Will more tourist arrivals save Singapore’s glut-stricken hospitality REITs?

Hotel earnings remain under immense pressure.

Hotels are gearing up for increased tourist arrivals to Singapore next year, and it’s very easy to get one’s hopes up for brighter days to come.

However, hotel owners may be staring at more vacant than occupied rooms this coming years, as analysts from Fitch Ratings say supply will continue to outpace demand in Singapore’s cutthroat hospitality REIT market.

While visitor arrivals are expected to jump more than the estimated 1%, Fitch analysts say this comes hot on the heels a 6.3% surge in hotel room supply next year.

“We expect China and India to drive the increased number of visitors in 2016, given that these economies are still better off than several other commodity driven inbound markets,” Fitch Ratings said.

While the efforts of Singapore’s government to lure more Chinese tourists into the city-state may appear to be taking effect, Fitch said arrivals from other neighbors such as Malaysia, Indonesia, and Australia are expected to remain muted due to depressed prices of key commodities.