SINGAPORE – Average hotel room rates hit a 14-year high in September, on the back of the return of the likes of the Formula One race and a slew of major Mice (meetings, incentives, conventions and exhibitions) events.

According to data from the Singapore Tourism Analytics Network, room rates hit $283.47 a night in September, and remained in the $280 range in October. Figures for November are not yet available.

The previous highest average room rate was in September 2008 – the year of the first Singapore F1 night race – when prices hit $298.65.

Average room rates are a function of demand and supply, as well as the hotels having to balance operating costs, said Mr Benjamin Cassim, a senior lecturer for the diploma in hospitality and tourism management at Temasek Polytechnic.

Other experts, such as Mr Paul Kent, partner for advisory at KPMG in Singapore, said the high average hotel room rates in September and October were likely due to the F1 race and the influx of more affluent and luxury profile travellers visiting the country.

He said that while room rates peaked, hotel occupancy rates also rose, climbing from 78 per cent in the first quarter of 2022 to 84 per cent in the third quarter of 2022.

“There should not be a concern in tourism recovery (despite the high average room rates) since Singapore is among the top performing countries on a revenue per available room basis,” said Mr Kent.

“Hence, we see tourism recovery as likely to remain sustainable and gradually progress over the next few years, since Singapore has plans to draw both business and leisure travellers.”

With 5.37 million visitor arrivals as at the end of November, Singapore is already within the Singapore Tourism Board’s (STB) projection of four million to six million visitor arrivals by the year end. However, this figure is still a fraction of the pre-pandemic high of 19.1 million arrivals in 2019.

While Covid-19 played a major role in the steep drop in Singapore’s tourism visitor arrivals this year, Mr Cassim said that factors such as Russia’s ongoing war with Ukraine, steep decreases in airline capacities and a preference for shorter-haul travel within Europe and the United States have also contributed to the decline.

However, he noted that the pandemic has provided Singapore with an opportunity to rethink the type of international visitors the Republic should be attracting, and align visitor experiences with more discerning visitor market segments who are prepared to pay to visit the Republic.

“It’s not really about hitting the over 20 million visitor arrivals again, but rather drawing in the relevant visitors into Singapore who will ultimately find value in the experiences they enjoy while here,” he said.

“This could well mean having optimal visitor arrivals at a number below the 20 million mark, and yet seeing much higher tourism receipts.”

Singapore is already on track to cater to such newer and potentially higher-value market segments, with STB positioning Singapore as an urban wellness destination, he added.

As for the business travel segment, Mr Kassim noted that Singapore’s strong position as a global business events destination and Asia-Pacific hub is enough reason for business travellers to make the trip to Singapore.

KPMG’s Mr Kent said that tourism recovery is still dependent on several larger factors, including ongoing geopolitical tensions that could further trickle down and destabilise and slow down the economy. This, in turn, could impact travel and tourism.

Labour supply also remains an issue within Singapore’s tourism industry. Mr Kent noted that while the total Singapore employment rate grew in the third quarter of 2022, signs in the job market indicate this momentum is slowing down.

He added: “Challenges do remain, such as a shortage of labour across the (tourism and hospitality) sectors, placing pressure on the industry. The ongoing recruitment and training of workers are therefore critical to ensuring that recovery remains on track.”

Ms Kwee Wei-Lin, president of the Singapore Hotel Association (SHA), which represents 160 member hotels here, said: “Despite the industry’s operational challenges, like rising business costs due to increased energy and food prices, as well as a tight labour market, we are prepared, as Covid-19 has taught us invaluable lessons on adaptability, resilience and being future-ready.”

The hotel industry, for one, has learnt to be resilient and to adapt, both during the slowed down influx of visitor arrivals amid the pandemic and after borders fully reopened.

“Our members have taken advantage of the downtime to upgrade their facilities, introduce creative travel experiences and upskill the workforce,” said Ms Kwee.

Hotels have also refreshed their offerings and aligned practices and processes with the latest sustainability trends.

“SHA’s general outlook for 2023 is one of cautious optimism for sustained tourism recovery supported by a healthy pipeline of Mice events and elevated tourism offerings,” Ms Kwee said.

“We are confident that travel is here to stay as it has become an integral part of our lives... This is evidenced by the strong recovery fuelled by revenge travel and pent-up demand after the pandemic,” she added.

“However, if key markets remain closed next year, it will be hard to reach 2019’s visitor arrival numbers.”