Skift Take

In recent years the island city-state of Singapore wisely expanded its airport, hotels, stopover program, and luxury offerings. That helped to prepare it for a recent influx of tourism after its star turn in the global blockbuster movie "Crazy Rich Asians."

After Singapore’s residential and office markets made comebacks, the next property sector to bet on might just be its hotels.

The hotel industry is heading into 2019 in good shape after boosts to visitor arrivals from the Trump-Kim summit and the romantic comedy “Crazy Rich Asians.” Average occupancy rates touched 87 percent this year, the highest in a decade, property firm Cushman & Wakefield Inc. said.

Singapore’s hospitality sector is in a “sweet spot,” according to Vijay Natarajan, an analyst at RHB Research Institute Singapore Pte. His top pick is CDL Hospitality Trusts, a real estate investment trust.

Occupancy rates climbed across luxury, upscale, mid-tier and economy rooms. Revenue per available room rose 4 percent to S$190.40 ($141) through October from a year earlier, reversing years of declines. Average daily room rates inched higher for all but luxury accommodation.

OCBC Investment Research upgraded Singapore’s hotel REITs to “overweight” from “neutral” this month on expectations for strong growth in revenue per available room this quarter and in 2019. Top pick was OUE Hospitality Trust.

“Crazy Rich Asians” delivered a promotional boost to the industry this year by showcasing the likes of the Marina Bay Sands and Raffles Singapore, the iconic colonial-style hotel where the Singapore Sling was invented. (Raffles is due to reopen next year after a refurbishment.) A plethora of events, including an air show and the ASEAN summit, swelled arrivals. International visitor numbers rose to a monthly record of 1.7 million in July.

“Visitor arrivals have started to trend upwards in recent years,” fueled by China, Indonesia and India, said Zhang Jiahao, manager of CBRE Hotels for Asia Pacific. “Backed by increased flight and cruise connectivity to Singapore, visitor growth is projected to remain strong in the coming years.”

To be sure, the headwinds could include slower global economic growth and the U.S.-China trade war.

However, in a positive sign for operators’ revenue, the supply of new rooms is growing at a much slower pace after the government sold less land for hotel developments. Cushman forecasts an average of 764 extra rooms per year from 2018 to 2022, down from 3,357 annually between 2014 and 2017.

And the industry is also spreading its net wider, targeting locals for “staycations.” Far East Hospitality Holdings Pte. is among firms opening mid-tier hotels which may appeal to this segment of the market.

Singapore’s residential market posted a recovery after a four-year slump while prime office rents are up about a fifth from a low at the beginning of 2017.

singapore hotel occupancy high 2018 bloomberg


©2018 Bloomberg L.P.


This article was written by Pooja Thakur from Bloomberg and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to [email protected]

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Tags: hotel owners, singapore, Singapore Tourism Board

Photo credit: A view of the rooftop infinity pool at Sands SkyPark at Marina Bay Sands in Singapore, the setting of the global movie hit Crazy Rich Asians. Marina Bay Sands