New inventory, slower arrivals weigh on hotel industry: reports

About 3.7% of the city-state's hotel rooms are expected to come online in 2025–27.

Singapore’s hotel sector is entering a late-cycle phase, grappling with rising room supply and a moderation in tourist arrivals, according to DBS.

Through the first 10 months of 2025, islandwide RevPAR (Revenue per Available Room) fell 4% year-on-year to $225, whilst average daily rates (ADR) dropped 4% to $274.

Occupancy, however, held steady at 82%, as hoteliers prioritized filling rooms amidst competitive pressures.

The softening comes as new inventory enters the market.

In 2025–27, approximately 3.7% of the city state’s total hotel room stock is expected to come online, including over 1,000 rooms from the Liang Court redevelopment and expansions at Resorts World Sentosa.

About half of this supply is concentrated in the luxury and upscale segments, particularly in central business district locations, intensifying competition among hotels in prime areas.

Visitor arrivals in 2025 are projected at around 17 million, about 90% of 2019 levels, according to Cushman & Wakefield. China remains the largest source market with 2.5 million visitors in the first nine months—roughly 88% of pre-Covid levels—whilst arrivals from Indonesia and India lag 2019 figures, partly due to a strong Singapore dollar.

Looking ahead, nearly 90% of operators expect revenue growth in 2026, according to JLL.

The recovery will be driven by higher occupancy, with room rates rising in line with inflation. Over 60% of operators anticipate GOP growth, supported by stabilizing demand and better cost management.

International demand and a slower supply pipeline are expected to further strengthen both occupancy and rates next year.

DBS expect hotels to maintain an occupancy-first strategy, keeping room rates broadly flat in 2026.

Islandwide RevPAR is projected to rise roughly 2% year-on-year (YoY) next year, primarily driven by higher occupancy rather than rate increases.

Tourist arrivals are also forecast to grow 3–4% in 2026, providing modest support for hotel demand.

Event-driven boosts will continue to support performance in the short term. The Formula 1 Singapore Grand Prix, China’s Golden Week, and major concerts like Blackpink’s Deadline World Tour helped spike RevPAR in 4Q25.

For example, CDL Hospitality Trust reported a 24.6% YoY jump in RevPAR across F1 nights in October, illustrating how marquee events temporarily lift performance.

Meanwhile, visitor behaviour is shifting toward “value-up” spending. Tourists are increasingly upgrading to higher-tier hotels even as overall rates soften, helping luxury hotels mitigate the impact of shorter stays, which averaged 3.50 days in 10M25, slightly down from last year.

This supports demand for central luxury properties, particularly those catering to business-leisure travellers attending short conferences or MICE events.

For hotel-focused S-REITs, growth is expected to come from asset enhancement initiatives (AEIs) and contributions from overseas markets.

CapitaLand Ascott Trust (CLAS) remains a top pick, benefiting from a diversified portfolio, AEI-driven earnings, and a sector-leading 6.4% yield.

Centurion Accommodation REIT (CAREIT) also stands out, supported by favourable demand-supply dynamics in Singapore’s purpose-built workers accommodation segment and rising bed capacity.