Singapore hotels’ average room rate recovers from March slip, gains 3.3% in April

SINGAPORE hotels’ average room rate (ARR) and revenue per available room (RevPAR) inched up in April after March’s dip, even as overall room revenue – which had reached a four-month high in March – and average occupancy rate slipped slightly.

ARR gained 3.3 per cent in April to S$273.18, from March’s revised S$264.55, Singapore Tourism Board (STB) data showed on Thursday (Jun 1). This was slightly lower than the rates recorded in January (S$273.96) and February (S$278.01).

On the year, ARR was up 32.8 per cent. On Apr 1 last year, the Vaccinated Travel Framework was introduced, removing Stay-Home Notice and on-arrival Covid-19 test requirements for fully vaccinated travellers, to ease their entry into Singapore.

The removal of Covid testing requirements was extended to non-fully vaccinated visitors on Apr 26, 2022.

“The biggest story remains that from September last year, rates are much, much higher than they historically were,” said Jesper Palmqvist, area director for Asia-Pacific at hotel industry research firm STR, noting that the hotel market’s ARR is about S$60 higher than during the 2015 to 2019 period.

In April 2023, RevPAR edged up on the month by 0.6 per cent to S$212.69, from March’s S$211.38. It was up 55.8 per cent on the year.

The latest figures came as tourist arrivals surpassed one million for the second straight month, for the second time since the pandemic began in 2020.

Overall room revenue slid 0.6 per cent to S$368 million, from S$370.1 million recorded in the preceding month – which had been the highest level since November 2022. However, it more than doubled year on year.

“The fall in overall room revenue was driven by the economy and mid-tier hotels, which both declined month on month,” said Cushman & Wakefield head of research Wong Xian Yang.

This was in contrast with the performance of luxury and upscale hotels, where overall room revenues increased sequentially in April, driven by increased demand from business travellers and tourists willing to spend on better accommodation, he added.

Wong said the trend of consumers spending more on experiences rather than goods, “coupled with continued ‘revenge travel’ has fuelled demand for luxury and upscale hotels”.

ARR generally improved across hotel categories in April, with the mid-tier segment being an exception. It was up to S$579.82 in the luxury segment, S$324.27 in upscale and S$143.62 in economy. The mid-tier segment recorded a fall on the month to S$210.05.

At 77.9 per cent, April’s average occupancy rate edged down sequentially, from 79.9 per cent previously, and under the pre-pandemic rate of 83 per cent in January 2020. But on the year, it was 11.5 per cent higher.

Citing STR data, Palmqvist said: “Occupancy dropped about 10 percentage points from when Ramadan started to when it ended” – from mid-March to mid-April.

But he was sanguine about the fall, adding that average room rates in that period were up, driven mostly by high-end hotels.

Traditionally, occupancy rates in Singapore were in the mid-80 per cent, he noted.

“The missing piece is still long-haul, wide body aircrafts bringing in more Europeans and Australians,” said Palmqvist, adding that short-haul flights on smaller planes have “pretty good capacity”.

“When we get that back, we’ll get those last few points in occupancy, and rates are going to stay up at that shelf where they are.”

Based on STB data, in the year to date, room revenue reached S$1.41 billion in April, surging 161.4 per cent from the corresponding year-ago period. ARR for the four months, at S$272.21, gained 40.4 per cent; RevPAR rose 76.1 per cent to S$211.85; and average occupancy rate grew 15.8 per cent to 77.8 per cent.