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Hotel Investment Sales Singapore List2020-01-19T06:40:39+00:00

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Hospitality Industry Shows Continuous Growth

Market Analysis and Report of 2019 & Beyond

Tourist Arrivals Has Gone UP Almost Every Year

Tourists Arrival UP

Hotel Occupancy Has Gone UP

Hotel Occupancy UP

Hotel Room Rates Has Gone UP

Hotel Room Rates UP

2019 was a great year for the hotel industry. According to the market report, transactions in the hotel industry amounted to nearly $2.15 billion – a figure that has quadrupled from what it was in 2018. Transactions in 2018 stood at $544.69 million.

The investment volume in the industry is expected to rise by $2.4 billion which will include sale of hotel land sites.

The positive atmosphere is primarily due to the increase in tourist footfalls who have especially come to Singapore because of the meetings, incentives, conferencing, exhibitions or MICE events regularly held in the city.

Tourist arrivals to the city reached 11.1 million by July, 2019 reported Singapore Hotel Market Update 2019.

There have also been many events round the year in the city. In 2018 many high-profile events happened in Singapore such as the US and North Korea Summit in Sentosa, 51st ASEAN Foreign Ministers’ Meeting and the launch of Crazy Rich Asians’ Singapore set.

In the last three years, Singapore has consecutively witnessed record tourist footfall of about 18.5 million. The Changi Airport has itself handled passenger traffic of 65.5 million in the last 3 years.

Ever since STB or Singapore Tourism Board started keeping track of how hotels were performing in terms of trade, highest occupancy rate average was observed in every month.

2018’s momentum was carried forward to the next year and occupancy reached 93.9% by the seventh month of the year.

Many factors have played a role in this boom. New airline and flight roads have been introduced which led to tourists seeking accommodation in Singapore more than ever.

Jewel Changi Airport Top Attractions in 2019

Jewel @ Changi Became Top Attractions Since its Opening

The Jewel Changi Airport opened in April, 2019 which further boosted the already positioned trading performance of hotels. This increase has not only boosted trade but the industry has seen a rise in investment as well.

The recent foreign capital influx has played a role. Example of Oakwood Premier QUE Singapore’s sale for $289m. It was bought through a joint venture by AMTD Group, a Hong Kong based financial services company and Dorsett Hospitality International, a hotel operator.

In the same year, an HNWI or high-net-worth individual from Bangladesh invested $169m to buy ibis Singapore Novena.

In 2019, another high value sale upped the prospects of the industry when Hoi Hup a local property developer invested $475m to buy Andaz Singapore a 342 roomed hotel.

It was the highest investment on a single asset – a record. This amount was also higher that Westin Singapore’s sale price which was reportedly sold for $468m in 2013.

The ADR or average daily rate in Singapore as well as occupancy has always been among the best in the Asia Pacific region.

The ADR from October 2018 to October 2019 was S$219.59. The occupancy levels had reached about 86.5% during that period mainly because of the steady rise in tourist footfall and a reducing supply pipeline.

According to the last data published by STB, RevPAR or revenue per available room raised up to 3.9% from October 2018 to October 2019.

More Hotels Needed Every Year

Improvement in Hotel Supply

More Hotel Rooms Are Needed,

Target Numbers 2,800 Per Year

If all the pipelines hospitality projects are completed within the period of 2019 to 2022, 50% of them is expected to come from upper midscale to midscale segments.

There is a likelihood of this trend continuing mainly because due to the operations and construction low cost, the segment will see better ROI and profit than any luxury or upscale hotel.

ADR growth has been “limited” in the last few years in Singapore’s hospitality market, while mid-scale and also upper midscale hotels can work on a flexible ADR to maintain their profitability, in the case of luxury hotels, the challenges are more.

This rise is quite in contrast to how luxury and upscale hotels positioned themselves in the last 6 years by opening brands such as JW Marriott, Andaz, Six Senses, InterContinental, Westin and Sofitel.   

There is a new wave where new hotels are positioning themselves as midscale hotel – a trend likely to continue in the coming years. This wave included the development of Worldwide Hotels along Club Street which has a provisional permission or PP for building a 900 roomed hotel.

Other thing need to mention that the 460 to 475 roomed Moxy hotel positioned as a midscale one and under Marriott International’s operation and which is part of the mixed-use redevelopment plan along the Liang Court site.

Despite of the optimism in the midscale and upper midscale hotels by the year-on-year October 2019, luxury hotels had some news to cheer upon as they saw a 2.3% RevPAR y-o-y growth, a percentage that was the highest in all hotel tiers.

This growth reflected on Singapore’s matured demand fundamentals and ability to attract high yielding global demand.

After Raffles Hotel reopened, it can be expected that the hotel will once again compete with luxury hotels such as The Capitol Kempinski, The St. Regis Singapore, Capella and Fullerton for the status of the best luxury hotel in Singapore.

Liang Court Redevelopment Plan to Be Soon Underway

Since these hotels have the capability to generate their own demand, the luxury hotels will collectively help in the growth of global tourism demand in the city.

The sites which have been sold and approved are likely to be operational by 2023 or beyond.

Even if all the known supply is accounted for, after the completion of all new projects between 2020 and 2024, there would be an average of 1400 units p.a. which will still be below the last 10-year average of 2800 rooms p.a.

Sentosa New Hotels

These 3 Luxury Hotels Easily Become Tourists Top Choice

The Outpost Hotel Sentosa Tourists Choice

The 3 new properties in Sentosa being opened by Far East Hospitality, namely, The Outpost Hotel Sentosa, The Barracks Hotel Sentosa and the Village Hotel Sentosa will be eyeing towards being midscale or luxury hotels.

Their entry will further position Sentosa’s image as a leisure designation, these hotels will likely generate their own demand mainly because of the brand loyalty factor.

It is noted that the average occupancy figures will continue to see a rise. The average occupancy figures rose from a mere 1.5% to 87.8 per cent at the y-o-y of October 2019. This was the highest occupancy rates recorded in October.  

Room rates expects to rise due to the heavy demand, increasing by 2.1 per cent to $224 year-on-year in October.

There is no immediate future likelihood of there being an oversupply in the industry.

Though new rooms will be added every year between 2019 and 2023, the growth rate will remain around 2% p.a., which in comparison is a slower growth rate than what happened in the period between 2014 and 2018 which saw a rise of about 4% p.a.

He added that since industry partners and STB are making continuous efforts to augment the demand, there is expectation that growth will happen slightly faster than supply.

Supply will be limited in 2020, with only about 520 rooms being currently in the pipeline. This will be in stark contrast to the 2300 new rooms that were available between 2015 and 2019, referring to the new hotels such as The Clan Hotel at Cross Street and Dusit Thani Laguna Singapore which is situated in the Laguna National Golf and Country Club.

Hotel Investment Performance in Singapore

Looking at The Future

There is likely to be a possible slowdown in the hospitality industry in 2020 after 2019 recorded high investment sales, many industry experts said.

Though headwinds should succeed, the slower supply in hotels will mitigate the expected risks.

The 142nd International Trademark Association’s annual meeting which will see 8000 attendees in Singapore and the Lions Club 103rd International Convention which will be attended by about 20,000 foreign attendees – both part of the MICE bi-annual events will happen in 2020.

These events will help the RevPAR to see a 1 per cent growth in 2020 even when the mitigating and outlook factors are taken into account.

Other developing tourist spots such as the Mandai Eco Tourism Project and the Jurong Lake District are likely to increase the demand in this industry.

In 2020, Market watcher is expecting investors, hotel operators and owners to look into the development of strategic hotels.

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