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IN another boost to the economy, tourism receipts and visitor arrivals both grew in the first half of this year, with prospects appearing bright for the second half as well.
Visitor arrivals were up 4 per cent at 8.5 million, while tourism receipts expanded at a faster pace of 10 per cent to hit S$12.7 billion, a report from the Singapore Tourism Board (STB) showed. Chinese travellers emerged as both the biggest spenders as well as the largest source market of visitors in the first six months of the year.
DBS senior economist Irvin Seah remains upbeat on the Chinese tourism market on the back of the strong economic performance in China. However, he noted that growth from this segment may "(moderate) towards a more sustainable growth path", following the recent property cooling measures in China, which indirectly impacts consumer spend.
With economic recovery broadening to include Singapore's services cluster since mid-year, Mr Seah estimates Singapore's GDP growth will clock around 2.8 per cent this year.
With the supportive macro-economic backdrop, the growth momentum for the tourism industry could be sustained, "especially given the usual year-end festive season which has the services firms more optimistic", said Selena Ling, head of treasury research and strategy at OCBC Bank. "The broadening of services' growth engines would definitely be beneficial to making growth sustainable into 2018."
At 1.55 million, 5 per cent more Chinese travellers visited Singapore in 1H17, surpassing Indonesians whose number rose 4 per cent to 1.47 million. Indonesia has traditionally been Singapore's biggest source market in previous years. This comes as the STB has been marketing Singapore aggressively to second and third-tier cities in China.
India, Malaysia and Australia rounded off the top five source markets for visitors, up 15 per cent, 2 per cent and 6 per cent respectively in 1H17.
Meanwhile, key markets Hong Kong, Thailand and Taiwan posted declines in arrivals of 17 per cent, 7 per cent and 5 per cent respectively.
The rise in tourism receipts came from broad-based growth across all major categories, "including shopping, accommodation, food & beverage, and sightseeing, entertainment & gaming", said the STB.
The Chinese also splurged the most with 10 per cent more in tourism receipts at S$1.88 billion. (The STB excludes spending on sightseeing, entertainment & gaming in the country analysis, citing commercial sensitivity of information)
Indonesians were again in second place, spending 10 per cent more at S$1.37 billion, while Indians were in third spot, with a 5 per cent growth in spending at S$790 million. Other markets with double-digit increase in spending include the Philippines (20 per cent), Malaysia (25 per cent), the US (14 per cent), South Korea (11 per cent) and the UK (11 per cent). Visitors from Japan, however, spent 4 per cent less at S$470 million.
In Singapore's hotel industry, hotel room revenue was estimated at S$1.6 billion in 1H17, declining 1.6 per cent from the corresponding quarter a year ago. A 1.2 percentage point increase in average occupancy rate (AOR) to 85 per cent helped offset a 1.2 per cent decline in average room rate (ARR) to S$231, which caused industry-wide revenue per available room (RevPAR) to edge up slightly by 0.2 per cent to S$197.
"Overall, the economy has shown signs of picking up," said RHB analyst Vijay Natarajan. "Hotels are seeing an improvement in corporate demand, which will translate to more intra-regional travel. The outlook is positive, with demand and tourism spend likely to remain on an uptrend."
Other potential drivers for tourism include the newly opened Terminal 4, which sports fresh handling capacity of 16 million passengers per year for Changi Airport. This could bring new demand as airlines are likely to increase or add services.
For the second quarter alone, visitor arrivals to Singapore grew 5 per cent year-on-year to reach 4.2 million visitors, while tourism receipts were also up 5 per cent to S$6.4 billion.
Hotel room revenue was down 1.8 per cent at about S$0.8 billion for the three months ended June 30, while overall RevPAR rose 1.7 per cent to S$194. The slight increase in RevPAR came on the back of a 1.1 percentage point increase in AOR to 84 per cent while ARR inched up 0.4 per cent to S$230.