Hotel room rates rose last year though occupancy took a hit from declining tourist arrivals, according to a report out yesterday.
A room cost $260 a night on average last year, up from $258 in 2013, making Singapore one of the most expensive out of 18 cities across Asia tracked by property consultancy Cushman & Wakefield.
But occupancy in Singapore fell to 84.3 per cent from 86 per cent a year earlier, based on the basket of hotels tracked.
Higher rates were driven by luxury hotels in prime locations such as Orchard Road and the Marina area, which are at the centre of events such as the Formula One Grand Prix race and Great Singapore Sale, said Cushman & Wakefield research director Teo Li Kim.
Though hotel stays surged over the race weekend in September last year, 3,000 fewer tickets were sold, the report said.
Cushman & Wakefield expects the low tourist numbers to recover and room rates to rise further this year.
Tourist arrivals fell 6 per cent to 3.6 million visitors in the second quarter of last year compared with the same period a year earlier.
Limited potential for new supply in the boutique hotel and hostel categories could also keep rates up. In July last year, the Urban Redevelopment Authority tightened the approval of new development applications for hotels, boarding houses and backpacker hostels.
The luxury and economy segments had the strongest showings from January to November last year. Revenue per room climbed 5.4 per cent at luxury outlets and 5.5 per cent for hotels in the economy sector, according to preliminary estimates by the Singapore Tourism Board yesterday.
Hotel sales also slowed last year as the limited availability of investment opportunities locally led to investors casting their nets wider to Japan, Europe, the United States and Australia, said Cushman & Wakefield.
Transaction value in the 11 months to November was US$721 million (S$960 million), down from US$2.3 billion in 2013, the report added.
Outbound capital grew to US$3.4 billion in the same period, from US$2.5 billion in 2013.
"Capital originating in Singapore largely has outbound investment mandates, and Singaporean-based owner-operators are broadening their portfolio beyond local borders," said Mr Akshay Kulkarni, Cushman & Wakefield's regional director of hospitality for South and South-east Asia.
But international hotel groups have also expanded here, said the report, noting the recent opening of Hotel Jen Orchard Gateway, a new brand of the Shangri La Hotels and Resorts, as well as Holiday Inn Express Clarke Quay.
Mr Kulkarni said he tips capital values to remain stagnant this year but expects a "definite increase" in the number of sales from last year.
"This is also part of a cycle as a normal transaction needs about eight to 10 months to close out," he said.
"There is a significant amount of capital waiting to be deployed into Singapore that is waiting for the right values to invest at," he added.
More than 4,600 hotel rooms are in the pipeline between now and 2018, with new developments planned for outlying areas, such as Park Hotel Alexandra, Park Hotel Farrer Park and the dual-branded complexes Novotel and Ibis Styles Stevens Road, and Hotel Indigo and Holiday Inn Express Katong.
Offerings in more established destinations are also being refreshed, with Sofitel Sentosa entering the market next year and the second
InterContinental Hotel planned to take over the redeveloped Gallery Hotel property in Robertson Quay.
This article was first published on Jan 6, 2015.
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