Chart of the Day: Here's why rising tourist numbers won't revive hotel earnings in Singapore

New room supply remains elevated.

Singapore's tourism industry started 2016 on a strong note, but analysts warn that the surge in visitor arrivals is no reason to be bullish.

Although visitor arrivals rose 13.4% year-on-year to 3.16 million visitors in the first quarter and are expected to grow by 5% for the full-year, a report by DBS noted that total visitor days are only expected to rise by 4% due to shorter stays.

DBS warned that approximately 3,930 rooms, or 6% of existing supply, are due to open in 2016.

In addition, corporate demand, which typically generates higher yield per guest, remains soft.

"We project a 4% y-o-y drop in 2016 RevPAR to $201. For 2016, while new supply is lower than the 4,237 rooms added in 2015, supply pressures should still persist with 3,930 net new rooms added. Nevertheless, going into 2017, with only 2,727 rooms to be added, the demand and supply situation in Singapore could potentially be more balanced,” DBS said.