Singapore sealed two largest hotel deals in Asia

The Asia Pacific region is on track for another record year of international tourist arrivals in 2013, according to a report released today by Cushman & Wakefield, the world’s largest privately owned real estate firm.

Akshay Kulkarni, Regional Director of Cushman & Wakefield’s Hospitality sector group across South Asia and Southeast Asia said: “The Singapore hospitality market in the last 12 months has seen two of the largest deals undertaken and has also seen an addition of about 3500+ rooms. And yet the operating numbers seem to show little or almost no stress. Put these factors together and there is definitely a winning combination. The capital values are up – which obviously means people are still bullish about the hotel markets and see an upside. There is still supply that is going to hit the market which means that the future demand is not in question. Rates have held steady which means that there is demand that has come in to absorb most of the new supply.
We think that this momentum will continue as Singapore is considered to be one of the most stable markets in the World. The steady growth in demand and supply will keep the operating numbers / parameters looking healthy. Capital Values will continue to rise as there will be a premium to be paid for the stability. Measured supply potential will ensure that vacancy is not high. However, profitability over the next few years may be affected by the rising costs of manpower which could affect margins.

In 2012, most hotel markets across Asia saw positive growth in RevPAR (Revenue Per Available Room) with the exception of Mumbai and National Capital Region, India. The top markets in terms of RevPAR growth were Bangkok (19.3%), Hong Kong (10.1%) and Jakarta (9.8%). They had benefited from improvements in occupancy levels and increases in Average Daily Rates (ADR). The markets that saw a decline in RevPAR include Bali (-4.6%), Ho Chi Minh City (-7.0%), Mumbai (-15.1%) and NCR region (-21.6%), whose performances lagged behind due to a substantial recent inventory of hotel rooms.