Despite vaccinated travel lanes, Singapore tourism recovery will be sluggish without China, India, Asean travel: Watchers

QUARANTINE-FREE border reopening to fully vaccinated arrivals from select markets could boost Singapore visitor numbers in the last quarter of the year - yet the recovery of the tourism sector will also hinge on openness to travel from nearby countries, watchers told The Business Times.

Hotel occupancy rates and revenue per available room (RevPAR) rebounded to year-to-date highs in September but visitor arrivals remain low compared with pre-pandemic levels despite broad-based month-on-month growth, Singapore Tourism Board (STB) figures showed.

As such, all eyes are on the recovery in travel from Asean and India which are not yet included in Singapore's vaccinated travel lanes (VTLs) with 13 countries in Europe, North America and the Asia-Pacific region.

That's as Lam Chern Woon, research and consulting head at Edmund Tie, called room rates and occupancies "still a fraction of what they were before the pandemic", with domestic consumption unlikely to fully make up for lost international spend.

Granted average hotel occupancy rates hit 63 per cent in September - the highest mark all year - compared with 55 per cent in the month before and RevPAR jumped to a high of S$103.18 against S$81.86 in August.

Average room rates rose to S$163.60, from S$147.90 previously, with the monthly improvements recorded across all hotel tiers: economy, mid-tier, upscale and luxury.

The hotel sector is now seeing more business outside of Stay-Home Notice (SHN) isolation orders for travellers, noted Govinda Singh, executive director of valuation and advisory services for real estate firm Colliers.

"This, combined with the increasing arrivals, mean that hoteliers can recover quickly to almost the pre-Covid-19 rates and even if they still accommodate some SHN guests, blended rates will surely increase."

September's uptick took overall industry room revenue to S$79.1 million, against S$68.6 million in August.

Still, industry metrics are still well short of their pre-pandemic levels.

The average occupancy rate was 87 per cent in September 2019 while RevPAR at the time was S$205.07 and room revenue was S$375.9 million.

Selena Ling, chief economist at OCBC, told BT that VTL-enabled reopening is "probably necessary for the long-term recovery and sustainability of the hotel sector" but also said: "Visitor arrival numbers still cannot compare to the pre-Covid levels yet."

International arrivals rose by 19.7 per cent month on month to 19,000 travellers. The arrivals were led by mainland China which sent 8,950 visitors though monthly visitor growth was also driven by Germany, Japan, India, Indonesia and the Philippines.

Noting that the increase in arrivals came "across a wide spectrum" of markets, Singh said: "This reflects Singapore's strong appeal as a desired tourist destination globally and bodes well for a future recovery in the hotel industry in 2022 through 2024.

"In addition, travellers from a significant number of the source markets are on a long-haul trip including China which bodes well for the average length of stay and tourist spend."

Singapore launched VTLs for arrivals from Brunei and Germany on Sep 8 and extended the scheme to vaccinated travellers from 8 other countries in Europe and North America on Oct 19. VTLs with Australia and Switzerland will open on Nov 8 and a VTL with South Korea on Nov 15.

With more VTLs set to start, Ling said headline visitor arrival figures will likely continue to grow, "and this should be welcome news for the aviation and hospitality-related sectors".

Wong Xian Yang, head of research at Cushman & Wakefield, also expects VTLs to boost travel from major markets such as Australia, the United States, South Korea and Britain.

But the tourism recovery will also rely on arrivals from "key tourism markets" that do not yet have VTLs with Singapore such as China, India, Malaysia and Indonesia, he added.

Singapore had closed its borders to non-residents with recent travel to India in late April and the ban - which was expanded to other parts of South Asia in May - was lifted just this week.

And, as Covid-19-shy China still keeps a lid on outbound travel, Maybank Kim Eng economist Lee Ju Ye added that relaxing restrictions on neighbours such as Indonesia and Malaysia "would provide a much needed boost, if completed by year-end".

Other challenges named by watchers include a spike in Covid-19 infections in Singapore which has prompted some countries to classify the Republic as a high-risk destination; a daily cap on VTL arrivals and persistent domestic social restrictions.

Lam suggested the VTL scheme could support the arrival of another 100,000 to 200,000 visitors in the last quarter, but added "full-year arrivals will likely still fall short of 300,000".

In contrast, Singapore welcomed 2.74 million travellers in 2020 and 19.1 million in 2019 before Covid-19.

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.