STB forecasts 15-16m arrivals in 2024, short of 2019’s 19m

There’s much reason to celebrate within Singapore’s tourism industry as Lunar New Year approaches on Febuary 10. The destination saw a 115% increase in the number of visitors last year, from 6.3m in 2022 to 13.6m in 2023, which fell within the forecast set by Singapore Tourism Board of between 12m and 14m.

Tourism receipts fared even better – they are expected to register S$24.5b to S$26b for 2023, which exceeds STB’s forecast of between S$18b and S$21b, about 88 to 94% of 2019 levels.

But murmurings are rippling through the industry of a softening this year and that full recovery to pre-pandemic levels (if that is still the benchmark being used) will not happen now till 2025. The 2023 performance is about 71% of the 19m number in 2019.

The STB said that international visitor arrivals are expected to reach around 15 to 16m in 2024 – short of 2019’s 19m number – bringing in approximately S$26.0b to S$27.5b in tourism receipts.

Strong demand from a mix of Singapore’s key markets, led by Indonesia (2.3m), China (1.4m) and Malaysia (1.1m) drove the 2023 recovery, while other key markets included Australia, South Korea, and the US.

While the STB says it expects the tourism sector’s recovery to continue in 2024, driven by improved global flight connectivity and capacity as well as the implementation of the mutual 30-day visa-free travel between China and Singapore, there are signs on the horizon that it will be a bumpy year for Singapore, with STB citing geopolitical uncertainty, the state of the global economy and other factors such as the continued restoration of flight connectivity.

Said Brendan Sobie of Sobie Aviation, “The reason why STB is no longer expecting a full recovery in 2024 is the inbound market weakened in the last few months of 2023. The inbound market was 81% recovered in the third quarter but this slipped back to 76% in the fourth quarter.

“The recovery rate of the inbound market from China slipped from 65% in the third quarter to 54% in the fourth quarter.”

Sobie said that while it is true that flight capacity is continuing to increase and is approaching pre-pandemic levels for the majority of source markets, “inbound is the weakest of the three segments of the aviation market here. Outbound (Singapore residents traveling overseas) and transit is stronger than inbound. For example even Singapore-China capacity is now fully recovered but Chinese visitor numbers will likely remain well below 2019 levels even with the visa-free policy. It is not a supply issue at this point. It is a demand issue.”

Sobie cited Japan as an example. “The overall Singapore-Japan market is fully recovered as Japan is such a hot destination for Singapore residents, but the Japanese are just not traveling here. In the fourth quarter of 2023 the inbound market from Japan was just 52% recovered. This is down from an already weak 61% in the third quarter. We all know about the Japanese not going overseas as much but for Singapore, it’s getting worse not better.”

Said STB chief executive Melissa Ow, “To sustain our growth in 2024 and beyond, STB will focus on achieving quality tourism, cultivating strategic partnerships, investing in new and refreshed products and experiences, and supporting stakeholders in building capabilities.”

Among initiatives the STB has taken to drive demand, other than continuing to push its MICE sector, is its partnership with Disney Cruise Line to make Singapore the exclusive home port for its new Disney Cruise Line vessel for at least five years from 2025. It also introduced new attractions and enhanced experiences in 2023 including Go-Kart at Sentosa, Bird Paradise, and the world’s first surf-snow-skate attraction Trifecta. CNA

But the question is, whether these are enough to drive demand in an increasingly competitive climate where the costs of visiting Singapore have become prohibitive for most of its regional neighbours, which form the bulk of its arrivals.

Chan Chee Chong, CEO and co-founder of GlobalTix, pointed out that with rising prices, Singapore would probably still stay strong and relevant for business/corporate trips. “However leisure trips might be the sector that is most affected. The other point could be surrounding regions are starting to give visa-free (to markets like China) to give their tourism sector a boost. That might affect Singapore but we will only know months down the road.”

The hospitality sector fared well in 2023. Average Room Rate (ARR) and Revenue per Available Room (RevPAR) surpassed 2019 levels, reaching $282 (~128% of 2019 ARR) and $226 (~118% of 2019 RevPAR) respectively.

“A 128 per cent of 2019 ARR is actually a massive increase in yield,” pointed out Chan.

Arthur Kiong, CEO of Far East Hospitality Management, in his LinkedIn post, raised his concern over the lower forecast for 2024 and how it might impact hotels. He said the number of visitors projected – 15-16m as opposed to the 19m expected – was significant “because we built a lot more hotels and added over 4,000 hotel rooms in Singapore over the last four years. Or, to put it another way, that’s 1,500,000 more room nights to fill this year.”

While some might say “that’s good” and “when hotel rates fall, we may attract more visitors to Singapore”, Kiong said the problem is “when hotel rates fall, hotels – due to cost inflation – may not be able to afford wages that are attractive enough to retain Singaporeans in our sector.

“Without a strong Singapore core, hotels will not have a sufficient quota to hire the foreign workforce to perform critical jobs that Singaporeans shun, like housekeeping, for example.”

Meanwhile, Trip.com Group released some interesting data insights showing that the top 10 origin locales for all bookings in Singapore made on its platform were, in order, Hong Kong, Malaysia, US, UK, Thailand, South Korea, Japan, Indonesia, Australia and Taiwan. The top 10 origin cities for all flight bookings in Singapore on its platform were Kuala Lumpur, Bangkok, Hong Kong, Penang, Taipei, Jakarta, Bali, Ho Chi Minh City, Seoul and Manila.

And the average booking window for all flight and hotel bookings in Singapore on Trip.com Group’s platforms was 27.17 days.

Read into those what you will but the reality remains, it will be a challenging year for Singapore inbound as the sector grapples with rising costs amid dampening demand, set against an uncertain global economic and political backdrop.