Hotels get Crazy Rich Asians boost

Raffles Hotel, which was featured in the Hollywood hit movie Crazy Rich Asians, is due to reopen next year after a refurbishment. Average occupancy rates in Singapore hotels touched 87 per cent this year, the highest in a decade, property firm Cushma
Raffles Hotel, which was featured in the Hollywood hit movie Crazy Rich Asians, is due to reopen next year after a refurbishment. Average occupancy rates in Singapore hotels touched 87 per cent this year, the highest in a decade, property firm Cushman & Wakefield said. Revenue per available room rose 4 per cent to $190.40 through October from a year earlier, reversing years of declines.ST FILE PHOTO

After Singapore's residential and office markets made comebacks, the next property sector to bet on might just be its hotels.

The hotel industry is heading into the new year in good shape after boosts to visitor arrivals from the Trump-Kim summit and romantic comedy Crazy Rich Asians.

Average occupancy rates touched 87 per cent this year, the highest in a decade, property firm Cushman & Wakefield said.

Singapore's hospitality sector is in a "sweet spot", according to Mr Vijay Natarajan, an analyst at RHB Research Institute Singapore. His top pick is CDL Hospitality Trusts, a real estate investment trust.

Occupancy rates climbed across luxury, upscale, mid-tier and economy rooms. Revenue per available room rose 4 per cent to $190.40 through October from a year earlier, reversing years of declines. Average daily room rates inched higher for all but luxury accommodation.

OCBC Investment Research upgraded Singapore's hotel Reits to "overweight" from "neutral" this month on expectations of strong growth in revenue per available room this quarter and next year. The top pick was OUE Hospitality Trust.

Crazy Rich Asians delivered a promotional boost to the industry this year by showcasing the likes of Marina Bay Sands and Raffles Hotel, the iconic colonial-style hotel where the Singapore Sling was invented. (Raffles is due to reopen next year after a refurbishment.)

A plethora of events, including an air show and the Asean summit, swelled arrivals. International visitor numbers rose to a monthly record of 1.7 million in July.

"Visitor arrivals have started to trend upwards in recent years", fuelled by China, Indonesia and India, said Mr Zhang Jiahao, manager of CBRE Hotels for Asia Pacific. "Backed by increased flight and cruise connectivity to Singapore, visitor growth is projected to remain strong in the coming years."

To be sure, the headwinds could include slower global economic growth and the US-China trade war.

However, in a positive sign for operators' revenue, the supply of new rooms is growing at a much slower pace after the Government sold less land for hotel developments.

Cushman forecasts an average of 764 extra rooms per year from 2018 to 2022, down from 3,357 annually between 2014 and 2017.

And the industry is also spreading its net wider, targeting locals for "staycations". Far East Hospitality Holdings is among firms opening mid-tier hotels that may appeal to this segment of the market.

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A version of this article appeared in the print edition of The Straits Times on December 20, 2018, with the headline 'Hotels get Crazy Rich Asians boost'. Print Edition | Subscribe