Singapore’s room supply levels to drop 25% in 2014: UOB

As tourists continue to flock to the city.

Visitor arrivals to Singapore have been on an uptrend with a 5-year CAGR of 9%. UOB’s analysis shows that growth has been fuelled by three key factors: a) the opening of IRs and a slew of new attractions (Gardens by the Bay, River Safari), b) strong growth of low-cost carriers (LCC) in the region (LCC market share at Changi International Airport increased from less than 5% in 2005 to nearly 30% in 2013), and c) Singapore’s top position as a popular MICE and medical tourist destination in the region.

In 2014, about 2,359 rooms are expected to come on stream, based on the latest CBRE data. This is estimated to be about 25% lower than the 2013 supply growth.

Accordin to UOB, hotel RevPAR for 2014 will stay flat backed by stable occupancy levels of about 85% as the market adjusts to the huge supply that came on stream in 2013.

UOB forecasts a visitor arrival growth of 5% year on year for the next three years, a flat average length of stay of 3.9 days, and hotel utilisation ratio of 95%.