Re-opening: The travel perspective November 25, 2022

In the first half of 2022, Singapore received 1.5 million visitor arrivals, nearly 12 times more compared to the same period in 2021 (119,000)
Singapore Tourism Board (STB) maintains the view that tourism flows will recover to pre-COVID levels by the mid-2020s
Forecast suggests that Singapore’s tourism performance in 2022 should be better than 2020
STB expects 4 to 6 million international visitor arrivals for 2022 as tourism recovery gains momentum
Key Takeaway: Tourism is improving in the city-state

Singapore’s international visitor arrivals grew for the eighth consecutive month in September 2022, according to the Singapore Tourism Board (STB)¹.

There were 778,141 arrivals in September, a jump from 728,744 visitors earlier in August. The figure, however, is below the 1.5 million mark pre-COVID, back in September 2019.

Source of Arrivals (in order of highest to lowest):

Indonesia
Indonesia was the top source of arrivals for the sixth month in a row, with 115,433 visitors, a ~7% rise from the previous month.
India
In second place was India, also for the sixth straight month, with 83,265 visitors, a ~9% rise from August 2022.
Malaysia
Malaysia was in the third spot with 79,692 travellers, a ~25% rise from a month earlier.
Australia
Australia was the fourth-biggest source of tourists in September, with 79,150 visitors, a ~39% rise from the previous month.

China, Singapore’s largest inbound market from 2017 to 2019, bucked the upward trend in September 2022. It sent just 13,601 visitors. This was a further slide from August’s figure of 14,735 visitors. As compared to the corresponding month pre-COVID in 2019, this is a ~95% drop in visitor numbers.

Based on the data from the STB, China was Singapore’s top international visitor-generating market in 2019, bringing 3,627,000 travellers to the city. The mainland was also the top contributor to Singapore’s tourism receipts in 2019, generating S$900 million. In 2019, China also ranked sixth amongst the top origin countries of Singapore’s international visitors during the Formula 1 race weekend. In 2022 however, China fell out of the top 10².

Last November, Chinese outbound tourism numbers were expected to jump by more than 25% from 2020 but remained “basically at a standstill” when compared with pre-pandemic levels, state broadcaster CCTV reported³.

A total of 25.62 million Chinese tourist trips overseas was expected to be made in 2021, CCTV said, citing an annual report on outbound tourism from the China Tourism Academy, part of the Ministry of Culture and Tourism.

The dramatic drop in travellers from China then left a US$255 billion annual spending hole in the global tourism market. However there is hope in this grim setting as China begins to relax its restrictions for international travel, both outbound and inbound.

Macau leads the way for outbound travel from China

Macau tourism players are anticipating a more vibrant year-end holiday season as access for visitors from Shanghai and the provinces of Guangdong, Zhejiang, Jiangsu and Fujian improves on the back of a new e-visa process. The e-visa system was activated by China’s immigration bureau on 1 November 2022⁴.

Inbound travel to China also expected to improve

Shifting the focus to inbound travel, interest in travel to China has nearly doubled. This was led by surging demands in the United States, after Beijing slashed its quarantine requirements for international arrivals, according to online travel giant Trip.com Group. Searches for flights to China from the US soared 136% over the weekend, between November 11-13, compared with the same period the week before.

Searches for flights from Australia also rose by 116% over this period, followed by a 102% increase in enquiries in Japan, Trip.com said.

Singapore reported about 3.7 million international visitor arrivals till date, falling short of STB’s expectation of four to six million for the year, that was announced earlier in July 2022.

About 2.2 million of these tourists arrived in 22Q3 as compared to ~1.3 million, in the second quarter and 246,145 in the first quarter, before border restrictions eased in April 2022.

SIA continues to see “strong travel demand”

Singapore’s flag carrier, Singapore Airlines (SIA) carried 2.3 million passengers, on a group level, in October 2022. This is a 6.2% rise from the previous month, it said in its operating results filed to the bourse on 15 November 15 2022. This is also a 4.9% increase in passenger capacity from September 2022, for SIA and Scoot; two airlines in the group. Year on year, group capacity was up 109.7%, reaching 71% of pre-COVID levels in October 2022.

The SIA group noted that it continued to see “strong travel demand” in October 2022, boosted by the spring school breaks in Australia and New Zealand, coupled with the relaxation of travel restrictions in Hong Kong, Japan and Taiwan.

While SIA is a clear beneficiary of the travel recovery in Singapore, here are some other counters that stand to benefit as well:

SIA Engineering: Positive

Strong recovery
Number of flights handled in June 2022 reached 55% of pre-COVID volume
Recently bought back shares (23 September 2022)

Genting Singapore: Positive

Recovery of earnings
Forward looking: expansion of tourism business

Singtel: Positive

Near-term earnings growth will be driven by a rebound in mobile ARPUs in India, Singapore and other associates from roaming and improving economic conditions. Mobile enjoyed EBITDA expansion from a 12.6% YoY rise in ARPU as roaming revenue returned with borders re-opening. Roaming has returned to 60% of pre-COVID levels. Penetration of roaming has risen, as compared to SIM card usage in various countries of destination.

StarHub: Positive

The rebound in ARPU from roaming was expected as borders re-open. The rise in subscribers (by 26,000) was above expectations. Subscription growth was from no-contract SIM-only giga! plans.

ComfortDelGro Corp: Positive

Rebound in taxi earnings stemmed from lower rebates of 15% (3Q21: 25%), with booking commissions of 4%.

CapitaLand Investment: Positive

The pick-up in travel and lifting of lockdowns in China will be immediate catalysts for CLI.

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Re-opening: The travel perspective

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Re-opening: The travel perspective

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About the author

Chua Minghan (Manager, Dealing) and Benjamin Tay (Dealer)

Chua Minghan graduated from the National University of Singapore with a Bachelor’s degree in Economics. He is passionate about education and went on to get a post-grad Diploma in teaching. His vision is to educate clients to make informed decisions for their trading and investments.

Minghan enjoys learning fundamental analysis, technical analysis, and strives to use data analysis to improve his trading skills.

Benjamin graduated from the State University of New York at Buffalo with a Bachelor’s degree in Business Administration. He believes that a strong foundation is absolutely necessary to succeed in the financial markets. Therefore, he enjoys sharing his knowledge and experience to help others succeed.

In his free time, he enjoys reading books on business, fish keeping and spending time with his family.

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