RevPAR dipped 3.1% to $369, due to a nearly 2-point decline in occupancy rate.
The high demand for hotels and the higher revenue per available room (RevPAR) that comes with it is not being felt by the luxury segment.
Colliers International previously reported that Singapore needs more hotel rooms in order to accommodate the growing number of visitor arrivals, which is expected to grow 4% to a record-breaking 18.1 million. Its analysis said that the number of overnight visitors to Singapore has consistently outstripped hotel room stock since 2011, and is projected to remain so over the next few years.
However, the picture is different for luxury and upscale hotels in the city. Christine Li, senior director and head of research at Cushman & Wakefield Singapore, told Singapore Business Review that there is no upcoming Luxury & Upscale supply in the Marina Bay and Raffles Place submarkets. Across 2018 to 2020, room supply for luxury and upscale hotels are expected to hit 879 rooms.
"Luxury RevPAR dipped 3.1% to $369, which was attributed to a decline of the Luxury segment’s occupancy rate from 85.1% in 2016 to 83.4% in 2017 due to oversupply during the year," Li explained.
However, the good news is that the immediate outlook for the hospitality market is favourable. "The growth of Singapore as a leading MICE destination, coupled with the tapering of supply post-2018 will result in the Luxury & Upscale segments outperforming over the next few years. In addition, the injection of 1.9 million square feet of office supply into the Marina Bay and Raffles Place submarkets in 2021 will further boost business traveller demand for Luxury & Upscale hotels within these submarkets," Li said.
For the other segments, Li said the influx of new hotel supply will decrease significantly with just 1,691 rooms scheduled for completion in 2018 or 2.5% of total stock. Offering a different forecast, she said, "Subsequently, supply will further plunge to 536 and 392 rooms in 2019 and 2020 respectively. Across 2018-2020, the Mid-Tier segment will see the most supply at 1,360 rooms, followed by the Luxury & Upscale segments at 879 rooms and the Economy segment at 380 rooms."
Meanwhile, in 2017, the RevPAR for the Upscale and Mid-Tier segments were stable at $211 and $144 respectively, whilst the Economy segment saw a 9% increase to $85. "The strong performance of the Economy segment was due to the surge of visitors from Tier 2 and Tier 3 cities in China and Indonesia," Li added.
Moving forward, Colliers said that hoteliers in Singapore should see an improvement in Average Daily Rate (ADR), but the increase is not expected to be significant as long as the rupiah, ringgit and yuan remain relatively weak.
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