Tourism downturn affects hotel performance, with a significant dip in room rates and occupancy
In October 2023, Singapore’s hotel performance experienced a notable decline, as average room rates (ARR) dropped by 14.6% from September, reaching S$278.08. This marked the first year-on-year decrease since March 2021, with a 2.6% drop compared to the same period in 2022. The downturn reflects a continuous drop in tourism arrivals, with only 1.13 million visitors recorded for October.
The total room revenue for hotels fell 16.2% from September, amounting to S$413.1 million, though it showed a slight increase of 1.1% year-on-year. Revenue per available room (RevPAR) also declined, by 19.3% from the previous month, down to S$217.05, marking a 9.8% drop compared to October 2022.
Hotel performance typically drops after the Formula 1 event in September, as noted by Wong Xian Yang, head of research at Cushman & Wakefield for Singapore and Southeast Asia. This year’s decline was exaggerated due to the record highs in September’s ARR and RevPAR, which were driven by the F1 race and a strong tourism surge.
Competition from other popular Asia-Pacific destinations, such as Japan and South Korea, likely contributed to weaker hotel demand, as these destinations attract tourists during the same September to November period. In October, the occupancy rate also dropped to 78.1%, the lowest since April 2023.
Looking ahead, Wong anticipates that hotel performance will remain stable through the end of the year, with RevPAR expected to pick up in February 2024, aided by the Chinese New Year festivities.
Despite the decline in October, 2023 overall has shown positive growth, with room revenue for the year-to-date reaching S$4.03 billion, a 61.9% increase compared to last year. ARR has seen a 16.7% rise and RevPAR has increased by 28.1%. The average occupancy rate also grew by 7.2%, standing at 80.8% for the year.
