A RECOVERY in visitor arrivals to Singapore, likely to pick up further over the course of 2022, is expected to benefit hotels in the Republic as usage of the Vaccinated Travel Lane (VTL) scheme continues to grow.
According to data from CBRE’s latest report on the Singapore hotel market, various signs of nascent recovery have emerged over the second half of 2021, led by premium segments such as luxury and upscale.
Average occupancy for the half-year grew to 65.3 per cent, up 6.5 percentage points over H2 2020. Average daily rates (ADR) grew 23.8 per cent over the same period to S$168.10. Amid overall revenue per available room (RevPAR) on-year growth of 35 per cent to end 2021 at S$111.40, luxury hotels registered the strongest RevPAR increases – while those in the economy segment posted the weakest performance.
Hotel investment activity also picked up in 2021 with 4 transactions worth a total of S$51.4 million completed over the year.
While transaction volume remained low as deals involved mainly smaller boutique hotels, CBRE noted that investors continue to explore alternative uses for hotels – with their conversion to co-living properties being among the most popular strategies.
Going forward, the real estate company said it is “upbeat” yet “cautiously optimistic” on the market’s outlook for 2022 amid the release of pent-up travel demand, which was evident from a 172.4 per cent year-on-year increase in visitor arrivals over H2.
Despite challenges such as pandemic-driven cost increases, the risk of new Covid-19 variants and the delayed reopening of travel to and from China, CBRE believes Singapore has “built a solid foundation for a steady recovery”.
The hotel market is “poised for a steady rebound” as Australia – one of Singapore’s major source markets – recently opened its borders, said CBRE.
“As the world adopts an endemic stance alongside rising vaccination rates, Singapore will add more countries to the VTL scheme over the course of the year, which CBRE expects to lead to a steady increase in visitor arrivals in the coming months.”
While growth in new hotel room supply is projected to fall to around 2.1 per cent CAGR (compound annual growth rate) from recent years’ average of 3 per cent due to construction disruptions caused by Covid-19, CBRE believes this will only be for the short term.
The tapering could in fact provide relief for the hotel industry as visitor arrivals recover from a very low base, in the company’s view.
New initiatives announced by the Singapore Tourism Board (STB) are also expected to boost demand for hotels in the country.
These include the planned expansion of Resorts World Sentosa, the recent extension of Singapore’s contract to host the Formula One Singapore Grand Prix for 7 more years, and several major Mice (meetings, incentives, conferences and exhibitions) events confirmed by the STB for 2022.