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January 12, 2015

Asia: Singapore rates expected to hold despite increase in room inventory

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Tour operators expecting rates to come down in Singapore this year may have that dream dashed following Cushman & Wakefield's assessment of an optimistic outlook despite a challenging 2014 and a stream of 2,100 new rooms opening in 2015. 

Cushman & Wakefield expects Singapore hotels to close 2014 at 84.3 per cent occupancy, down from 86 per cent in 2013, due to more rooms coming on line and a decline in tourist arrivals spurred by massively fewer Chinese visitors. Despite this, the ADR held steady, at S$260 (US$195), compared with S$258 in 2013.

Said Cushman & Wakefield’s regional director, Akshay Kulkarni: “Let us not forget that the current drop seems to be only driven by increased supply and not so much a drop in arrivals. It is estimated that (2015) marketwide occupancy and ARR will be marginally, say three to five per cent, higher than 2014 figures.”

In his opinion, recovery for Singapore’s hotel industry will come in the 2H “due to higher inbound traffic from an overall settling of economies around the region and an increase in the number of attractions and events in Singapore”.

Asked if a stream of 6,400 rooms expected to enter the market between 2015 and 2018 would derail recovery, he pointed out that, of this, just over 2,100 new rooms are planned to open over the course of 2015 and can be filled with the forecasted increase in inbound arrivals.

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