Why 2018 will be a ‘turnaround year' for the hospitality sector

Growth drivers include a new airport terminal and more calendar events.

The hospitality sector could benefit from new growth factors in 2018, RHB said.

According to RHB, the extension of Singapore's Formula 1 (F1) until 2021 could lead to nearly full occupancy for trackside hotels that could spill over to other hotels in September.

Average attendance for the said event rose 19% YoY in 2017.

Moreover, the opening of Changi Airport Terminal 4 (T4) could increase visitor arrivals by 5% to 800,000.

T4 will start operations on 31 October 2017 with 9 airlines moving there. It has the capacity of 16 million passengers per annum.

RHB assumes that if it reaches 60% capacity utilisation in 2018, with 40% being new demand and a visitor ratio of 22%, additional visitors could rise by 5% to 800,000.

The increase in corporate travel is another growth driver for the sector.

Here’s more from RHB:

World Bank, in its June 2017 report, noted that global growth is firming with growth expected to rise to 2.7% in 2017, up from 2.4% in 2016, before strengthening to 2.9% during 2018-2019.

Growth in emerging markets and developing economies is projected to recover to 4.1% in 2017, and reach an average of 4.6% during 2018-2019. Key drivers are a pick-up in trade and manufacturing activity.

We believe this demand-led growth augurs well for intra-regional corporate travel and should stabilise weakening corporate sector demand.