Singapore hoteliers bracing for room oversupply

Occupancy to remain flat, they say.

Singapore’s travel and tourism industry is poised to grow 5.4% this year, according to the Singapore Economic Impact Report by The World Travel & Tourism Council.

This is supported by DBS who says 2014 will be a good year for Singapore’s hoteliers. DBS notes that the Singapore Tourism Board (STB) has set a target of 16.3m - 16.8m visitor arrivals for 2014, representing a growth rate of 5 - 8% on a y-o-y basis. Against this backdrop, DBS believes that 2014 will be a better year for hoteliers, with stronger expected visitor arrivals to be driven by higher volumes of business travellers in 2014.

However, analysts warn that these data must be taken with a grain of salt. In it report, DBS also highlight that a key limiting factor to a more bullish forecast for RevPAR growth is the completion of close to an estimated 3,000 new rooms (c.5% growth in supply).

According to Jason Dowd, General Manager of Park Regis Singapore, the occupancy is expected to remain flat with the added room stock.

“We also expect to see a decreasing RevPar as market is reacting to the pre-opening rates from new hotels,” he says.

Meanwhile, Patrick Fiat, General Manager of Royal Plaza on Scotts observes that individual business travellers have become more prudent in their travel plans. He also adds that with Singapore dollar getting stronger, the industry is seeing a dip in the leisure segment.

“The line between business and leisure travellers are thinning as more are coming for both purposes in their trips here. Younger travellers are also coming for shorter stays with shorter booking lead time,” he says.

To offset the looming oversupply risks, hoteliers plan to take a bolder move.

Park Regis Singapore intends to take a proactive approach by refurbishing its lobby, reception area and F&B outlets. It also aims to enhance its products and services with new technology to gain bigger market share.

Meanwhile, Royal Plaza on Scotts reveals that a brand new bar and restaurant is set to be launched in 2Q.