China visitors fuel rise in tourists, jump in spending

Singapore

DRIVEN by growth across most categories, tourism spend in Singapore jumped 15 per cent year-on-year in the first quarter of this year to S$6.4 billion, outpacing a 4 per cent rise in arrivals to 4.3 million.

Chinese travellers emerged as both the biggest spenders and leading source of visitors in the first quarter, chalking up double-digit growth in tourism receipts and arrivals.

"The strong growth in tourism receipts was due to higher visitor arrivals and growth in all major tourism receipts components except sightseeing, entertainment and gaming," said the Singapore Tourism Board (STB). Spend on shopping, for example, shot up 38 per cent to S$1.6 billion. On the other hand, spend on sightseeing, entertainment and gaming was flat at S$1.08 billion.

Travellers from China spent 30 per cent more at a collective S$1.08 billion in Q1, followed by Indonesia - up 16 per cent to S$688 million - and India. Indian travellers spent S$302 million, which was on a par with the corresponding quarter a year ago.

However, the figures by country analysis exclude spend for sightseeing, entertainment and gaming, said the STB, citing "commercial sensitivity of information".

China outpaced last year's top feeder market Indonesia as arrivals from the populous nation shot up 14 per cent to 851,000. Indonesia and Malaysia rounded off the top three, with growth of 2 per cent to 720,000 and 1 per cent to 275,000, respectively.

Year-on-year declines were posted by arrivals from Hong Kong (-29 per cent), Thailand (-7 per cent) and South Korea (-5 per cent).

The STB's marketing strategy of reaching out to its top source markets, such as China and India, and expanding its focus to Tier 2 cities is seen as one factor fuelling tourism growth.

"The statutory board launched numerous marketing campaigns in recent times to target Chinese Tier 2 cities, and collaborated with Chinese online travel agencies to promote Singapore as a tourist destination," said CBRE Hotels Asia Pacific executive director Robert McIntosh.

"With more direct links and added frequencies by both full-service and low-cost carriers, we definitely see more travellers into Singapore from secondary cities in China," said Alicia Seah, director of public relations and communications at Dynasty Travel.

Other draws for visitors from China include Singapore's reputation for safety, its colourful heritage and the ability for Chinese travellers to get by with speaking Mandarin, she added.

CBRE Hotels estimates visitor arrivals this year will clock 16.7 million - the upper range of STB's forecast of 16.2 to 16.7 million.

On the hotel front, hotel room revenue edged down 1.3 per cent to S$0.8 billion for the quarter under review. Average occupancy rate grew by 1.3 percentage points to 86 per cent while revenue per available room (RevPar) declined by 1.2 per cent to S$199, weighed down by a lower average room rate (ARR). ARR fell 2.8 per cent to S$233, likely due a combination of new supply and softer corporate demand.

Most hotel categories - upscale, mid-tier, economy - reported declines in ARR but luxury hotels bucked the trend by chalking up a 4.3 per cent growth to S$463. This helped luxury hotels rake in a 3.7 per cent rise in RevPAR to S$397. Economy hotels also reported a boost in RevPAR of 4.6 per cent to S$79, which came on the back of stronger occupancies.

On the other hand, both upscale and mid-tier hotels saw RevPAR fall, by 1.9 per cent to S$223 and 4 per cent to S$141 respectively.

The STB has also released the latest preliminary estimates for January to May, which show that visitor arrivals were up 3.6 per cent year on year to 7.16 million. At 1.33 billion, arrivals from China continue to surpass Indonesia but growth has eased to 6.6 per cent. Tourism receipts for the five month period have not been released.

Total room revenue for the five months dropped 2.7 per cent to around S$1.3 billion, while RevPAR was down marginally by nearly one per cent to S$197. This came as occupancy held steady at about 85 per cent while ARR dipped nearly 2 per cent to S$232.

Meanwhile, it appears that some of the hotel room supply injection for this year could be pushed back, noted OCBC Investment Research analyst Deborah Ong in a report, quoting data from CDL Hospitality Trusts and Horwath. Singapore hotel room supply is now expected to grow 4 per cent this year - less than the initial 5.9 per cent projection. This could alleviate some of the pressure that the industry is grappling with.

Next year, room supply is slated to grow 1.7 per cent, up from the earlier forecast of just 0.1 per cent.

CBRE Hotels highlighted that the second half of 2017 will see a mix of luxury and mid-scale hotels entering the market, notably the Andaz Duo, Yotel Orchard and InterContinental Singapore Robertson Quay. It added that the launch of Changi Airport's new Terminal 4 in 2H17 and STB's efforts in targeting key visitor markets should help to boost demand and cushion the decline in hotel performance.