Singapore hotels to milk benefits from China-Japan spat

Tourists from China surged 29%.

According to OCBC, CDLHT reported that RevPAR for its Singapore hotels fell 0.9% YoY in 3Q12, versus RevPAR growth of 7.5% for these hotels in 1H12.

Here's more from OCBC:

We have been hearing about lackluster performance for hotels in 3Q12 and likely in 4Q12 as well. While remaining cautious about 1Q13, we note that the top four places of origin for Singapore’s visitor arrivals are projected to have real GDP growth rates of at least 4.9%: Indonesia (+6.3%), China (+8.1%), Malaysia (4.9%) and India (6.0%).

Since mid-Sep, the media has reported that tourists from mainland China are shunning Japan amid tensions over the Diaoyu/Senkaku Islands.

Other tourist destinations like HK, Korea, Taiwan and Singapore-Malaysia-Thailand would be the net beneficiaries while tensions persist. In 1H12, Singapore registered a 29% YoY increase in visitors from China to 978k.

For 1H12, the latest period for which data is available, Singapore visitor arrivals climbed 11.4% to 7.1m, in line with the STB’s projection of 13.5m-14.5m arrivals for 2012.

There were 13.2m arrivals in 2011. STB set a target of 17m annual visitors by 2015, which implies an increase of 6.6% p.a. We project that hotel demand will grow at 6.4% p.a. for 2012-2014, outstripping room supply increase of 4.8% p.a.; Luxury - 1.6% p.a., Upscale - 3.4% p.a., Mid-tier - 7.0% p.a., Economy - 7.2% p.a.

According to hotel consultant PKF, faster growth of lower tier hotel supply is consistent with the maturation of a tourist destination.

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