Bankbazaar.sg, Singapore - December 26, 2017
SINGAPORE - With the festive spirit slowly catching up, the Singapore tourism industry is all set to end the year on a high note. With the conscious efforts made by the Singapore Tourism Board (STB) to engage Chinese visitors, the number of visitors from China has shot up significantly, dethroning Indonesia as the primary source market for Singapore’s tourism industry.
As per the early estimates proffered by STB, the visitor count over the first three quarters in 2017 stand at 13.05 million and is well on way to cross the 17 million threshold set for the year, especially with the festive fever catching up. This could push up the number of visitors to the country in the last quarter at a faster rate. This stands starkly against the initial forecast of 16.4 million to 16.7 million visitors for the entire year.
While the total visitor count for the first three quarters this year has risen by 5% year-on-year, the number of Chinese visitors into the country has ratcheted up by 10% from the same period last year to 2.49 million. Analysts believe that STB’s endeavour and strategy to involve the people from the second-tier cities in China has worked well.
Even after being pushed down by China as the largest source market for Singapore’s tourism industry, Indonesia still remains an extremely important market. The number of visitors from Indonesia has grown by 2% y-o-y over the first three quarters in 2017, standing strong at 2.17 million.
Despite a rise in the visitor count and return of a more optimistic outlook for the local economy, the retail industry continues to remain stressed. The tourism spend for the whole year could touch anywhere between S$25.1 billion to S$25.8 billion.
Although the average occupancy rate (AOR) for the local hospitality industry has grown by one percentage point to 86% from the corresponding period last year, the total room revenue for the first three quarters has fallen by almost 2% y-o-y to S$2.39 billion. A slight decrease in the average room rent (ARR) for the industry, down by 1% to S$233, contributed mainly to the dip in the revenue for the first nine months. The average revenue per room (RevPAR) came to a flat S$201 for the nine months under consideration.
While economy, mid-tier, and luxury hotels all registered a growth in AOR, only the first and third on the list witnessed a growth in ARR, albeit muted. As per projections made by CBRE Hotels (Asia-Pacific), the AOR for the entire year could be 85%, an increase of 1% over the 2016 figures.
Some industry mavens have forecasted that a tighter supply pipeline in the next two years coupled with better prospects for the economy will help the industry clock better revenue. However, the prospects remain bleak for the local retail sector for the fourth quarter this year with headwinds like competition from the online retail industry and higher operating costs affecting the revenue margin.
While the retail sales grew by 0.9% year-on-year for Q3 2017, it fell on a sequential basis by 1.4%. The figures posted for H1 2017 show that the tourist shopping receipts has increased by 20% from the same period last year against the total tourist receipt growth of 10% y-o-y. As expected, the increase in tourist spends was dominated by the Chinese for the first nine months.
Despite a big cheer from the secondary market and a possible turnaround in the economy, the retail industry numbers remain stressed, as the exuberance is yet to translate into figures. For 2018, analysts feel that an increase in energy and food prices could severely impact the discretionary spending capacity of the Singaporeans, posing a challenge for the retail industry.
However, with the Chinese government issuing travel restrictions on South Korea and lower headline GDP unable to hit the Chinese appetite for overseas travel, the tourism industry could breathe easy with the inflow of Chinese travelers expected to grow in the next few years.