Chart of the Day: Hotel supply predicted to spike 5-6% in 2013-15

Competition seen to tighten.

According to Macquarie Research, in the face of sizeable supply growth of 6.2% in 2013, RevPAR has held up well with a decline of 1.7% YTD as hoteliers reduced average daily rates to capture the strong tourist arrivals.

Here's more:

Although 2014 will see a more manageable supply increase of 5.3%, we think newly-opened hotels in 2013 will continue to offer preferential rates through 2014, due to rising competition and the typical gestation period of 12-18 months.

Demand for room nights could grow at a more moderate pace, as average length of stay becomes shorter due to the strengthening SGD, ASEAN’s weakening economic fundamentals and lack of major novel attractions in Singapore.

This should result in RevPAR decline of 1.5% in 2014, an improvement over 2013’s -2.0%. Upside risk to our forecast is from tourist arrivals, with our sensitivity analysis implying additional RevPAR growth of +1.6%pt for every 1% increase in visitor arrivals.

Macquarie predicted that Singapore's hotel supply will grow at sizeable 5-6% in 2013-15.

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