Phocuswright’s special series “Covid-19 Hotel Forecast: Singapore” has cited Singapore as “an excellent example of how the hotel industry is impacted by the interplay of viral spread, government policy and social behavior – both at home and outside its borders.”
Yet, the unpredictable course of the virus has led to new uncertainties in the hotel sector’s timeline for recovery as Singapore faces a new surge in cases and new “circuit breaker” measures that suspend all non-essential travel and services in the city.
In an analysis conducted by Phocuswright and LodgIQ, the impact of Covid-19 on Singapore’s hospitality market was evaluated on:
- Level of disruption
- Duration of disruption
- Shape of its recovery curve
A broad look at Singapore’s Covid-19 timeline demonstrated its swift response to the outbreak – drawing lessons from its previous experience with SARS – that seemed to slow its spread.
Expectedly, the increase in cases led to a drop in hotel demand and RevPAR, similar to other destinations. However, the report highlights that the Singapore market was unique in how it has incorporated the hotel sector into its recovery strategy.
Singapore has used hotels to serve as quarantine quarters for those serving “Stay Home Notices” – block-booking over 7500 rooms across multiple properties, with contract varying in length but continue through May and June.
This has had a profound impact on local hotel occupancy, keeping the group segment afloat. In fact, the report states that while Singapore’s April group occupancy percentage is predicted to be in the low double digits, it exceeds total occupancy for most international gateway cities. It has had the added effect of levelling the decline in RevPAR change as the number of Covid-19 cases increases.
Based on the March 1 forecast, the report stated, “Incorporating the group bump, the model forecasts April RevPAR to fall approximately 75% compared with 2019, driven by a 62% YoY drop in occupancy coupled with a 33% YoY decline in average daily rate.” May and June are predicted to see a RevPAR decline of roughly 69% and 45% respectively.
However, the lasting impact of Singapore’s recent “circuit breaker” policy (introduced April 7) – suspending all non-essential travel, services and ‘socialising’ following a surge in cases – remains uncertain.
“With the government contracting of group rooms, there may be less pressure on some hotels to close, but none are allowed to accept transient reservations during the duration of the circuit breaker.”
Looking specifically at hotel occupancy, the report revised its original projections from March 1 where it predicted a rate of 42% in April, with signs of recovery in May (48%) and June (65%) to a further drop. The latest forecast predicts April could see occupancy drop to 31% in April, and a further decline in May (28%), before a potential increase in June (48%).
The analysis will continue to monitor the following as time goes on:
- Active cases and mortality rates
- Test counts per million
- Government travel policies
- Stock market and volatility indexes
- Unemployment rates