which inched down 1.1 per cent to around S$199. Mid-tier hotels experienced the biggest fall in RevPAR of the four categories, declining 4.4 per cent while upscale hotels saw a 1.9 per cent dip. Economy hotels posted a 3.5 per cent rise in RevPAR, while the figure was 4.5 per cent for luxury hotels.
New hotels which opened in the first half include The Warehouse Hotel and the JW Marriott Hotel Singapore South Beach. The latter, however, is a rebranding of the former South Beach Hotel.
This year, Singapore is aiming for visitor arrivals growth of 0-2 per cent – up from 16.4 million last year – and an increase in tourism receipts of 1-4 per cent. Last year, the city-state chalked up S$24.8 billion in tourist spend.