Heartbreak hotel: Will Singapore’s hotels recover from prolonged anemic Chinese tourist arrivals?

China is Singapore’s largest tourist market.

The city-state’s hotels have been experiencing slower growth since Chinese arrivals languished in October 2013, but analysts are saying they might be on the way to recovery.

According to a report by UOB Kay Hian, by May 2016, overall visitors were up 13.3% yoy to reach 6.9m visitors, driven by resurgent Chinese tourists.

“China is currently Singapore’s largest tourist market after overtaking Indonesia last month, and the exuberant growth in Chinese visitors has been heartening, especially against the backdrop of a higher visitor base from Apr-Dec in 2015,” UOB Kay Hian said.

Meanwhile, UOB Kay Hian added that sustained Chinese arrival growth from April-May onwards would point to a material coup for Singapore’s hospitality scene, as phenomenal growth in the months before April this year stemmed from a lower base effect after languishing Chinese arrivals from Oct 13 onwards.

“Nonetheless, we are cognisant of the sizeable supply of about 3,930 rooms (6.4% yoy expansion) set to hit the market in 2016. This may partially explain the slight dip in industry RevPar (-0.8% yoy) for 5M16, as the sector grapples with supply digestion,” UOB Kay Hian noted.