Hotel room supply to outpace tourist arrivals in 2013

Room supply forecasted to double 2012's 1,653.

Here's from CIMB:

The hospitality industry benefited from a combination of a demand surge and tight room supply during the last few years. Between 2001 and 2009, gazetted
hotel room supply only increased 11% compared to tourist arrivals, which rose 29%. In 2010, room additions peaked at 5,625 rooms (17% of gazetted room
supply) but this was more than offset by tourist arrivals, which grew 20% in the year itself.

Following this, in 2011-12, actual and expected room supplies of 4-5% of existing inventory was more than offset by tourist arrivals, continuing the positive matching of net visitor arrivals against room supply.

The tight room supply situation sparked optimism among hoteliers and the government, prompting them to release more hotel sites. With various projects
coming onstream, additions in 2013 are expected to be double that of 2012 (1,653 rooms), even if we exclude hotels outside the city centre for both years.
We estimate that the 3,455 rooms expected to be added in 2013 will make up about 8% of the gazetted stock expected by end-2012. With this, we expect
room-to-arrivals ratio to trough in 2012 as room supply starts outpacing arrivals from 2013 onwards.

12.3 1% RevPAR growth expected for 2013
9M12 RevPAR grew at about 7.6% yoy on the back of a 0.4% pt increase in occupancy and a 7.4% increase in ARR. For the full year, we expect full-year
average RevPAR to come in at about S$227 given a 6% increase in room rates and a marginal 1% creep-up in occupancy to 88%. Despite an expected easing in the tight room supply situation in 2013, we are not anticipating a crash in occupancy given the undersupply situation in the past. Taking into consideration room supplies and assuming 4.5% growth in arrivals, we project occupancy to moderate from 9M12‟s average of 86.6% to about 85% in 2013, a level at which hoteliers could still be in a position to hold room and corporate rates. With a 4% projected increase in ARR (hoteliers have still been able to book low single-digit growth for corporate renewals), we expect RevPAR of about S$269 for 2013, up by a marginal 1% against our projected 2012 RevPAR.