China visitor arrivals almost halved in second quarter

Singapore

SINGAPORE'S second-quarter tourism was again hammered by the severe drop in China visitors. The retreat however appears to be easing, prompting some economists to say that the decline may have bottomed.

According to the Singapore Tourism Board (STB), Chinese arrivals dived a worrying 47 per cent in the quarter. But there was some consolation in their average spend, which helped total China receipts fall by a less sharp 24 per cent.

Overall, the number of visitors dropped 6 per cent year on year to 3.6 million in the second quarter. Receipts dipped 3 per cent to S$5.6 billion. The decline in tourism receipts was mainly due to lower shopping expenditure, particularly from China, Indonesia and Malaysia, which was down 19 per cent, possibly due to the strong Singapore dollar.

This was offset by the growth in sightseeing, entertainment & gaming expenditure, where spending was up 12 per cent in line with higher gaming revenues at Marina Bay Sands and Resorts World Sentosa.

In addition to China, visitor spend was also down for Indonesia (-7 per cent), Malaysia (-12 per cent) and the Philippines (-12 per cent) while Hong Kong bucked the trend to post a 30 per cent growth on the back of higher business travel and MICE traffic.

CIMB economist Song Seng Wun said signs were pointing to a possible recovery in 2H14, with 2Q likely to be the trough. "Going forward, we are seeing some tentative signs of the decline in visitor arrivals levelling off," he said, pointing to markets such as China and India.

Preliminary month on month data from STB seems to support this view. For July, visitors from China nearly doubled month on month. While arrivals from China were still down 27 per cent year on year in July, the decline eased from the steeper drops of 52 per cent and 45 per cent in May and June respectively.

For the first six months, total tourism receipts were up two per cent to S$11.8 billion, even as visitor arrivals declined three per cent to 7.5 million. "The disappearance of flight MH370, abduction of Chinese visitors in Sabah and political unrest in Thailand have all had a dampening effect on Chinese travel to the region," said STB.

It added that new tourism laws in China, implemented in October last year, which clamp down on "zero-dollar tours" that come with surprise fees have also contributed to weaker tourist arrivals from China.

Stripping out China, visitor arrivals from all other markets were up 2 per cent in the first six months. The number of travellers from China were down 30 per cent to 871,000 in 1H14, while Indonesian visitors - Singapore's top source market - edged up three per cent to 1.525 million. Arrivals from Hong Kong and South Korea were also both 16 per cent higher.

Last year, Singapore received S$23.5 billion in tourism receipts from 15.6 million visitors. STB earlier forecast visitor arrivals to clock 16.3-16.8 million this year, and tourism receipts to hit S$23.8-S$24.6 billion. However, it remains to be seen if those targets will now be met.

CIMB's Mr Song expects a slight growth in 4Q arrivals, which would result in flat growth or up to a one per cent slide for the total this year.

Total tourism receipts for the year are likely to be flat as well, even with 4Q14 receipts expected to grow by five per cent due to favourable base effects, which suggests hitting STB's target is unlikely, reckons Mr Song.

Meanwhile, gazetted hotel room revenue rose 5.2 per cent to about S$0.8 billion in Q214 and 9.1 per cent to S$1.6 billion for 1H14.

In 2Q14, average room rate (ARR) across the hotel industry dipped 0.2 per cent to S$255, while average occupancy rate (AOR) was down 2.1 percentage points to 84 per cent and revenue per available room (RevPAR) was 2.6 per cent lower at S$213. Of the various hotel categories, luxury hotels saw the highest growth in RevPAR.

And for the six months, ARR edged up 1.2 per cent to S$258, while AOR slipped 1.3 percentage points to 85 per cent. RevPar came to S$218, down marginally by 0.4 per cent.