First year-on-year drop in room rates since March 2021, driven by post-F1 slowdown and regional competition.
In October 2023, Singapore’s hotel sector saw a noticeable decline in both room rates and revenue, largely driven by a drop in tourist arrivals and increased competition from other Asia-Pacific destinations. According to the Singapore Tourism Board (STB), average room rates (ARR) decreased by 14.6% from September, settling at S$278.08. This marked a 2.6% decline compared to the same month in 2022, making it the first year-on-year fall in ARR since March 2021.
Tourist arrivals fell to 1.13 million in October, contributing to a drop in demand. As a result, revenue per available room (RevPAR) dropped 19.3% from the previous month, reaching S$217.05. Total hotel room revenue fell by 16.2% to S$413.1 million, a significant decline from September’s S$493 million.
Cushman & Wakefield’s head of research for Singapore and South-east Asia, Wong Xian Yang, highlighted that the sharp decline in October performance followed record highs in September, driven by the Formula 1 Singapore Grand Prix. He noted that competition from tourist hotspots like Japan and South Korea, which are popular during the September-November period, may have further impacted Singapore’s hotel demand.
All four hotel categories experienced a drop in ARR, with the luxury segment witnessing the most significant decline, falling by more than S$100 from September to S$581.75. The average occupancy rate also dipped to 78.1%, the lowest since April this year. This marked a 6.2% year-on-year drop, following a smaller decline in September.
Looking ahead, industry experts expect RevPAR to remain stable for the rest of the year, with a potential rebound in early 2024 during Chinese New Year celebrations. However, the hotel sector may continue to face challenges due to stiff competition from neighboring tourist destinations and shifting regional travel patterns.
Despite the October dip, year-to-date figures show strong overall growth. Room revenue for the first 10 months of 2023 reached S$4.03 billion, up 61.9% from the same period in 2022. ARR for this period grew by 16.7%, while RevPAR increased by 28.1%. The average occupancy rate rose to 80.8%, reflecting a resilient recovery in the broader context of 2023’s tourism rebound, despite recent monthly fluctuations.
