Following recent years of relatively stagnant performance, tourism arrivals in Singapore are expected to finally see an uptick on the back of a surge in intra-regional tourism, according to a new report from Colliers International, the commercial real estate services firm.
The first quarterly Colliers International Hotels Insight Report, which features major trends in destinations across Asia and highlights key industry disruptors, predicts that 2016 visitor arrivals have grown by around 7%, with a further 2% forecast for 2017.
In a Monday release, Colliers says these figures represent a “robust performance” for Singapore’s tourism sector, which is mostly underpinned by an increase in visitation from North Asia, in particular China.
The firm also notes that the city state’s hotels – especially hospitality REITs – have consistently outperformed other mainstream real estate assets.
Tourism arrivals to the Asia Pacific region were forecast by Colliers to grow by 9% in 2016, continuing from a steady period of growth which the firm says it has witnessed since 2010.
Colliers adds that it believes China’s continuing influence in the region will evolve in two ways, the first being the slowing of outbound tourism impact as China adjusts to new growth levels as it matures. Greater domestic travel within China is to be expected as the government curbs “conspicuous spending” with capital controls, whilst the yuan also remains relatively weak against the dollar.
Additionally, a ‘staycation’ effect is expected across a number of markets where the currency is relatively weak, and is already being witnessed in Japan, Malaysia and Indonesia.
“Intra-regional and domestic tourism continues to drive growth in the hospitality sector in Asia Pacific. This is evidenced by the fact that, of the top 10 source markets for travel in Asia, seven are from within the region,” comments David Faulkner, managing director of valuation and advisory services for Colliers International Asia.
“With increasingly favourable conditions in emerging markets across the region, such as ASEAN, these destinations are expected to continue to attract strong growth and provide the best opportunities for investors,” he adds.
Govinda Singh, director of valuations and advisory services for Colliers International Asia highlights emerging markets as an area that provides the best investment opportunities due to the continuing evolution of low cost carriers and the destinations they serve.
“The outlook for mature destinations isn’t as positive, with growth likely to remain low or even negative as markets peak and new supply enters the market. This will place pressure on room rates in the short term in particular as the new supply is absorbed, with owners paying more attention to who their operator is, or should be, in an effort to mitigate this,” says Singh.
This article first appeared in The Edge Singapore Market Report.