Singapore’s hotel market observed a continued growth momentum in 2019 and this is attributable to strong contribution from the main source markets as well as the slower growth in hotel supply entering the market.

Hotel occupancy and average room rate (ARR) rose for all the hotel tiers in 2019, recording an increase in marketwide occupancy by 0.9 percentage points (p.p.) and increase in ARR by 1.3%.

Overall, RevPAR accounted for a 2.4% growth, the highest over the past five years.

Moving forward, with the coronavirus outbreak (COVID-19), rescheduled travel plans, travel restrictions and flight cancellations are likely to have a significant impact on the hotel performance outlook in Singapore.

The Republic of Singapore is a metropolitan city-state and island country in Southeast Asia with a total land area of an estimated 714.3 square kilometres. It is situated at the southern tip of the Malayan Peninsula, between Malaysia and Indonesia. With an economy supported by its growing population of approximately 5.8 million people, Singapore has witnessed remarkable record of sustained economic growth throughout the years and bolsters its role as a global commerce, finance and transportation hub.

Overall economy in Singapore expanded by 0.7% in 2019, slower than the 3.1% growth in 2018. The manufacturing industry contracted sharply by 1.4% on the back of the ongoing trade war and global uncertainty. The service sector, on the other hand, grew by 1.1%, with the information and communication and the financial and insurance sectors registering the fastest pace of growth.

Tourism remains as an important pillar in driving economic growth in Singapore. According to the World Travel & Tourism Council (WTTC), the direct and total contribution of Travel & Tourism to Singapore’s Gross Domestic Product (GDP) in 2019 was 4.0% and 10.0%, respectively.

Tourism arrivals reached a new high of 19.1 million in 2019, supported strongly by international source markets. Activity in the hotel investment has also been robust in 2019, with hotel transaction volume having reached its peak over the past five years, standing at 2.57 billion.

Source: HVS Research

Economic Outlook

Global economic growth continued to decelerate into 2019 on the back of moderating activity and heightened risks. 2019 started with the US government shutdown, the ongoing uncertainty from the US-China trade tension and Brexit.

In the second half of the year, the world witnessed the unfolding of the geopolitical turmoil between Hong Kong and China and the persisting protests in Hong Kong. With growing uncertainties in the geopolitical landscape and global market pressures, international trade and investment activities have softened and is expected to remain subdue.

According to the World Bank, global economic growth is projected at 2.5% for 2020.

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