5-star hotels to unveil lower room rates

The usual S$300 room charge may dip to S$250.

According to OCBC, hotels in Singapore may be seeing lower average room rates in 3Q12 on a YoY basis, according to a hospitality industry player they spoke to. For example, a 5-star hotel may be charging S$250++ while they may have charged S$300++ a year ago. In percentage terms, the decline might be less pronounced for higher-end hotels.

Here's more from OCBC:

The pricing power of the hotels relative to walk-in customers and corporates may have declined because of reduced booking visibility but this may be buffered by increased pricing power versus certain travel agents. According to CBRE, hotel room supply in Singapore is estimated to grow at 4.6% p.a. for 2012-2014 from 49,719 rooms in 309 hotels as of end 2011. CBRE estimates that the spread of hotel rooms by categories as of end 2011 was 14% Economy, 29% Mid-tier, 46% Upscale and 11% Luxury.

Based on this, we calculate that the 2012-2014 growth rates of hotel room supplies by tiers are as follows: Economy (7.2% p.a.), Mid-tier (6.4% p.a.), Upscale (3.4% p.a.), Luxury (1.6% p.a.). As a whole, the Mid-tier and Upscale categories are expected to grow at 4.6% p.a., in line with the general market and comparing favorably to hotel room demand, which we expect to grow at 6.4% p.a. for 2012-2015.

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