Singapore’s Hotel Market Thrived as Travel Rebounded in 2022

As COVID-19 travel restrictions eased in 2022, Singapore’s hotel market experienced a significant resurgence. Investors increasingly focused on the mid-market segment, driven by changing consumer habits and the potential for property conversions.

Rising Interest in Mid-Market Hotels

In the first half of 2022, Singapore recorded US$899.7 million in hotel transactions, predominantly in the mid-market segment. Noel Neo, head of Singapore mid-markets at JLL Hotels & Hospitality Group, stated, “Investors are taking a long-term view on changing consumption habits and new conversion opportunities available to operators. The pandemic highlighted the sector’s role in accommodating longer-term stays, leading to a broader push to transform properties into co-living spaces.”

The trend towards co-living conversions was evidenced by LHN Group Four Star’s joint venture under the Coliwoo brand and SLB Development’s partnership with Weave Living to convert Hotel Clover in Jalan Sultan into a co-living property.

Continued Focus on Luxury Hotels

Despite the growing interest in mid-market hotels, the luxury segment remained significant. HVS reported that 14 additional hotels with 3,443 keys were slated to open in Singapore by 2026, with four hotels with 663 keys set to open by the end of the year. Notable luxury openings in 2022 included The Singapore Edition, Raffles Sentosa Resort & Spa, and Pan Pacific Orchard.

Craig S. Smith, Asia Pacific president & managing director of Marriott International, commented on The Singapore Edition: “Singapore is one of the most important business and travel hubs in Asia Pacific and the world. We are very excited to enhance our luxury hotel portfolio and bring more options to this vibrant city.”

Impact of Eased Restrictions

The reopening of international borders significantly impacted Singapore’s hotel market. HVS reported a year-on-year drop in occupancy by 2.6 percentage points due to the end of quarantine stays. However, room rates and revenue per available room (RevPAR) increased by 77.3% and 70.6% year-on-year, respectively, with Bloomberg noting that room rates reached a decade high.

Douglas Louden, senior asset manager at Global Asset Solutions, noted, “April saw Singapore open its borders to fully-vaccinated travelers, boosting travel numbers and returning hotels to traditional operations. A shortage of labor is putting pressure on hotels, particularly in the luxury segment, creating a greater need for operational expertise.”

Visitor Numbers and Future Outlook

By June 2022, Singapore saw 1.71 million arrivals, up 773.8% from the previous year. The Singapore Tourism Board forecasted 4 million to 6 million visitors for the full year. While domestic deals were prevalent, Singapore also made significant investments in the global hotel market. For example, sovereign wealth fund GIC purchased a stake in Greece’s Sani/Ikos Group, valuing the luxury resort group at €2.3 billion.

Conclusion

As travel returned in 2022, Singapore’s hotel market thrived. With a focus on mid-market conversions and luxury hotel expansions, the sector was poised for continued growth. Investors viewed Singapore’s hotel market as a long-term prospect, underscoring the resilience and potential of the industry.