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Mid-scale and economy hotels fared better than their high-end counterparts in the first five months of the year, reversing the trend witnessed in the past few quarters, the latest report from CBRE revealed.
Based on the consultancy’s data, occupancy rates of economy and mid-scale accommodations rose by 1.2 and 2.8 percentage points respectively during the period, reaching 82 percent and 83.8 percent. Conversely, that for luxury hotels fell by 5.2 percentage points to 80.6 percent.
Given the Singapore dollar’s appreciation against currencies of Asian neighbors like Malaysia and Indonesia, tourists from such countries were more inclined to stay in cheaper accommodations, it said.
As for the overall average daily rate (ADR), it declined by 3.4 percent to S$251.48 during the first five months of 2015. In particular, that for economy hotels slipped by 3.8 percent to S$102.8, while the high-end segment suffered a drop of 3.3 percent to S$444.9.
Moreover, revenue per available room (RevPAR) in Singapore’s hospitality industry decreased by 4.6 percent to S$213.29 in May year-to-date (YTD). The upper segment recorded the largest contraction of 9.2 percent to S$358.59 due to weaker ADR and occupancy level. In contrast, the midscale tier registered a growth of 1.8 percent thanks to healthy occupancy.
In terms of new supply, 1H 2015 saw the opening of Park Hotel Alexandra, Genting Hotel Jurong, D’Resort Downtown East and Hotel Chancellor @ Orchard. During the period, there was only one major hotel deal, which was Frasers Centrepoint’s acquisition of Capri by Frasers Changi City from Ascendas Frasers Group for S$203.4 million.
Moving forward, the Tourism Board’s S$20 million Golden Jubilee campaign, which will run from May to December 2015, is expected to boost visitor arrivals and this would help the hospitality industry. Another attraction booster is the 156-year-old Singapore Botanic Gardens, which was recently named as a UNESCO World Heritage Site.
Meanwhile, more rooms are expected to enter the market with the completion of ibis styles at Macpherson, Hotel @ Victoria Street and ibis Singapore on Stevens by 2016.
“The large inventory may put pressure on hotels’ occupancy rate, especially for the mid-scale and economy tier markets,” added CBRE.
Nikki De Guzman, Editor at CommercialGuru, edited this story. To contact her about this or other stories email nikki@propertyguru.com.sg
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