Travel & Hospitality Tech Outlook | Monday, February 21, 2022
Singapore’s hospitality sector is expected to lead its Asia Pacific competitors as travel recovers around the region, with occupancy rates and room revenues saw returning to their pre-pandemic levels by late 2024.
FREMONT, CA: Singapore's hospitality industry is predicted to outperform its rivals in the Asia Pacific as regional tourism recovers. By the end of 2024, occupancy rates and hotel revenues are predicted to reach their pre-pandemic levels.
The Singapore hotel sector has made a strong start in the recovery race. The strong resurgence should continue over the following years, and Singapore hotels as a whole should expect a large boost in revenues and operating profit because of the high demand and limited availability.
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The hotel occupancy rate in the Lion City, where demand for rooms is primarily driven by foreign tourist and business travel, was found to be between 72 and 73 per cent in the eight months that ended on August 31, exceeding the 60-70 per cent norm seen in other developed APAC markets. It can take at least two years for the city's hotels to reach operating cash flow levels that are comparable to pre-crisis levels and average 87 per cent occupancy. The company still considers these to be the greatest results in the Asia Pacific, with Singapore poised to take the lead in the race for travel recovery.
Following a decline in hotel occupancy to 20 to 40 per cent during the height of the coronavirus pandemic, CBRE data reveals that Singapore, with 72 to 73 per cent of its rooms booked, had the highest regional hotel occupancy rate in the period from January to July, followed by Australia and South Korea, both of which reported average occupancy rates of 67 per cent.
In August 2022, Singapore welcomed 730,000 visitors, less than half the 1.6 million visitors per month on average before the pandemic struck in March 2020. By the end of 2023 or the beginning of 2024, Schroders predicted that monthly international arrivals would probably reach 2019 levels.
Singapore might not have the highest revenue in the area, but the country’s limited hotel room supply is good news for top-line growth. There are currently just 75,000 hotel rooms in the city, and in the following four years, that number will only rise by six to seven per cent. According to hospitality analytics company Smith Travel Research (STR), quoted in the Schroders research, the average daily rate (ADR) for hotels in the city-state was already five per cent higher in the first seven months of the year than the ADR in July 2019.
Revenue per available room (RevPAR), when the number of occupied rooms is taken into account, was still 15 to 20 per cent below pre-pandemic levels. According to the STR statistics, Australia and South Korea were the only developed markets in APAC where both ADR and RevPAR exceeded 2019 levels.
Not only is the demand outlook positive, but fresh supply is also restrained, according to Schroders. Most market sectors have balanced demand and supply, although new luxury offers progressively drive occupancy.
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