Get a room: Skyrocketing hotel occupancy rates worsen room crunch

Rates will hit 91% in 2018.

Don't be surprised when you get to see tourists setting up tents in parks and other open spaces as years go by. Blame it on the ever-rising number of visitors and the ever-lagging hotel room supply.

According to Chesterton Singapore, there is an imbalance between projected tourist arrivals and the future supply of hotel rooms. 

Here's more from Chesterton Singapore:

Our projections revealed that hotel occupancies will remain extremely tight, rising from 80% to 91% from 2014 to 2018 respectively.

We had assumed that visitor arrivals would grow at a conservative 7% per annum from 2014-2018 and that similar proportions of the visitors would require hotel accommodations.

We also assumed a typical average length of stay and number of guests per hotel room. The total hotel stock for 2014 – 2018 was derived from adding estimated pipeline supply to the current hotel room stock. We had not accounted for any demolitions / redevelopments / refurbishments of hotels. Neither had we factored in delays in hotel completions.

Healthy hotel occupancies (AOR) typically hover around the 75% mark. Our projection of steadily increasing AORs from 80% in 2014 to 91% in 2018 suggested a dire situation of room crunch. Without any new rooms injected, the situation seems set to worsen in 2017 and 2018 when AORs spike to 88% and 91% respectively.

It is also foreseeable that hoteliers would raise room rates (ARR), given the severity of the developing hotel room crunch situation.