Singapore will encourage tourists to spend more by offering marquee events and attractions such as the Formula One night race as a faltering global recovery threatens to curtail growth in visitor arrivals.
The country’s five biggest tourism markets are located in the Asia-Pacific region where there’s “steady growth,” said S. Iswaran, Singapore’s second trade minister who oversees the tourism industry. This has offset concerns that Europe’s protracted sovereign-debt crisis may limit travel, he said.
Singapore forecast arrivals to rise to 17 million and tourism spending to S$30 billion ($24.5 billion) by 2015. The opening of two casino resorts that include a downtown convention center and a Universal Studios theme park spurred a 13 percent increase in visitors last year after a 20 percent climb in 2010. The country expects the number of tourists to rise as much as 9.8 percent to 14.5 million in 2012.
“Compounding at double-digit rates for your visitor arrivals are OK in short bursts, but on a long-term basis, it will have its limits,” Iswaran, who’s also a minister in the Prime Minister’s Office, said in an interview on Sept. 17. “The emphasis is on yield,” where “tourism receipts grow at a faster rate,” he said.
Tourism spending is expected to rise as much as 8 percent to S$24 billion this year, according to government estimates.
Singapore’s Formula One night race, which is in its fifth year, attracts about 40,000 visitors to the island annually and adds an average of S$140 million to tourism revenue, Iswaran said. This year’s Grand Prix takes place this weekend.
The Formula One has drawn companies such as Singapore Telecommunications Ltd. and UBS AG, which have flown in clients and partners for networking events around the race. Entertainment is a key component, and tickets to the race this year offer access to concerts by performers including Maroon 5, Katy Perry and Jay Chou.
“There are a lot of events hosted around F1 that are pinned to the uniqueness of F1 as a night race,” said Wai Ho Leong, a senior regional economist at Barclays Plc in Singapore. “The race is important, but even more important are the deals that go around it, that are made here.”
The majority of tourists for this week are expected from Australia, the U.K. and the U.S., according to data on flight reservations up to Sept. 1 compiled by Amadeus IT Holding SA and Forward Data SL. Overall bookings are 3 percent lower than a year earlier, they said in a joint statement today. The data also indicates the possibility of a surge in last-minute bookings, they said.
About 15 percent of arrivals are expected tomorrow, indicating that visitors are staying longer, they said.
“Thursday shows peak arrival numbers two days before the qualifying race takes place, suggesting that visitors arriving for the F1 are making a long weekend out of the famous Singapore leg of the circuit this year,” they said.
Negotiations to extend Singapore’s contract for another five years are under way with Formula One Administration, Iswaran said, adding that both parties will decide before the middle of 2013.
“We will take a hard look at the benefits that accrue to the economy as a whole and in turn what are the costs that the government would have to incur in order to continue to support this event in Singapore’s context,” said Iswaran, who lobbied to bring the race to the island in 2008.
Formula One Chief Executive Officer Bernie Ecclestone didn’t respond to an e-mail seeking comment.
The Grand Prix has elevated Singapore’s standing as a tourist destination, said Craig Baird, who’s racing at the Porsche SC Global Carrera Cup Asia before the Formula One.
“No matter where you go around the world, people talk about the Singapore night race because they get so many people who may not go to an F1 event,” Baird, 42, said in a phone interview. “From a driver’s perspective, I love it that you have all day to cruise around and take in the sights before heading to the races. It’s a good event from both sides of the fence.”
Singapore’s tourism sector continues to grow even as the negotiations take place. In June, the city-state unveiled a S$1 billion, 101-hectare downtown park that’s set to attract as many as 5 million visitors a year. It also welcomed two pandas this month on loan from China for 10 years. They will reside in the River Safari, the island’s newest attraction due to open at the end of the year.
The city of 5.2 million people occupying an area about half the size of Houston remains vulnerable to global forces as it diversifies its tourism industry.
“Certainly, if there’s a general slowdown, that will have an impact on discretionary spending and therefore some of the travel,” Iswaran said. “Any slowdown in large economies will have an impact, but there are other mitigating factors which can help to keep the tourism industry’s momentum going.”
The Singapore dollar has strengthened 6 percent this year, the best performer among Asia’s 11 most-traded currencies tracked by Bloomberg, making the city’s costs higher for tourists in the region.
“That’s always something that we have to watch out for, in terms of the impact of a currency that is very strong relative to the main source markets of our tourists and their currencies,” he said. “If you look at the data, we are still holding up and able to attract our fair share of tourists.”
Singapore’s top five tourism markets are China, India, Malaysia, Indonesia and Australia, he said.
Neighboring countries are also doing more to draw visitors. Malaysia opened the first Legoland theme park in Asia last week, the first in an Orlando-styled cluster of attractions planned by Merlin Entertainments Group Ltd., which said it will target tourists visiting Singapore.
Billionaire Sheldon Adelson, whose Las Vegas Sands Corp. owns Singapore’s downtown casino-resort, is keen to build a project in Taiwan that would rival its Venetian Macau gaming center if it gets permission, Sands China Ltd.’s Chief Executive Officer Edward Tracy said last month.
When Singapore “first had the two integrated resorts, there’s this novelty effect but we have already passed that stage,” said Irvin Seah, a Singapore-based economist at DBS Group Holdings Ltd. “Now it’s a matter of enticing tourists to loosen their purse strings further.”