Worsening supply glut looms.
The total room stock last year has increased 6.5%, outstripping the modest 0.9% increase in tourist arrivals. Despite the mismatch in supply and demand, Singapore saw seven new hotels opening their doors from January-June this year. At least nine more are still expected to debut in the remaining months.
Deborah Ong, analyst at OCBC, believes that the room supply injection going forward will not be adequately matched by a growth in demand. For 2016, the room supply, she said, is to increase another 4.7% to 63,800 rooms.
"Even though visitor days has shown a healthy start (up 4.5% from Jan-Jun this year), the outlook for corporate demand remains weak. As such, we expect this supply overhang to worsen this year, contributing to downward pressures on RevPAR," she said.
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