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Tourism receipts fall amid drop in business travel

SINGAPORE — With companies tightening their belts and cutting back on business travel, the Republic’s tourism receipts have taken a hit, falling last year for the first time in six years by 6.8 per cent to S$22 billion, according to the Singapore Tourism Board’s (STB) preliminary estimates.

Tourism receipts fall amid drop in business travel

A tourist posing for a photograph at the Merlion Park. TODAY file photo

SINGAPORE — With companies tightening their belts and cutting back on business travel, the Republic’s tourism receipts have taken a hit, falling last year for the first time in six years by 6.8 per cent to S$22 billion, according to the Singapore Tourism Board’s (STB) preliminary estimates.

While visitor arrival numbers to Singapore surpassed targets to reach 15.2 million, tourism receipts fell short of the official forecast of between S$23.5 billion and S$24 billion, with spending on accommodation seeing the biggest drop.

Anticipating economic uncertainty and regional competition, the STB is gunning to increase tourism receipts by 2 per cent this year to reach S$22.4 billion, and arrivals by 3 per cent to 15.7 million visitors, by counting on relatively bright spots like the Meetings, Incentive Travel, Conventions and Exhibitions (MICE) sector.  

Sharing the figures on Monday (Feb 29), the STB pointed out that spending by business travellers excluding sightseeing, entertainment and gaming was S$3.4 billion as of the third quarter of last year, down 14 per cent. In comparison, receipts from leisure travellers dipped by two per cent. Correspondingly, the number of business travellers fell by 6 per cent, and spending by each business traveller fell by 8 per cent. 

For STB-supported MICE events, there was a 0.3 per cent growth in arrivals, and receipts jumped by 4 per cent, bringing in about half a billion dollars last year.

STB chief executive Lionel Yeo said that while business travellers make up about a quarter of total arrivals, each spent about two times more than the average leisure visitor. “The fall in (business travellers) arrivals and spending due to companies cutting back on both travel and trip budgets has had a significant impact on our tourism receipts”, said Mr Yeo, adding that the STB has less control over such cutbacks by firms. Asked about the prolonged haze spell last year, the STB said it had no discernible impact on tourism. 

Mr Yeo also said the 2 per cent growth in leisure visitor arrivals last year, which helped offset the drop in business travellers, indicated “confidence that (Singapore) is still attractive as a leisure destination”. Investment in the cruise sector has also borne fruit with an increase in cruise arrivals, he said. 

Efforts to woo tourists from second-tier Chinese cities — China remains Singapore’s second biggest market for arrivals — also saw the numbers of such tourists rise 32 per cent to about 433,000, but this group also spends less than their first-tier counterparts. 

Last year, the STB embarked on a slew of initiatives, including a S$20 million global marketing campaign leveraging on the Republic’s Golden Jubilee year. 

Moving forward, Mr Yeo reiterated the need to focus on growing per capita expenditure by visitors. The STB has plans to expand marketing efforts into new cities in key markets like China and India and developing more cultural experiences for leisure visitors. On the MICE front, Singapore remains competitive, Mr Yeo said, noting that several events will take place here over the next few years. But the strong Singapore dollar might continue to weigh down takings, he said.

Receipts shrank the most for accommodation last year, falling 14 per cent as of the third quarter last year due to lower average hotel room rates, which fell 4.8 per cent to S$246. Six hotels opened last year, adding 3,736 rooms to the mix, and at least five more hotels are slated to open. Visitors also spent 7 per cent less on shopping, and 11 per cent less on sightseeing, entertainment and gaming. 

The top three markets in terms of spending is China, Indonesia and India, but all three groups spent less last year. Arrivals from China rose by over 20 per cent, but there was a 5 per cent dip in spending. 

Mr Song Seng Wun from CIMB Private Banking said STB’s targets were “conservative” in light of the economic outlook. While the STB has flagged bright spots in the cruise and MICE sector, he noted that Singapore does not present as the cheapest option to host large-scale business events. But with the currencies of Singapore and Malaysia — key markets for Singapore — stabilising, “fingers crossed that this will also lead to recovery for the tourism side”, said Mr Song.
OCBC Bank’s head of treasury research and strategy Selina Ling noted the pockets of growth that are driving travel such as the cruise sector and low-cost air carriers. “Everyone has benefited from the increase in appetite of Chinese travellers to see the world and I think the trend will continue,” she said.

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