Analysts turn cautious on S'pore's hospitality sector

Analysts turn cautious on S'pore's hospitality sector

SINGAPORE - Beneath the dazzle of new tourist destinations to come, not all may be well for Singapore's hospitality sector.

Analysts have turned cautious on the industry as visitor numbers climb at a slower pace, while more new hotels are expected to enter the market next year.

Earlier this week, OCBC Investment Research downgraded the hospitality sector to "neutral" from "overweight".

This came after DBS Vickers warned of a more competitive hotel landscape ahead.

"Singapore's tourism sector in 2013 continues to hold promise with the opening of new major attractions," said DBS Vickers analysts Derek Tan and Lock Mun Yee in a Dec 14 report.

For instance, Resorts World Sentosa's Marine Life Park opened last month, while River Safari is scheduled for launch next year.

But the analysts also observed a drop in visitor spending in recent quarters, and a softness in the luxury and upscale hotel segments.

Over 2013-2014, another 5,480 hotel rooms - implying a further 13 per cent expansion in supply - may come up, they said.

"With competition from newly opened hotels, we expect hoteliers to focus on maintaining occupancies and see limited opportunities in raising average daily rates. We expect the industry to record a 3 per cent year-on-year growth in RevPAR (revenue per available room), versus 5 per cent before, in 2013."

A slowing growth in tourist numbers has also been a concern for market watchers.

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