Mid-tier hotels hardest hit by Singapore’s tourist arrival tumble: report

Luxury hotels are surprisingly unscathed.

The country recorded amazingly disappointing tourist arrivals in the first seven months of the year. Tourist arrivals fell 1% year-on-year to 1.4m visitors in July, bringing total 2014 visitor arrivals to 8.9m, a decline of 2.5%.

According to DBS, mid-tier hotels are the hardest hit by this decline, as revenue per available room fell 3.5% year-on-year to $162 in July. Surprisingly, luxury revenues were up 11.2% in the same period.

“There was an improvement in the overall hospitality sector with 7M14 RevPAR now flat y-o-y, compared to -0.3% for 6M14. This was driven by a 2% y-o-y increase in Jul’14 RevPAR to S$223 (the first positive y-o-y growth in two months) as occupancy rose to 90% (+1.5 ppts) and ADR increased slightly (+0.5%) to S$248. For the rest of 2H14, we expect a gradual improvement in y-o-y RevPAR as the slowdown in tourist arrivals abates,” noted DBS’ report.

Here’s more from DBS:
Chinese tourists continue to be the main drag, down 27% y-o-y, with the bright spot being Indonesia up 14% y-o-y. While the numbers continue to be weak, the rate of deceleration has slowed as 6M14 total and Chinese arrivals were down -2.8% and -30% respectively.

Going forward, we expect arrivals to remain soft, albeit on an improving trend. 4Q14 may see arrivals bottoming out, mainly due to the low-base effect. 3Q13 total and China visitors were down 0.3% and 31% respectively, following the imposition of new Chinese tourism laws in Oct13.

Remain selective, limited catalyst near term. While our industry contacts and the Jul’14 STB statistics indicate some improvement in the hospitality sector, we think there are limited catalysts to re-rate the sector until we see a sustained recovery in tourist arrivals, which may occur in 4Q14/1Q15.