August visitor arrivals pick up, but floodgates still shut

Singapore

RECENT border control easing had a muted impact on visitor arrivals, going by the latest monthly figures from the Singapore Tourism Board (STB).

That is as analysts expect any year-end staycation boost for the beleaguered hotel sector to be mild too.

Singapore's inbound travel figures improved again in August on the month before, but remained severely depressed on a year-on-year basis, as the novel coronavirus pandemic battered tourism-related industries.

Singapore saw 8,910 visitors in August - higher by 30.3 per cent from 6,840 in July, but down sharply from 1.74 million in the year-ago period.

Meanwhile, gazetted hotels took in a combined S$58 million in room revenue - up from S$35.1 million in July, but 84.9 per cent lower than the S$383.5 million in August last year.

"Despite the big improvement in visitor arrivals in August, there is not much reason to cheer, given that the levels are still far below normal times," Maybank Kim Eng economist Lee Ju Ye told The Business Times.

Greater China and South-east Asia were the top sending regions in August, with a jump in Chinese arrivals behind the latest increase in visitors.

There were 2,620 travellers from Greater China in August, up from 1,410 in July. Visitors from South-east Asia rose to 2,830, from 2,310 in July, with Indonesian arrivals making up more than one-third of this group.

"It is evident that the green-lane arrangement with China is driving some demand," said Govinda Singh, executive director of hotels and leisure at real estate firm Colliers.

Singapore suspended the entry of short-term visitors and transit passengers in late March, leading to an unprecedented trough in international visitors - just 750 in April.

But entry restrictions have been gradually eased since the introduction of a "fast lane" with parts of China in June.

Yet Mr Singh expects take-up of such arrangements to stay low, on the strict conditions involved, "compounded by the relative lack of airlift".

Maybank's Ms Lee added that reopening to low-risk countries - Brunei, New Zealand, Australia and Vietnam so far - will likely yield only "a trickle" of increase, since these countries made up just one-tenth of arrivals last year.

Selena Ling, chief economist at OCBC, also told BT that the outlook for tourism-related businesses "may be still challenging, since the gate is being open very cautiously rather than being thrown open freely".

Separately, gazetted tourist hotels saw average occupancy slip month on month to 62.1 per cent in August - down from 65.1 per cent in July and 92.4 per cent in the year-ago period.

August occupancy was highest in the economy segment, at 74.4 per cent, and mid-tier market, at 72.8 per cent.

In contrast, luxury hotels saw occupancy of 46.9 per cent, while it was 40.2 per cent for the upscale tier.

One factor could be a tapering-off in the government's use of hotels as isolation facilities for residents returning from abroad, suggested Mr Singh.

But he added that "less reliance on heavily-discounted government business" boosted average daily rates and revenue per available room (RevPAR).

Gazetted hotel RevPAR stood at S$71.8 in August, improving from S$53.6 in July, although it was still down by 65.5 per cent year on year.

In the months ahead, hotels could see a year-end boost from the school holidays, as well as some S$320 million in domestic tourism vouchers to be credited to citizens in December.

"Discounting may still be rampant to get domestic visitors in the gate, but, for now, staycations and domestic visitor numbers are the silver lining," said OCBC's Ms Ling.

"The upcoming festive season and spending power in December will be key to watch, since Singaporeans are likely still unable to travel."

Still, Ms Lee said: "I don't expect to see a significant uplift, given that the domestic market is much smaller compared (with) neighbouring countries . . . A weak labour market and declining wages will also likely cap discretionary spending."