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Singapore’s international visitor market, which continues to be dominated by visitors from China and Indonesia, grew by 6.2% to 18.5 million in 2018, according to data released by the Singapore Tourism Board. Visitor arrival growth rates varied widely for Singapore’s Top 12 inbound markets in 2018, ranging from 13.7% for the USA to -0.3% for South Korea.

Growth rates for the other Top 12 markets were: UK (13.5%), India (13.4%), Vietnam (11.3%), Malaysia (7.3%), China (5.8%), Philippines (5.7%), Japan (4.6%), Thailand (2.7%), Australia (2.3%) and Indonesia (2.3%).

China overtook Indonesia in 2017 as the largest inbound market for Singapore as illustrated in the graph below. Over the past five years the fastest growing inbound markets for Singapore were Vietnam, India, China and South Korea which grew by a CAGR of 9.2%, 9.1%, 8.5% and 5.9% respectively. The markets of Japan, Australia, Malaysia and Indonesia experienced marginal declines with CAGRs of -0.4%, -0.3%, -0.1% and -0.1% respectively.

Source: Singapore Tourism Board

Just over 80% of Singapore’s inbound international visitor market is derived from twelve markets as illustrated in the table below. While arrivals from China, Singapore’s largest market grew by 5.8% to 3.4 million in 2018, we forecast a decline of 2.9% in 2019 to 3.3 million. A potential slowdown in China’s outbound travel market is likely to occur as a result of trade tensions with the U.S. China’s slowing economy is also likely to take its toll on visitor numbers to Singapore and other ASEAN countries.

2018 & 2019 Visitor Statistics for Singapore’s Major International Visitor Markets

Source: Singapore Tourism Board & Hotel Investment Strategies, LC

International visitor arrivals grew by 6.2% in 2018, following a similar growth rate of 6.2% in 2017. In fact, the long-term (2008-2018) CAGR for international arrivals is 6.2%. Based on our univariate forecasting technique using Box-Jenkins with log transform, we forecast a growth rate of 2.5% to reach 19 million visitors in 2019 and 5.7% to reach 20 million in 2020.

Given the historical volatility in the growth of international visitors to Singapore, there is a 4.5 million spread between the 15% lower confidence limit and 85% upper confidence as illustrated in the following graph.

Historical & Forecast Growth in International Visitors to Singapore

Source: Singapore Tourism Board & Hotel Investment Strategies, LLC.

The hotel industry performed well in 2018, with all major indicators exhibiting growth. Total gazetted room nights grew by 6.5% to reach 18.2 million in 2018 while hotel occupancy rose by 1.2 percentage points to 86% as illustrated in the graph below. The average occupancy for luxury hotels rose 2.4 percentage points to 87.3%.

Historical & Forecast Hotel Room Occupancy Rate for Gazetted Hotels In Singapore 2007-2020

Source: Singapore Tourism Board & Hotel Investment Strategies, LLC

The average daily room rate (ADR) increased by 0.9% to reach $219.14, while RevPAR increased 2.4% to reach $188.57 in 2018. The ADR is forecast to grow 3.2% to reach $226.17 in 2019 as illustrated below. Given the historical volatility of ADR there is a $36.55 spread between the 15% lower confidence limit and the 85% upper confidence limit in 2019 as illustrated.

Historical & Forecast Average Daily Rate for Gazetted Hotels in Singapore 2007-2020

Source: Singapore Tourism Board & Hotel Investment Strategies, LLC

Despite the challenges facing Singapore’s tourism industry in 2019, including increased regional competition and uncertainty surrounding the global political and economic environment, we anticipate moderate growth from some of the city-state’s largest markets including India (3.2%), Malaysia (4.0%), Philippines (7.4%) and USA (6.6%).

Please feel free to download a complimentary copy of our report, “Short-Term Forecasts of Visitor Arrivals in Singapore, 2018-2020”, which will be updated in the next couple of months.