Chart of the Day: Hoteliers forced to slash rates as massive room glut floods the market

Over 4,000 rooms will come onstream this year.

Singapore’s already-saturated hotel market will welcome the addition of over 4,000 rooms this year, putting further pressure on hoteliers to cut rates in order to stay competitive.

According to RHB, an estimated 4,405 rooms will come onstream this year, a substantial increase from initial growth estimates of just 2,886 rooms.

This is mainly due to an unexpected early completion of Hotel Boss, which will yield a total of 1,055 new hotel rooms into the market.

In 2016 and 2017, the market is expected to endure the addition of another 6,274 rooms. By 2017, there will be 67,851 hotel rooms in Singapore, compared to 57,172 rooms in 2014.

“Due to the abundance of new hotel supply in the market, RevPAR growth rate has been declining compared to those of prior years. As of May 2015, RevPar had fallen 7.4% YTD, while occupancy rates have been maintained at above 81% since 2014. To maintain healthy occupancy rates, hoteliers were pressured to slash their room rates so as to attract more tourists. As of May 2015, average daily rate (ADR) had fallen 5.7% YTD,” RHB said.