F1 race sends Singapore hotels’ average room rate, takings to record highs in September

SINGAPORE hotels’ average room rate (ARR) surged in September to a record S$325.24, surpassing the previous year-to-date peak of S$292.46 in July, the latest data from the Singapore Tourism Board (STB) showed on Monday (Oct 30).

ARR was up 13.4 per cent from August’s S$286.87, and 14.1 per cent on year.

Overall hotel room revenues rose to S$492.4 million in September, similarly exceeding July’s high of S$484 million. On the month, it was up 8.1 per cent from August’s S$455.7 million; on the year, it grew 27 per cent.

The spike in the ARR for September surpassed expectations, said Wong Xian Yang, Cushman & Wakefield’s head of research for Singapore and South-east Asia; he noted that in pre-pandemic 2017 to 2019, month-on-month growth in September was about 4 to 5 per cent.

The month’s average occupancy rate fell to 83.2 per cent from the preceding month’s 85.8 per cent. But it remains a nudge higher than the 83 per cent recorded in pre-pandemic January 2020, and was up 0.5 per cent on year.

Despite the fall in occupancy rate, the sharp rise in ARR drove overall revenue per available room (RevPAR) higher, Wong said. RevPAR climbed 9.9 per cent on the month to S$270.60 – a historical record – from August’s S$246.12. Year on year, it was up 14.8 per cent.

The latest figures came even as tourist arrivals continued to decline, falling for the second straight month to 1.13 million. “Given the influx of affluent leisure and business travellers due to the F1 (Formula 1) night race, hotels typically enjoy pricing power during this period, and are able to increase room rates accordingly,” said Wong.

He noted that ARRs rose across the board, recording double-digit percentage increases for luxury, upscale and mid-tier hotels month on month; economy hotels posted a single-digit percentage increase.

ARR for the luxury segment jumped sequentially to S$695.12. It was up to S$391.88 in the upscale segment, S$249.77 in mid-tier and S$162.16 in economy.

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F1 race organiser Singapore GP on Monday said that the early-bird tickets to its 2024 race have sold out, a month before the end of the promotional period. It has consequently moved up the sale of its regular-priced tickets to meet demand. Dedicated suites offered for next year’s race are almost fully taken up, it added.

Following September’s strong showing, Wong expects ARR to moderate to below S$300, in line with historical averages.

“A higher-for-longer interest-rate environment could eventually lead to travellers being more cost-conscious, despite the current travel boom,” he said. “Singapore, a high-cost travel destination in the region, has become more expensive, given the strong Singapore dollar and higher hotel rates. This could turn away budget-conscious travellers looking to stretch their dollar, or lead to shorter stays in Singapore.”

Based on STB’s data for the year to date, room revenue reached S$3.62 billion in September, surging 73.8 per cent from the corresponding year-ago period. ARR for the first nine months of 2023 gained 20.6 per cent to S$283.61; RevPAR rose 35.5 per cent to S$230.11; and the average occupancy rate grew 9 per cent to 81.1 per cent.