Singapore hotels 51% full in Feb, room revenues drop 40%

Singapore

SINGAPORE hotels were only half-filled in February, resulting in a 40 per cent plunge in room revenues, as coronavirus fears threaten to bring the global travel industry to a grinding halt, according to data from the Singapore Tourism Board (STB).

The standard average occupancy rate in February 2020 was 51 per cent, a steep fall from 83.1 per cent in January, which saw little impact yet from the Covid-19 outbreak that was mostly confined to China. In contrast, the rate was 88.5 per cent in February 2019.

While the average room rate in February 2020, at S$230 per night, saw a 2.3 per cent year-on-year gain, the revenue per available room was down to S$117, representing a 41 per cent year-on-year drop, data from STB showed.

The drastic decline came at no surprise to market watchers. However, Jesper Palmqvist, area director for the Asia-Pacific at market research firm STR, said the fact that Chinese New Year took place in January in 2020 affected the numbers as well, since the festive season fell in February in 2019.

"In light of this, it is more relevant to compare in two alternative ways: January and February combined but also daily data comparing the time period since the outbreak, weighing in all significant dates," he told The Business Times.

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He noted that the occupancy rates for both January and February 2020 combined saw a 23.5 per cent decline in occupancy, compared to the same periods in 2019, whereas revenue per available room dropped 21.2 per cent over that same period.

According to STB data, large hotels, defined by STB as those with more than 300 rooms, appear to be the worst hit in occupancy rate at 51.4 per cent, representing a year-on-year drop of 39.5 percentage points. They also saw their revenue per available room sink 42.7 per cent year on year to under S$125.

Medium-sized hotels that have between 101 and 299 rooms were moderately affected in comparison, with a 35.4 percentage point drop in occupancy rate to 52.1 per cent. Their revenue per available room fell 36.3 per cent to S$114.

Small hotels, which have up to 100 rooms, had an occupancy rate of 46.2 per cent, which is 26.6 percentage points lower than a year ago. Revenue per available room for these hotels fell 30 per cent year on year to S$71.

STB data also suggests that upscale hotels saw the biggest drop in occupancy rate in February 2020, with a decline of 46.8 percentage points year on year. Revenue per available room fell 48.7 per cent year on year to under S$125.

Ian Loh, head of investment and capital markets at Knight Frank Singapore, said this could be because upscale hotels are more likely to see meetings, incentives, conferences and exhibitions (MICE) activities, and a cut back on such activities during this period could have led to them bearing the brunt.

These statistics came ahead of widespread border closures and national lockdowns across the world, as it was in March that the Covid-19 outbreak was declared a global pandemic by the World Health Organization.

Market watchers agree that occupancy and revenue are likely to be slashed further in March and April. Singapore began barring all short-term arrivals from March 25. However, a measure to place all returnees to Singapore from the US and UK on 14-day Stay Home Notice at hotels from March 26 could bring a new stream of guests to hotels.

Even at about 1,200 returnees a day however, both Mr Loh and Mr Palmqvist think any boost to the industry will be minor. Mr Palmqvist said: "In terms of boost, there will be a little bit since the overall actual levels are low at the moment, but (it's) likely not enough to offset general declines."