Singapore Tourism Report Q2 2008

Core Forecasts BMI's forecasts for 2007 tourist arrivals were spot on, with the city state welcoming 10.3mn tourists over the year, in line with our expectations. This represented a new record for Singaporean tourism and bodes well for 2008 being another year of strong growth, especially with the city state hosting its first ever Formula One Grand Prix in September. Tourism revenues for the year stood at SGD13.8bn, an increase of 11.3% year on year (y-o-y).

Indonesia (1,956,000 visitors), China (1,114,000), Australia (768,000), India (749,000) and Malaysia (646,000) were the top five source markets for Singaporean tourism across 2007. These five markets accounted for some 51% of total arrival numbers.

Given the continued strong performance of Singapore's tourism sector, we are happy to maintain our tourist arrivals forecasts at present. By the end of our forecast period, in 2012, we predict that annual visitor arrivals will be running at 13.9mn. Foreign exchange receipts are expected to register US$14.9bn in 2012. We expect annual departures of 5.9mn by 2012, with a steady growth rate of around 5%.

New Section On Cruises BMI is pleased to announce the addition of a new section to its Singapore Tourism Report for Q2 2008, on the outlook for cruise tourism. Singapore is a major cruise terminal and in late January 2008, the government announced plans for a new two-berth terminal that will double its existing cruise ship capacity. The two berths at the new International Cruise Terminal will be able to accommodate the world's largest cruise ships and should do much to help the city state meet its ambitious target of achieving 1.6mn passenger throughput by 2015 Grand Prix To Boost Visitor Numbers The Federation Internationale de l'Automobile (FIA) has given approval for Singapore to host Asia's first ever night race in 2008. Construction on new pit facilities and modifications to existing road layouts are already well underway, with the city state's massive lighting system for the race being successfully tested at the end of March 2008. The STB has organised a range of upscale tourist events to coincide with the Grand Prix, which should provide a significant boost to tourism revenues this year.

BMI believes that the hosting of a Singaporean grand prix will be a clear boon in attracting new visitors to the city state. The television coverage of the event will provide institutions like Raffles with a clear shop window to the world and the entire city state will be the focus of the world's media over the grand prix weekend. Supporters of grand prix racing tend to be reasonably affluent, so shopping centres and nightlife venues should receive extra revenue from incoming travellers.

Opening Up The Lucrative KL-Singapore Route The long-awaited liberalisation of the lucrative Singapore-Kuala Lumpur route commenced on 1 February 2008. Malaysia's Air Asia now operates two daily flights, with Singapore-based Tiger Airways and Jetstar Airways having one daily flight each. To celebrate the launch, the budget carriers were even offering some seats free of charge (before taxes).

This opening up of a route that was previously the sole domain of Malaysia Airlines (MAS) and Singapore Airlines (SIA) should have great benefits to the travelling public, as more flights are allowed and prices are lowered. Full liberalisation of the KL-Singapore route is expected by December 2008 in accordance with an ASEAN agreement. Singapore and Malaysia have very well-developed bilateral tourist ties and the new competition on the KL-Singapore route can only benefit the tourism industries of both countries. The Sydney-based Centre for Asia Pacific Aviation believes that traffic on the KLSingapore route could triple within two years of full liberalisation.

Of interest now will be the reaction of the two flag carriers, MAS and SIA. Will they use their deep pockets to fuel a price war, trying to knock the budget carriers out of the market? Or will they prefer to concentrate on business travellers, who are happy to pay higher prices for the direct centre-to-centre links provided by the major airlines? Singapore To Host Inaugural Youth Olympics In late February 2008, it was announced by the International Olympic Committee (IOC) that Singapore is to host the inaugural Youth Olympic Games in 2010. This international showcase will provide Singapore with a further opportunity to show itself to the world, following the hosting of its first Formula One Grand Prix race in September. In addition, the Games should attract tourists from around the world to the city state.