Singapore’s hospitality market is expected to grow at a strong rate this year, according to commercial property advisory firm CB Richard Ellis (CBRE).
CBRE Hotels anticipates an increase of between 10.0 and 15.0 percent in average room rates, from last year’s levels. It also expects to easily meet the Singapore Tourism Board’s (STB) target of 12.0 million to 12.5 million visitors.
STB’s data reveals that average room rates for mid-tier hotels saw the most significant improvement, with a 22.4 percent gain in rates from S$137 in 2009 to S$168.50 last year.
CBRE Hotels expects national occupancy levels to reach between 83.0 and 86.0 percent, on the back of an estimated increase in visitor arrivals and a robust economy. This represents a decrease from last year’s occupancy level of 85.6 percent but an increase from the respective 81.8 percent and 83.0 percent occupancy levels in the first two months of 2011. The estimated range of average occupancy rates for this year is indicative of a healthy year for the hospitality market.
“All indicators point to the sector having made a very strong recovery post financial crisis. The prospects for growth in the sector are very positive,” said Robert McIntosh, Executive Director of CBRE Hotels Asia Pacific.
“We are confident that the 1,499 rooms that are expected in the pipeline this year will be matched by a good level of increased demand.”
Domestic revenue per available room (RevPar) increased 24.7 percent in 2010 to S$181.64 and is expected to climb between 7.5 and 10.0 percent. RevPar for upscale hotels, under which boutique hotels are classified, grew 28.34 percent to S$205.90, from S$155.70 in 2010. RevPar grew the most for economy hotels, jumping 41.75 percent year-on-year to S$86.10 a year ago.
Boutique hotels are expected to remain popular in the near future. Hotel investors have shown strong interest in sites where they plan to convert conservation buildings into boutique hotels.
For instance, the site at Robinson Road Boon / Tat Street incited solid competition and attracted eight bids when it was launched for tender by Urban Redevelopment Authority (URA) last year. It was eventually bought by Royal Group Holdings Pte Ltd for S$86.00 million (S$1,072 psf/plot ratio).
Another example is the site at Stamford Road / North Bridge Road. After attracting 14 bids, the site was bought by a consortium for S$250.00 million (S$461 psf/plot ratio).
Last year was a record-breaking year for the hospitality and tourism sector, with STB registering around 11.6 million visitors, the highest number of tourists ever received by the city-state in a year. This resulted in a 20.2 percent year-on-year increase, one of the highest quarterly figures recorded.
The increase in visitor arrivals was attributed to various factors, such as the opening of the two Integrated Resorts (IRs), the upcoming International Cruise Terminal and the recent efforts to improve Orchard Road.
“The opening of the IRs and subsequent increase in visitor arrivals and tourism demand helped to provide support and boost ailing tourism demand. Many existing hotels have successfully attracted new business and reinforced client relationships,” said Mr. McIntosh.
“Coupled with the massive investment that Singapore has undertaken in tourism infrastructure, we are confident that the hospitality sector will build on the momentum in the past year and stay healthy for the next few years.”
To contact the journalist, you may send your message to editor@propertyguru.com.sg