Visitor arrivals in Singapore in for a tough second quarter

Singapore

SINGAPORE visitor arrivals face a rocky second quarter, as fresh Covid-19 infections and virus variants derail the global travel recovery.

On the bright side, analysts do not expect consumer spending to take a severe hit, as domestic consumption has proven a solid buffer against the plunge in tourism.

Still, new travel restrictions imply a slower tourism recovery, said Kwee Wei-Lin, president of the Singapore Hotel Association, which represents 160 members. She expressed hope of signs of recovery showing up by early 2022.

Singapore welcomed 68,680 visitors in the first three months of the year, down 97.4 per cent from Q1 2020's figure, the latest data from the Singapore Tourism Board (STB) showed.

But arrivals then fell month on month in April to 25,730, from the one-year high of 27,170 in March.

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CIMB economist Song Seng Wun, noting that large-scale events such as e-sports tournaments and business conventions had resumed with safety measures, said: "We've coped and adapted ... to try to give the most affected sectors a helping hand.

"Unfortunately, the pandemic is far from over ... The stop-start-stop recovery of our travel and leisure industry, aviation, and so forth, mean that many businesses will continue to face significant headwinds as restrictions remain in place."

The hotel industry, a significant casualty of the Covid-19 outbreak, reported overall room revenue of S$202 million for the first quarter - down by 70.2 per cent year on year.

Room takings came to S$75.58 million in March, down by 36.2 per cent year on year. Still, occupancy ticked up to 48 per cent for the month, from 41 per cent in February. Revenue per available room also improved on both a monthly and annual basis, to S$69.5, despite a month-on-month dip in the average room rate.

Zhang Jiahao, associate director of CBRE Hotels, had originally expected a gradual recovery in both hotel occupancies and rates over the course of the year, as international visitors returned and locals took staycations.

But the recent case spikes and restrictions have dimmed this view.

While he believes that hotel occupancies are likely to stay afloat during H2 2021 on Stay-Home Notice (SHN) contracts, he said that "room rates are expected to see a decline as it is common for bulk-government businesses to yield lower room rates".

Nomura South-east Asia economist Euben Paracuelles added: "Retail sales are also now nearly back to pre-Covid levels despite the absence of international tourists, which implies spending by locals has made up for the slack."

Indeed, CIMB's Mr Song, who tracks the local leisure sectors, told The Business Times that "we should really cheer" the number of visitors to Singapore in March. Arrivals that month hit a peak since the pandemic began, despite still being down by 88.7 per cent from 240,000 in March 2020, he noted.

"But it is clearly not a linear or exponential recovery from there. The outlook for the coming months will obviously depend on the safety and health issue," he said. Recent inbound travel was driven by mainland China and Indonesia; the number of visitors from China rose from 8,890 visitors in March to 9,060 in April, while Indonesian travellers went up in number from 3,030 in March to 3,280 in April.

But restrictions on other source markets could stymie the inflow of travellers. Singapore imposed an indefinite freeze on non-residents with recent travel to India, from April 23. The ban was extended on May 1 to those who had been in Bangladesh, Nepal, Pakistan and Sri Lanka.

The SHN period has also been upped to 21 days for travellers from everywhere but Australia, Brunei, mainland China, New Zealand, Taiwan, Hong Kong and Macau.

Arrivals from India slid from 4,190 in March to 3,730 in April, while visitors from Bangladesh fell from 2,740 to 1,700; Malaysian arrivals dipped from 1,500 to 1,440.

Now, KPMG advisory partner Guillaume Sachet is keeping an eye on how the tighter curbs will affect high-profile international events "that aid national branding", such as the World Economic Forum meeting scheduled to be held here in August.

"In that light, we can expect swift steps from the Singapore government to close the gaps this period and work towards easing restrictions as soon as they can," he said.

Mr Paracuelles told BT that "the latest border restrictions are unlikely to matter much for the near-term tourism outlook, which is still fairly grim".

Raising the possibility of bilateral travel bubbles, he added: "We expect visitor arrivals to stay at similarly low levels in the next few months but the prospect for some recovery could start to brighten in H2 2021."

The STB defines international visitors as people who spend less than a year in Singapore. It excludes returning citizens and permanent residents and pass holders, Malaysians arriving by land, non-resident air and sea crew, and air transit passengers.