Singapore hotels’ average room rates up in Dec from previous month; other measures down slightly
SINGAPORE hotels’ average room rate (ARR) picked up in December 2022 after a marginal fall in November to record a new 14-year high, going by Singapore Tourism Board data on Monday (Jan 30).
ARR was up 27.7 per cent from the year-ago period to S$285.84. It was also up 1.9 per cent from November’s S$280.57 rate.
The figure came as tourist arrivals grew to a new high of 931,337 since the onset of the pandemic.
Gus McConnell, Asia-Pacific research manager at CBRE, said that hotel operators wanted to capitalise on the first uninterrupted holiday period since the onset of the pandemic, as they were confident that “revenge” travel would continue to be a factor, even with December and January’s usual seasonal slowdown.
Wong Xian Yang, head of Singapore research at Cushman & Wakefield, said that the higher overall ARR could be due to higher hotel-operating costs and pent-up demand for luxury accommodation in particular from overseas visitors: “Many overseas visitors could be travelling for the first time in years and are willing to splurge on accommodation.”
The luxury and upscale ARRs are the highest since January 2008, the earliest month for which historical data is available, he noted.
Performance was mixed across hotel categories. ARR was up for the month in the luxury (S$599.44) and upscale segments (S$545.14), but down slightly in the economy (S$216.59) and mid-tier (S$144.11) segments.
McConnell noted that increased rates for luxury rooms are typical for the December holiday period in Singapore, with guests more willing to pay for more extravagant locations in the month.
“In the same vein, room rates for mid-tier and economy assets typically see minimal growth over December, with usual business and Mice (meetings, incentives, conventions, exhibitions) travel slowing down during the holidays as businesses shut their doors for the new year.”
Overall hotel room revenues, while up almost two times on the year in December and higher than the pre-pandemic December 2019 figure of S$371.8 million, dropped 3 per cent sequentially to S$377.9 million, from S$389.6 million.
On the month, revenue per available room (RevPAR), at S$226.23, was lower than the S$241.51 recorded in November by 6.3 per cent. It was still up 36 per cent on the year.
December’s average occupancy rate of 79.1 per cent was also slightly lower than the preceding month’s 86.1 per cent and pre-pandemic rates in December 2019 and January 2020. On the year, it was up 4.8 per cent.
McConnell said that these falls are reflective of seasonal trends, where figures peak in event-packed September and October before normalising in December and January.
South-east-Asian holiday destinations such as Thailand, Vietnam and Indonesia may also provide some competition over this period, he added.
Wong, however, noted that the falls in overall RevPAR and occupancy across most segments suggests that price resistance in the market is increasing and overall ARR growth could moderate or stabilise in 2023.
Still, analysts remain optimistic about hotel performance in 2023, citing raised inbound arrival projections, especially with the re-opening of China, Singapore’s largest source of tourists pre-Covid.
For the full year, overall room revenue was S$3.24 billion, beating the combined full-year figures of 2021 and 2020, though still under the S$4.2 billion seen in pre-pandemic 2019. ARR reached S$248.93 in 2022, up 55.1 per cent from the year-ago period; RevPAR rose 106.7 per cent to S$188.61; and the average occupancy rate rose 18.9 per cent to reach 75.8 per cent.