Singapore Tourism Report Q1 2013

The Singapore Tourism Report examines the strong long-term potential being offered by the local tourismindustry, bolstered by rapidly growing demand from emerging markets such as China and Russia.

However, we caution that the stellar growth rate in tourist arrivals achieved over 2010 and 2011 maymoderate as we move into 2013 if fears of a double-dip global economic recession come to pass.

The report also analyses the growth and risk management strategies being employed by some of theleading players in the local tourism sector (ie: airlines and hotel chains) as they seek to maximise thetremendous growth opportunities being offered by the Singaporean market.

Arrivals over January-June 2012 increased by 11.4% year-on-year (y-o-y), to 7,082,161, according todata from the Singapore Tourist Board (STB). Growth was seen from all market regions expect Africa,with Indonesia remaining the most important inbound source market, contributing 1,366,037 tourists, or19.3% of total arrivals, over the first half of the year. Arrivals from Indonesia went up by 11.5% y-o-yover January-June, with other key markets including China, Malaysia, Australia and India.

As such, 2012 looks set to be another strong year for Singapore's fast-growing tourism industry, in linewith BMI's views. We forecast 14.29mn tourist arrivals and SGD23.5bn (US$18.35bn) in tourismreceipts this year, which appear to be accurate projections based on current monthly trends. The STB hasnoted that it 'is in the midst of transiting to a new data processing system for tracking visitor statistics' andthat the 'latest tourism data may not be immediately available'. Therefore, there was no more recent datathan June 2012 available from the STB website as this report was being compiled in late November.

Consequently, BMI maintains its forecasts this quarter in the absence of any clear indication from theSTB of how tourist arrivals have progressed over the early part of H212.

Over the last quarter, BMI has revised the following forecasts and views:

BMI has extended its forecast period out to 2017. Our forecast model projects increases of 7-8%per annum in tourist arrivals over the coming years, leading to a total of just over 20mn samedayand overnight tourists visiting Singapore by 2017.

BMI believes that the recently-announced enhanced links between Singapore Airlines (SIA)and Virgin Australia could prove very beneficial for both airlines. In October 2012, SIAannounced that it would be buying a 10% stake in the Australian low-cost airline, with the twoairlines then announcing an expansion of existing codesharing arrangements. Furtherinformation on the outlook for Singapore Airlines (including SWOT analysis) can be found inthe Company Profiles section of this report.