Saturday, March 2, 2013

Hotel room rates take the fast lift to top floor

Rates keep rising as preliminary estimates put 2012 visitor arrivals at 14.37 million

The Business Times |  Mar 02, 2013

In a year dogged by weak economic growth, hotel room rates in Singapore climbed to a record high, coming in at an estimated $261 for 2012 as a whole and making the city-state's average rate among the priciest in the region.

Those who stayed in luxury hotels here, paid an average room rate of $428 last year.

The hospitality industry closed the doors on 2012 - a year where GDP growth came in at 1.3 per cent - with an estimated $2.8 billion in room revenue, up 5.9 per cent from 2011, according to the Ministry of Trade and Industry's (MTI) 2012 Economic Survey of Singapore.

After slumping to $190 in 2009, the average room rate (ARR) has been growing steadily in recent years, increasing from $218 in 2010 and surpassing pre-crisis levels to hit $247 in 2011.

ARR jumped further to $261 last year and although the average occupancy rate (AOR) was flat, it still registered a respectable 86 per cent. This puts 2012 revenue per available room (RevPAR) - an indicator of performance - in the region of $226, up from $214 in 2011.

With room rates now hovering at historic levels, it remains to be seen whether tourists will start scaling back their average length of stay, especially given the strong Singapore dollar.

According to a CBRE Hotels report last year, Hong Kong had the highest average daily rate at US$248 (S$307) as at June 2012, followed by Singapore (US$230) and Seoul (US$185).

Preliminary estimates from STB show that occupancies at luxury and upscale hotels rose two percentage points to 82 per cent and one percentage point to 88 per cent respectively in 2012, while ARR for the two categories increased 7.2 per cent to $428 and 7.8 per cent to $301 respectively.

Meanwhile, occupancies for mid-tier and economy hotels were flat at 87 per cent and 85 per cent respectively, with economy hotels posting a flat ARR of $111 while mid-tier hotels saw a 4.7 per cent growth in ARR to $197.

In the fourth quarter of 2012, overall average occupancy softened slightly, dipping one percentage point to a still healthy 86 per cent, offset by a 2.2 per cent rise in ARR to $260.

But new supply coming onstream this year may put further pressure on occupancy rates, with 4,000 hotel rooms from 16 new hotels being launched over the course of this year, according to figures from CBRE Hotels. This is in contrast to a net supply of 1,200 rooms from eight hotels last year.

"We think occupancy for this year will be between 81 and 84 per cent," said Robert McIntosh, executive director of CBRE Hotels (Asia Pacific).

At the same time, CBRE Hotels projects that room rates will edge upwards only slightly to $270-$275 as hotels may be wary of ratcheting rates upwards given the supply injection, while RevPAR is expected to stay flat at about $226.

On the other hand, DBS Group Research analyst Derek Tan expects occupancies to hold at about 85-86 per cent this year, against a 3 per cent rise in RevPAR and ARR.

While RevPAR for the first quarter of 2013 may come in flat or lower year-on- year, partly due to the fact that 1Q12 benefited from trade visitors arriving for the 2012 Singapore Airshow, there is likely to be fairly good pick-up in ARR and occupancies after February, he noted.

The MTI report also showed that the nation attracted some 14.37 million visitors in 2012 judging from preliminary estimates, up nine per cent, as the pace of growth moderated from 2011 but met the Singapore Tourism Board's target of 13.5-14.5 million visitors

Mr Tan sees visitor arrivals growing to 15.3 million this year, as any scaling back of corporate budgets is likely to be offset by strong demand from leisure travellers, lured by new attractions such as the River Safari and Marine Life Park.

But while visitor arrivals to Singapore remain on an upward track, an equally - if not more important figure - is the total tourism receipts for 2012, which have yet to be released. Singapore had set a target of $23-24 billion in tourism receipts for 2012.

In 2011, visitor arrivals shot up 13 per cent to 13.2 million while tourism receipts surged 18 per cent to $22.3 billion.

At the recent Natas travel fair last weekend, visitorship figures were reportedly softer than expected at 53,300, lower than the 63,000 projected by organiser National Association of Travel Agents Singapore, possibly due to the overlap with the tail-end of the Chinese New Year period, industry players said.

Nonetheless, tour operator CTC Travel expects to post sales growth this year, although Alicia Seah, senior vice-president of marketing and public relations, noted that revenue could feel the impact of lower-priced outbound travel packages as a result of a strong Singapore dollar.
On the flip side, this benefits Singaporeans looking to travel, especially to destinations such as the US, Europe and Japan.

Ms Seah is also bullish about the cruise market owing to the new Marina Bay Cruise Centre, which is attracting larger cruise ships. "The cruise market for both inbound and outbound is very buoyant," she said.

Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C

Senior Sales Director
DTZ Property Network Pte Ltd (L3007960A)

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