NewRoom glut hobbles Singapore hotels despite tourist influx

An influx of tourists to Singapore this year has brought little joy to the city’s hoteliers, as a glut of rooms sends a key revenue measure to a six-year low.

Revenue per available room, a metric used by the hotel industry, slumped 7.4 per cent in June to S$179.40 (US$132) a night, the lowest since 2010, according to data from the Singapore Tourism Board. Even as tourist arrivals have risen each month this year, room rates have fallen because of shorter trips by visitors and a 5 per cent increase in the number of hotel rooms.

There’s no relief in sight.

Of the 2,866 hotel rooms slated for addition this year, about two-thirds were expected to open in the second half, according to UOB Kay Hian Pte. Marriott International Inc. and the owner of the Holiday Inn Express chain are among operators that have planned new hotels in Singapore this year or already opened them.

“The high supply of new hotel rooms will be a headwind for room rates,” Macquarie Group Ltd. analysts Ken Ang and Tuck Yin Soong said in a note to clients. “While visitor arrivals have increased, average length of stay is falling, including from a higher proportion of day visitors,” said the analysts, who have a negative rating on hotel stocks.

Chinese visitors, the largest group of tourists to Singapore, posted a 53 per cent increase in June from a year earlier, the tourism board data showed. However, many price-conscious tourists are stopping over before crossing into Johor Bahru in Malaysia, which is about a 30-minute drive from the city centre, according to Derek Chang, an analyst at UOB Kay Hian in Singapore.