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H1 tourist spend points to Singapore missing full-year target

Slide in Q2 receipts brings first-half figure to S$13.1b, less than half the S$27.3-S$27.9b forecast for the year; but number of arrivals still on uptrend

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Singapore's tourism receipts were down 1.3 per cent year on year in the second quarter at S$6.5 billion, despite a 1.7 per cent rise in international visitor arrivals to 4.6 million, according to Singapore Tourism Board (STB) figures on Wednesday

Singapore

SINGAPORE'S tourism receipts were down 1.3 per cent year on year in the second quarter at S$6.5 billion, despite a 1.7 per cent rise in international visitor arrivals to 4.6 million, according to Singapore Tourism Board (STB) figures on Wednesday.

This was nonetheless an improvement from the first quarter's 4.8 per cent fall in spending. With the latest figures, tourism receipts for the first six months of 2019 were S$13.1 billion, down 3 per cent from the year-ago period. This was despite a 1.3 per cent rise in arrivals to 9.3 million.

"Singapore continues to be an attractive tourism destination despite facing some headwinds," said STB director of digital transformation Poh Chi Chuan, noting that from January to August, arrivals reached 12.9 million, up 1.9 per cent year on year.

This was driven by good growth from key markets such as China (up 5 per cent), the US (12 per cent), Japan (7 per cent) and Germany (10 per cent), he added.

The decline in receipts for the first half was due to lower spending in both the leisure segment, with per capita spending down 5 per cent; and in business travel and meetings, incentives, conferences, and exhibitions, with arrivals down 4 per cent.

"This is likely because visitors are more cautious about spending due to ongoing risk and uncertainties in the global economy, such as the US-China trade tensions and Brexit, as well as currency fluctuations against the Sing dollar," said Mr Poh.

There was also a slight rise in visitors who "spent less time in Singapore due to the way their travel itineraries are structured", such as day-trippers, those who twin Singapore with other destinations, and cruise passengers.

Maybank Kim Eng economist Lee Ju Ye said the gap between receipts and arrivals in the first half may be due to lower spending by China tourists in particular, who may be cutting back due to the weak yuan.

Still, the first half's 3 per cent rise in leisure arrivals "is a positive indicator that Singapore remains an attractive holiday destination", Mr Poh said.

For the second quarter, the fall in receipts was due to lower spending on accommodation; food and beverage; and sightseeing, entertainment, and gaming. But shopping - accounting for about a fifth of receipts - rose 11 per cent, while other tourism receipt components held steady.

The fall in accommodation spending is due to more visitors staying in lower-tier hotels or with friends and relatives, said Mr Poh.

In the second quarter, the top three markets for tourism receipts - excluding expenditure on sightseeing, entertainment and gaming - stayed the same, led by China at S$897 million, with Indonesia and India contributing S$757 million and S$478 million respectively.

These were also the top three markets for tourist arrivals in the first six months, with 1.81 million, 1.49 million, and 747,000 respectively.

In the second quarter, gazetted hotel room revenue was steady at S$1 billion, down a marginal 0.1 per cent.

Average occupancy rate held steady at 85 per cent, while average room rate edged down 1 per cent to S$211. Revenue per available room was down 1 per cent to S$178.

For the first half, revenue was up 1.7 per cent at S$1.9 billion, with average occupancy rate and average room rate steady at 85 per cent and S$215 respectively. Revenue per available room was down 0.9 per cent at S$183.

For the full year, some macro and external challenges are expected to persist, which could affect tourism performance and receipts in particular, said Mr Poh. The STB will continue efforts to boost the sector's resilience, including marketing in Tier 2 cities of key source markets, and markets with good growth potential; enhancing attractions and events; and encouraging visitors to stay longer.

At the start of 2019, the STB forecast that full-year receipts could grow 1 to 3 per cent, reaching S$27.3 billion to S$27.9 billion. Arrivals were seen rising 1 to 4 per cent, at between 18.7 million and 19.2 million.

Maybank's Ms Lee sees the visitor target as "very much achievable", but the receipts target as less likely. She expects arrivals to pick up in the second half "as prolonged protests in Hong Kong divert leisure and business tourists" here.

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