Is Singapore losing its tourism appeal?

Tourism was surprisingly taken out as a major economic growth driver in 2013.

The Ministry of Trade and Industry’s latest economic outlook for 2013 has highlighted transport engineering and the construction sector as potential support pillars for the economy in 2013. Surprisingly, tourism which saw a 5.2% decline in overall tourism receipts to s$5.5b has been omitted from mention when it was included in the previous outlook.

Singapore Business Review sought for comments on what would this ean for Singapore economy and what was behind the omission:

Edward Koh, Executive Director, Strategy and Planning, Singapore Tourism Board

While the global economy in 2012 witnessed weak growth coupled with a high degree of uncertainty, Singapore tourism benefited from Asia’s resilient growth, as reflected in our Tourism Receipts for January to June 2012, which registered a 7% year-on-year growth to hit $11.5 billion. Further, Singapore’s position as a compelling tourism destination is reinforced by the opening of large-scale attractions such as the Marine Life Park and iconic Gardens by the Bay. We have also hosted another successful F1 Singapore Grand Prix in 2012, as well as announced the extension of the race till 2017.

Looking ahead for 2013, travel patterns are likely to continue being affected by global economic concerns, however, with the strong travel potential seen within in Asia, we are cautiously optimistic that Singapore will continue to perform well in the coming months. In the year ahead, we will be welcoming another addition to Singapore’s attractions scene, the River Safari, Asia’s first river-themed attraction, of which the Panda Enclosure, which opened in November 2012, has already proven popular to both visitors and Singaporeans. In addition, we will continue to strengthen Singapore’s brand as a compelling lifestyle destination and business hub with diverse shopping, dining, entertainment and heritage offerings

Tomeu Gili, Head of Distribution, Hotelbeds MEAPAC

The average price of a room in Singapore has been increasing from the last 3 years. The traditional leisure business will be transferred to corporate as long rates remain within the budget of corporate travellers. But anyway, the increase in rates will ultimately have a ceiling. 

Singapore is perceived to be an expensive destination, hence some share of its tourism will be diverted to other areas and then it will take some time till travellers change the image of Singapore. For example, for most Europeans, Japan is still perceived to be a very expensive destination, but in the last decade, deflation and increase of the parity of the euro, has changed the exchange rate dramatically.

Derek Tan, Assistant Vice President, DBS Vickers Research.

The strategies set by the Singapore Tourism Board (STB) in making tourism a pillar of economic growth has worked. Anchored by the new attractions ( 2cintegrated resorts, MICE and festivities) have made Singapore very different today compared to 5 years ago and that translated to 2 years of record monthly arrival numbers. What is not very evident in the numbers is also that STB has also sought to target a more affluent class of visitors (for the casinos, and together offer fine-dining, shopping experience) who are less price sensitive have also worked. Over the past 2 years, we have  seen visitor spending increasing and the luxury / upscale hotels doing better compared to the other subsectors over the past 2 years. However, after a strong start in 2012, we sense that the worries from the global economic uncertainties have hit our shores. Latest numbers by STB seem to suggest that travelers have turned more cautious in spending from the (i) weaker average spending per visitor in recent quarters and (ii) the relative weakness in the luxury and upscale hotel segments, implying that travelers, are trading down to cheaper accommodation.

The outlook for 2013 appears mixed. We expect the industry to start slow and visitor growth y-o-y in 1Q13 might even be weaker vs 1Q12. This is due to the lack of large-scale bi-annual events like the Singapore Air Show, which will not be held next year. Notwithstanding a slow start, we believe Singapore’s tourism sector in 2013 continues to be hold promise with the opening of new major attractions like the Marine Life Park, River Safari and the International Cruise Terminal anchoring Singapore as a regional holiday destination. Moreover, our top visitor markets like Indonesia and China (c30% of total visitors), continue to grow strongly. We expect visitor arrivals to grow 7.7% to15.3m in 2013.

What is the upside surprise then?

The target set by STB back then was also to see a lengthening of the visitor's average length of stay (LOS) profile ,which stayed flat-ish at 3.8 days. Upside will hinge on the LOS increasing, given the improved tourist offering in 2013 ( marina life park, river safari) and even the Johor Premium outlets + Legoland. To cover everything, visitors have to extend a day or two in order to explore what we have to offer.