SINGAPORE - Visitor arrivals in Singapore are expected to increase this year through 2018, underpinned by new attractions and major events the country is hosting, but the hotel room supply here is not rising quickly enough.
"Our projections revealed that hotel occupancies will remain extremely tight, rising from 80 per cent to 91 per cent from 2014 to 2018 respectively. We will expect hoteliers to raise room rates given the severity of the hotel room crunch situation developing here," Chesterton Singapore said in a report released yesterday.
"As such, we strongly suggest that the government review its policy and release more hotel sites for sale under the government land sales programme (GLS) sooner rather than later."
The hotel pipeline from 2014-2018 is expected to be just 11,147 rooms - about 20 per cent of the existing stock of 54,962 licensed hotel rooms in 2013. Most of the new hotel supply is expected to come onstream in 2014 and 2015.
There are no hotel GLS sites available in the first half of 2014, after the government removed the hotel reserve list site at Race Course Road to review the land use intention for it.
Meanwhile, new attractions such as the Singapore Sports Hub and the National Arts Gallery, as well as events such as the Women's Tennis Association Championship from 2014-2018 and SEA Games in 2015 which Singapore will be hosting are expected to boost tourism growth.
A strong line-up of conferences and exhibitions will also support the growth of business and MICE travellers to Singapore.
About half of the new stock in the pipeline are mid-tier rooms, with major completions including Holiday Inn Express Clarke Quay in 2014, Ibis Styles and Park Hotel Alexandra in 2015, and Park Hotel Farrer Park in 2016. This should sit well with the dual trends of budget travellers and low corporate budgets, Chesterton noted.
Many new hotels will also be located in the fringe and suburban areas, away from the concentrated Orchard shopping belt, along the riverfront, and within the Central Business District.
The upcoming One Farrer Hotel & Spa at Farrer Park and Genting Singapore in Jurong, for instance, are being developed on sites awarded under the GLS programme which has started to catalyse its decentralisation plans by releasing more land outside the city and in the suburbs.
Julien Naouri, associate director of Savills Hotels Asia Pacific, agrees that this year will be another record year for hoteliers in terms of occupancy rates and room rates. But he thinks it unlikely that the government will release more hotel-zoned land to ease the supply.
"I think the government is quite cautious and doesn't want to see any oversupply coming into Singapore because you can see some risk factors, such as Singapore's strengthening dollar against regional currencies and talk that Japan will start licensing casinos in 2016."
The Asia Pacific accounts for more than half of Singapore's total international visitor arrivals, and a stronger Singapore dollar may discourage visitors from spending, or even coming. Meanwhile, Japan's possible clinching of a gaming licence poses new competition which could draw visitors away from Singapore's integrated resorts.
Full research report available on BTInvest (http://www.btinvest.com.sg/ property/).
This article was first published on May 27, 2014.
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