Throughout the first month and change of 2025, hotel demand is up in Singapore but constraints on labor and rates are putting profitability under pressure.
Speaking on the latest episode of the Hotel News Now podcast, Jesper Palmqvist, STR's senior director of Asia-Pacific, said profit margins were down 3% to 4% in Singapore this past year while most Southeast Asia markets were able to grow margins.
"Singapore can maintain the [gross operating profit per available room] because of the rates holding and growing, but margin was dropping," he said. "That's not the same everywhere. It's very evident, and you see it's still happening this year."
The Marina Bay market has been the top performer so far in Singapore to date, he said.
There's been a lot of talk about growing outbound demand from Indian travelers this year. While there is something to the idea that markets such as Vietnam, Thailand, Malaysia and Singapore will be vying to capture that demand, it isn't as if the demand is going to explode in a month, Palmqvist said.
"It is a long-term, concerted effort ... as with everything in this region, it has to start with the flights and flight capacity," he said. "It's about countries and markets expanding and investing in the airports, the usual stuff, and making sure that you have airlift from second-tier Indian cities and gateway cities because it's not going to boom up and grow by 50% in a month."
Other topics discussed on this week's episode include:
- Indonesia's hotel industry.
- Palmqvist's expectations ahead of attending the Asian Hotel Industry Conference & Exhibition in Singapore.
- How U.S. tariffs will affect Asian markets.