AFTER a lacklustre 4Q2012, Singapore’s hotels and serviced residents are in for a challenging year with flat demand expected for 2013.
Research by OCBC Investment Research has forecast that Singapore’s hotel room supply will grow at 5.8 per cent per annum, faster than the demand for rooms which is predicted to grow at 5.4 per cent per annum.
The report stated that average length of stay per visitor was declining partially in reaction to the strong Singapore dollar, while the industry is facing potential oversupply in the medium term.
Such a situation could hit Singapore’s REITs such as Far East Hospitality and Ascott Residence Trust, surmised local daily The Straits Times. Demand for serviced residences was likely to remain flat and room rates plateau or drop, according to OCBC’s report.
The report expected the industry to continue struggling to sustain margins with a tight labour market and higher operating costs and the lack of near term catalysts to prop up RevPAR.
However, the climate is better at the regional level. TripAdvisor’s TripBarometer has ranked Asian accommodations third in being optimistic about their business prospects in 2013, while 42 per cent of providers indicated they plan to increase room rates (TTG Asia e-Daily, March 20, 2013).
