Singapore hotel rooms expected to increase 20 per cent by 2016 underpinned by healthy hospitality outlook

​Singapore, 14 March 2012 - Hotel room supply increased across Asia in 2011 with the addition of 42,368 new rooms in China, Hong Kong, Indonesia, Japan, Malaysia, Singapore, Vietnam, Thailand and Taiwan. The increase equates to 10.7 per cent over 2010. Supply hot spots in 2011 included Bangkok (2,570 rooms or 8.8 per cent), Bali (1,982 rooms or 8.5 per cent), Singapore (1,944 rooms or 4.9 per cent), Ho Chi Minh City (819 rooms or 8.4 per cent) and Hong Kong (1,914 rooms or 2.9 per cent).

In Singapore, CBRE Hotels’ latest analysis of hotel room supply indicates an increase in the number of gazetted hotels by 10 to 149 for the whole of 2011. Lion City Hotel and Copthorne Hotel Orchid Hotel closed in 2011, representing 607 rooms. New supply of hotel rooms in 2011 came mainly from V Hotel (888 rooms) and Oasia Hotel (428 rooms).

19 new hotels with approximately 4,028 hotel rooms are expected to enter the market by the end of 2013. Projects in the planning stage, on top of those announced, could add another 5,200 rooms by 2016. This brings the potential new supply to over 9,228 rooms providing an additional 3.4 million room nights per year by 2016, an increase of 22.4 per cent from 2011 figures. While some projects face the possibility of postponement or cancellation, majority of projects due to open by the end of 2013 are expected to proceed as planned.

Robert McIntosh, Executive Director, CBRE Hotels said “The demand for hotels continues to grow as Singapore offers a more diverse set of attractions and an increase in supply. Occupancy is likely to be maintained at a level which will enable operators to increase room rates.”

In Singapore, CBRE Hotels expects average room rates to increase between 5.0 and 10.0 per cent from 2011 levels. Average room rates islandwide increased 12.9 per cent year-on-year in 2011. According to data from STB, average room rates for upscale hotels made the greatest improvement with a 13.7 per cent increase in rates from $245 in 2010 to $278, largely due to the success of the two IRs in attracting visitors in the past year. CBRE Hotels anticipates islandwide occupancy levels to stay above 80 per cent and be in the range of between 83 to 86 per cent in 2012. These projections are published in CBRE Hotels’ latest report Asia Hotels Market View Q4 2011.

Mr McIntosh said “The projected average occupancy rate for 2012 is still indicative of a very busy year ahead for the hospitality market. Island-wide revenue per available room (RevPAR) grew 14.6 per cent last year to $212 and is expected to increase between 5.0 and 8.0 per cent this year. Upscale hotels, under which the two IRs are categorised, increased 16.5 per cent to $244 from $209 a year ago."

The market does face some uncertainty in 2012 reflecting the outlook for the global economy. The occupancy levels certainly support rises in room rates but the lower confidence levels amongst hoteliers will tend to temper these increases. The hotel industry statistics is not likely to experience the same situation as 2009 with a RevPAR decrease of 27 per cent, as Singapore has re-shaped its tourism industry to be less impacted by the global environment.

The economy is now expected to move on to a more stable growth path. As the Singapore economy remains largely unchanged structurally and continues to be open to the global market, it will continue to be exposed to fluctuations in global demand. The outlook for 2012 is uncertain in the current global economic environment. Singapore’s hospitality sector may be weakened this year due to the Eurozone crisis.

In terms of investment volume, Singapore was the most active hotel investment market after China in 2011 with eleven transactions representing USD$1.15 billion, accounting for 22 per cent of the total investment volumes in Asia. China accounted for 26 per cent. Although investment sales in Asia were impacted slightly due to the events in Japan in the first quarter, investment levels have risen sharply elsewhere, particularly in China and Singapore. Market fundamentals in the region remain positive and investors are still bullish on the major Asian cities.

The most important trend is the continual effort of the Singapore Government to diversify its offering in terms of cultural and business events, attractions, medical facilities, gaming facilities, shopping, exhibitions and conventions which led the country to record increased visitor arrivals - and extended length of stay on the island.

Mr McIntosh added “Hotel transaction volume across Asia Pacific is projected to reach US$5-6 billion in 2012, a level similar to 2011. Some long-term owners in Southeast Asian countries are reportedly looking to exit to redeploy their capital elsewhere and these could open up more buying opportunities for investors. Looking ahead, the prime hotel yields in Asia are likely to remain stable. Assets with a lower-risk profile will continue to be highly sought after by investors.”

About CBRE Group, Inc.

CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services firm (in terms of 2010 revenue). The Company has approximately 31,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.sg.

About CBRE Hotels

CBRE Hotels is the world’s leading, full-service, real estate advisory group focused exclusively on the hospitality industry. CBRE Hotels provides consultancy services for the sale, valuation, financing, development and asset management of hotels. Please visit our website at www.cbrehotels.com.