3 reasons why Singapore hospitality growth will remain dreary till 1Q14

RevPAR growth forecasted at low single digits.

The Singapore hospitality sector will open weakly in 2014, according to OCBC Investment Research, due to 3 factors that will drag on growth.

"The dreariness that characterized the Singapore hospitality industry over 2013 looks set to continue into 1Q14 with the subdued global business sentiment, a strong Singapore dollar and increasing competition with an expanding supply of hotels," said the research firm.

OCBC cited channel checks which indicate that hotel bookings up to Feb 2014 are still weak, despite an expected pickup to the number of MICE events for 2014.

"We project that for end-2012 to end-2015, hotel room demand will grow at a CAGR of 5.4%, while hotel room supply will expand at a CAGR of 6.5%," said OCBC.

"Given this, the industry is facing a mild oversupply situation. We project that 2014 RevPAR growth for the industry will be in the low single-digit percentages at best, and do not rule out another year of contraction," it added.