The easing of Covid travel restrictions has meant growth for Singapore’s hotel market, with investors also showing increasing interest.

Transactions have favoured the mid-market segment, while operations remain under pressure because of the straitened labour market.

JLL reported that the island had recorded US$899.7m in hotel transactions in the first half of the year, with the mid-market seeing the bulk of the deals.

Noel Neo, head of Singapore mid-markets, JLL Hotels & Hospitality Group, said: “Singapore’s mid-market hotel segment is firmly on investors’ radars as they take a longer-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, and we see a broader push from the mid-market space to transform properties into co-living spaces.”

Return of travel bolsters Singapore
The trend of co-living conversion was highlighted by the launch of LHN Group Four Star’s joint venture under the Coliwoo brand and the more recent partnership between SLB Development and Weave Living to convert the Hotel Clover in Jalan Sultan into a co-living property.

Despite the growing interest in the flexible mid market, there was continued focus on the luxury sector, as part of wider supply increases. HVS reported that 14 additional hotels with 3,443 keys would open in Singapore by 2026, with four hotels with 663 keys due to open by the end of the year. Openings this year in the luxury segment include The Singapore Edition, Raffles Sentosa Resort & Spa and Pan Pacific Orchard.

Commenting on The Singapore Edition, Craig S. Smith, Asia Pacific president & managing director of Marriott International, said: “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.”

As of YTD June 2022, HVS reported that Singapore hotels saw a year-on-year drop in occupancy by 2.6 percentage points, as it was no longer benefiting from the quarantine market. Once the international border re-opened, the room rates and revpar increased by 77.3% and 70.6% year-on-year respectively, with Bloomberg reporting in September that rooms had reached a decade high in terms of rate.

Douglas Louden, senior asset manager, Global Asset Solutions, said: “April saw Singapore open its borders to fully-vaccinated travellers, with limitations on group gatherings also lifted. As one would expect, this has meant a boost to travel numbers, with hotels returning to traditional operations after years of quarantine service.

“A shortage of labour is putting pressure on hotels, particularly in the luxury segment, creating a greater need for operational expertise. Rates are rising, but so are the demands of guests, freed to travel for the first time in a long time and meeting their needs and the requirements of the owners will be a challenge as the region reopens.”

For YTD June 2022, Singapore saw 1.71 million arrivals, up 773.8% on the year, with the Singapore Tourism Board forecasting 4 million to 6 million visitors for the full year.

While investors are looking at domestic deals, the growing move into the mainstream of hotels as an asset class has seen Singapore making investments in the global hotel market. Most recently sovereign wealth fund GIC purchased a stake in Greece’s Sani/Ikos Group. The deal that valued the luxury resort group at €2.3bn, one of the biggest deals in Europe since the start of the pandemic.

With GIC committed to viewing hotels as a long-term prospect, many are now viewing Singapore’s hotel sector the same way.