Hotel revenues, occupancy rates at risk from looming room glut

RevPAR will decline by 5%.

Hotel revenues and occupancy rates are at risk from a looming room oversupply. DBS estimates that the number of hotel rooms will increase 5.7% in the first half of the year, which will cause revenues to decline by 5%.

The report noted that revenue per available room (RevPAR) is expected to decline to $208, on back of a 200bps decline in occupancy to 83.4% and a 3% decline in average daily rate (ADR) to $250.

“Based on a stable average length of stay of 3.7 days and 3,258 net rooms to be added in 2015 (5.7% y-o-y growth), we project 12% y-o-y decline in RevPAR to S$194 if there is no recovery and Singapore registers 15.1m visitors in 2015, the bottom end of the government’s target,” stated DBS.