Singapore Hospitality Outlook
Tourism is a major industry in Singapore. Tourism accounts for nearly 4% of Singapore’s gross domestic product in 2019. In 2018, Singapore became the fifth largest and most visited city in the world, and singapore became the number two most visited city in Southeast Asia.
Visitor arrivals to Singapore that year were recorded at 18.5 million, while 2019 international tourist arrivals were 19.11 million. Since 2009, visitor numbers have doubled, and growth in the area is expected to continue in the near future.
2020 is a really difficult year for the tourism industry, especially the hotel industry. As the Coronavirus pandemic spreads around the world, hotels and tourism are the businesses that are most affected. According to the singapore market report, transactions in the hospitality industry totaled nearly $2.15 billion – a figure that is four times that of the previous one in 2019. Transactions in 2018 reached $544.69 million.
Investment volumes in the industry are expected to increase by $2.4 billion which will include land sales for hotels.
This positive situation is mainly due to the increasing number of tourists visiting Singapore for meetings, incentives, conferences, exhibitions, or better known as MICE which is routinely held in Singapore.
Tourist arrivals to Singapore reached 11.1 million in July 2019 based on data from Singapore Hotel Market Update 2019.
Now anyone can BUY PROPERTY, INVEST IN PROPERTY and MAKE NEW BUSINESS. With EQUITY CROWDFUNDING heavy burden become lighter.
For 2020 after the pandemic is complete, there will be many international class events throughout the year that will be held in this city. In 2018 many important events took place in Singapore such as the US and North Korea Summit in Sentosa, the 51st ASEAN Foreign Ministers’ Meeting, and the launch set of Singapore Crazy Rich Asians.
Since the Singapore Tourism Board began monitoring the performance of the hospitality industry in order to increase the value of trade, they observed the highest average occupancy rate each month.
STB learned a lot from the situation that occurred in Singapore in 2018 and then took to the following year to study its niche market so that the hotel occupancy rate reached 93.9% in the seventh month of 2019.
Many factors play a major role in the increasing number of tourists coming to Singapore. The Singapore government is opening up new routes for airlines and flight routes have been introduced which are causing travellers to seek accommodation in Singapore more than ever.
Jewel Changi Airport opened in April 2019, further improving the trading performance of the well-positioned hotels. This increase has not only increased trade but the industry has also experienced increased investment.
With the increasing amount of foreign capital coming into Singapore, this is an important role for economic growth in Singapore.
According to the UNCTAD World Investment Report 2020, FDI inflows rose to USD 92 billion in 2019, from USD 79 billion the previous year. In the same year, FDI shares were approximately USD 1.7 trillion.
Singapore is the 5th largest recipient of FDI inflows in the world, after the United States, China, the Netherlands, and Hong Kong. Singapore is also a major investor abroad, FDI outflows reached USD 33 billion in 2019; has sought to diversify its investments beyond its traditional target markets in Asia, namely China, India and Vietnam in recent years.
The main investors in Singapore are the United States, British Virgin Islands, Cayman Islands, and the Netherlands. Financial and insurance activities are by far the main beneficiaries of foreign investment, accounting for 54.5% of all FDI shares.
One of Singapore’s hotel operators, Oakwood Premier is getting $289 million in fresh funding. It was bought through a joint venture by AMTD Group, a Financial Services Company based in Hong Kong and Dorsett Hospitality International, the hotel operator.
That same year, a wealthy man from Bangladesh invested $169 million to buy ibis Singapore Novena.
In 2019, another high-value sale boosted the industry’s prospects when Hoi Hup, a local property developer invested $475 million to buy Andaz Singapore a 342-room hotel.
It was the highest investment and was a record high back then. This amount is also higher than westin Singapore’s reported sale price of $468 million in 2013. ADR or average daily rates in Singapore as well as occupancy rates are always among the best in the Asia Pacific region.
ADR from October 2018 to October 2019 is S$219.59. Occupancy rates have reached about 86.5% during the period mainly due to a steady increase in tourist visits and reduced supply pipelines.
According to the latest data published by STB, RevPAR or revenue per available room rose by 3.9% from October 2018 to October 2019.
Increased Hotel Supply More Than The Amount Needed,
If all hospitality projects are completed in the period 2019 to 2022, 50% of them are expected to come from the upper to medium middle segments.
It is possible that this trend will continue mainly due to low-cost operations and construction. This segment will see a Better Return On Investment and profit than luxury or high-end hotels.
Average growth in occupancy rates or ADR has been “constrained” in recent years in Singapore’s hospitality market, while for medium-sized and medium-sized hotels the upper classes can use flexible ADR to maintain their profitability. Especially for luxury hotels, the challenges are more.
There is a new wave in which new hotels are positioning their market as middle-class hotels. It’s a trend that will most likely continue in the coming years. The surge includes the development of the Worldwide Hotel along Club Street which has a temporary permit to build a 900-room hotel.
Another thing to note is also that the Moxy hotel which has rooms 460 to 475 is positioned as a mid-range hotel operated by Marriott International.
Despite optimism in middle- and upper-middle-class hotels year after year, luxury hotels have some news to encourage as they see revenue per available room (RevPAR) y-o-y growth of 2.3%, the highest percentage at all levels of hotels.
This growth is reflected in Singapore’s mature demand fundamentals and the ability to attract high-yielding global demand.
Once Raffles Hotel reopens, its presence is expected to compete with luxury hotels such as The Capitol Kempinski, The St. Regis Singapore, Capella and Fullerton for the status of the best luxury hotel in Singapore.
If all known supplies are taken into account, upon completion of all new projects between 2020 and 2024, there will be an average of 1400 units per year. which is still below the average of the last 10 years which is 2,800 rooms per year.
A Look at the Future of Hotels In Singapore
There is a possible slowdown in Singapore’s hospitality industry by 2021 after the covid-19 period is over despite Singapore recording high investment sales, many industry experts say.
The 142nd annual meeting of the International Trademark Association will be attended by 8000 participants in Singapore and the Lions Club’s 103rd International Convention which will be attended by approximately 20,000 foreign participants – both part of the MICE’s two-yearly event to be held in 2020.
This event will help RevPAR to see 1 percent growth in 2020 even when easing factors and prospects are taken into account.
By 2020, market watchers expect investors, hotel operators and owners to see strategic hotel developments.