By Kevin Lim
SINGAPORE (Feb 05) -- The outlook for Singapore's hotels is brightening, based on the latest results from real estate investment trusts that own properties across the island.
Room rates rose in the last quarter of 2017, reversing a three-year decline as visitor numbers increased. Moreover, new supply, which has loomed as a major hurdle to growth, is expected to ease in the next three years.
CDL Hospitality Trusts, Singapore's largest hotel REIT, reported revenue per available room from its six properties in Singapore rose 1.1% to 155 Singapore dollars ($118) in the fourth quarter from a year ago. It was the first on-year increase in 12 quarters as occupancy held steady at 83.5%. This was despite the opening of seven new hotels in Singapore during the quarter, it said.
CDLHT, whose properties include the Orchard Hotel and Grand Copthorne, also said the supply of new rooms in Singapore is likely to slow to a growth of 1.4% per annum between now and 2020, down from the 5.3% annual increase seen between 2014 and 2017. CDLHT is managed by Millennium & Copthorne, the hotel arm of local property giant City Developments.
OUE Hospitality Trust, which owns Mandarin Orchard, the biggest hotel along Singapore's Orchard Road shopping belt, said revenue per room at the Mandarin rose to S$225 a night during the fourth quarter from S$220 a year ago. Crown Plaza Changi Airport, its other hotel, saw that measure rise 32% to S$176 a night.
Ascendas Hospitality Trust said gross revenue and net property income from Park Hotel Clarke Quay, its sole hotel in Singapore, rose by S$200,000 during the quarter from a year ago.
Revenue per available room could grow by 3%-5% per annum as supply eases over the next three years, DBS Equity Research said in a note to clients.
CDLHT expects the number of hotel rooms in Singapore will rise by just 769 this year, partly due to planned renovations at Swissotel The Stamford that will start later this year.
According to the Singapore Tourism Board, Singapore had 413 hotels with 63,850 rooms at the end of 2016. The number includes global and regional chains as well as boutique establishments.
Last year, Singapore was the world's fourth most visited city with an estimated 16.6 million visitors, ahead of Paris and New York but behind Hong Kong, Bangkok and London, according to market research firm Euromonitor International's latest Top 100 City Destinations Ranking. The report was released by the World Economic Forum in early January ahead of its annual meeting in Davos.
Latest data from STB show the city-state attracted 15.9 million visitors between January and November 2017, an increase of 6.4% over the same period of 2016, suggesting an improvement on Euromonitor's figures given the influx of tourists in December.
In its presentation to analysts last month, CDLHT said Singapore could enjoy a seasonal lift in visitor arrivals this year, driven by major biennial events such as the Singapore Airshow, which starts this week, and Food and Hotel Asia 2018, which will be held in April.
Singapore also took over the rotating chair of the 10-member Association of Southeast Asian Nations on January 1, which means the city-state will host several meetings and events involving foreign delegates over the course of 2018, the trust added.
However, the rosy outlook could be threatened if the government eases restrictions on room-sharing platforms such as Airbnb.
Currently, Singapore does not let home-owners rent out or sublet private homes for periods of less than three months. For government-built Housing and Development Board flats, the minimum occupancy period is six months.
But National Development Minister Lawrence Wong said over the weekend that the government would release a consultation paper outlining the proposed regulatory framework for home sharing.
"We want to have a framework to allow short-term home sharing, with the right controls and safeguards. So, we will put out something to allow for this to happen," Wong told the Sunday Times newspaper.
- By Kevin Lim; firstname.lastname@example.org; +65 6331 6250
- Edited By Sumathi Vaidyanathan
- Send Feedback to email@example.com
- Copyright (c) 2018 Nikkei NewsRise Asia Pte Ltd.