Business travel is expected to grow about 3% annually through 2020

Businesses spent more than US$28 billion (38 billion Singapore dollars) on travel to, from and within Singapore in 2017. Inbound trips consistently account for two-thirds of total spending on business travel; outbound travel makes up 29%. The domestic segment is less than 5% of total spending, and outlays in the local currency remained essentially flat between 2012 and 2017. Industry economists foresee business travel growth of almost 3% annually through 2020, as international travel strengthens. Domestic travel is expected to expand more than 7% per year.

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Economic environment

Economic growth and business travel spending

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  • Singapore’s economy is influenced mostly by external forces. Its goods and services exports make up most of its gross domestic product (GDP).
  • The economy expanded 4.2% in the first half of 2018, but it’s slowing as the manufacturing sector loses momentum. Economists predict annual of 3% this year.
  • The forecast for 2019 is growth of just 2.4% because of softer demand from China and the effects of global trade protectionism.
  • Domestic demand is unlikely to help; higher oil prices and rising interest rates are offsetting improvements in Singaporeans’ household spending power.

Air

International travel

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  • International travel expanded, on average, 2.2% per year between 2012 and 2017.
  • Departures accounted for 55% of the 38 million international trips made in 2017. Outbound travel is expected to grow almost 8% annually through 2022, while a arrivals will hold steady—growing at around 3% per year.
  • China has replaced Indonesia as the top source of visitors to Singapore, now accounting for 22% arrivals.
  • Malaysia is the most popular destination for Singaporean travelers, accounting for 61% of their outbound travel in 2017. This share likely to stay steady through 2022.
  • Singapore’s air travel market is competitive, with more than 70 airlines flying to the country. But its main Changi Airport is dominated by SIA Group, comprising full-service Singapore Airlines, regional carrier SilkAir and low-cost carrier Scoot. Together, these three airlines account for 47% of all departing flights.
  • SIA Group increased its market share by one percentage point—to 54.4%—during the first eight months of 2018.

Accommodation

Hotel demand

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  • Hotel demand increased 25% between 2012 and 2017, averaging a 4.5% annual increase. That’s expected to weaken to 2.2% growth per year through 2022.
  • International travelers drive demand, consistently accounting for more than 90% of room nights.
  • Indonesian budget brand Zen Rooms, with 34 hotels, has the most properties in the Singapore market.
  • The next two largest chains—Global Premium Hotels Ltd and Hotel 81—are based in Singapore and operate in the same economy segment as Zen Rooms.
  • AccorHotels is the largest global chain; its 15 hotels span all service levels except economy.
  • Local chains Far East Hospitality, Pan Pacific Hotels and Aqueen Hotels & Resorts may appeal to some business travelers. Most properties offer upscale or upper upscale service.
  • Average daily rates should rise 0% to 2% in 2018 and 2019, according to BCD Travel’s 2019 Industry Forecast.


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