Singapore’s hotel market set to rebound steadily as border restrictions ease: CBRE

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SINGAPORE (THE BUSINESS TIMES) – Visitor arrivals to Singapore are expected to increase further this year to benefit hotels here as use of the Vaccinated Travel Lane (VTL) program continues to grow.

According to data from CBRE’s latest Singapore hotel market report, signs of an incipient recovery emerged in the second half of last year, led by high-end segments such as luxury and upscale.

The property company said it was optimistic, but cautiously optimistic about the market outlook for this year amid the release of pent-up travel demand, as evidenced by a 172.4% year-on-year increase. visitor arrivals in the second half of last year. .

Despite challenges such as rising costs due to the pandemic, the risk of new variants of Covid-19 and the delayed reopening of travel to and from China, CBRE believes that Singapore has “built a solid foundation for a steady recovery.

The hotel market is “on the verge of rebounding” as Australia – one of Singapore’s top source markets – has fully reopened its borders to vaccinated travellers, CBRE said.

“As the world adopts an endemic stance alongside rising vaccination rates, Singapore will add more countries to the VTL program over the course of the year. CBRE expects this to lead to a steady increase in visitor arrivals in the coming months.”

While new hotel room supply growth is expected to fall to around 2.1% CAGR (compound annual growth rate) from the 3% average for the past few years due to construction disruptions caused by Covid-19, CBRE thinks it will only be in the short term.

The company noted that the reduction could actually bring relief to the hospitality industry as visitor arrivals recover from a very low base.

New initiatives announced by the Singapore Tourism Board (STB) are also expected to boost demand for hotels in the country.

These include the planned expansion of Resorts World Sentosa, the recent extension of Singapore’s contract to host the Formula 1 Singapore Grand Prix for a further seven years and several major Mice events (meetings, incentives, conferences and exhibitions) confirmed by the STB for this year.

Average occupancy for the second half of last year rose to 65.3%, up 6.5% from the second half of 2020, CBRE said.

Average daily rates increased 23.8% over the same period to $168.10.

Amid overall revenue per available room (RevPAR) annual growth of 35% through the end of 2021 to $111.40, luxury hotels saw the largest increases in RevPAR, while those in the economy segment showed the weakest performance.

Hotel investment activity also picked up last year, with four deals totaling $51.4 million completed during the year.

While deal volume has remained low, with deals primarily involving smaller boutique hotels, CBRE noted that investors continue to explore other uses for hotels — converting them into co-living properties being one of the most popular strategies.

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