Revenues drop to six-year low as Singapore battles hotel room glut

Singapore’s hotel room glut could be a cause for concern. Pic: Kah-Wai Lin/flickr

SINGAPORE’S current glut of hotel rooms has resulted in a six-year low in revenues, according to a report by Bloomberg.

Revenue per available room, a metric used by the hotel industry, was reported to have slumped by 7.4 percent in June to US$132 a night, the lowest since 2010.

The numbers appear to be worrying even if more inbound tourists are visiting the country each month this year. In fact, the number of Chinese visitors – the largest tourist market in Singapore – climbed 53 percent compared to June last year.

Despite the rise, tourists seem to be more cautious about prices and are staying in the country for shorter periods.

Many price-conscious Chinese tourists from secondary Chinese cities are stopping in Singapore but crossing over to the Malaysian city of Johor Bahru, a 30-minute drive from Singapore’s city center.

Macquarie Group Ltd. analysts Ken Ang and Tuck Yin Soong said in a note to clients: “While visitor arrivals have increased, average length of stay is falling, including from a higher proportion of day visitors.”

The glut is not slowing down hotel openings in the near future. This year alone, a five percent increase in number of rooms – or about 2,286 rooms – is predicted.

Shares of large hotel chains like Four Seasons, Hilton and Concorde have fallen by a significant 10 percent this year. The outbreak of the Zika virus too isn’t going in Singapore’s favor.

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However, experts are optimistic about Singapore’s tourism sector despite the virus. The Singapore Business Review reported that some travelers deem Zika to be less dangerous than that of the SARS virus.

However, countries like South Korea, Indonesia, Taiwan and Australia have been issued advisories about travel to Singapore.