It also noted over 5,000 new rooms will enter the market between 2025 and 2027, particularly in the upscale to luxury segments.

Singapore's hotel sector is expected to moderate in 2025, with revenue per available room (RevPAR) seen growing by  2-3%.

DBS said large-scale events, such as Taylor Swift concerts, provided a significant boost to visitor numbers and hotel performance, but such events are one-off occurrences and unlikely to be repeated at the same scale.

It also noted over 5,000 new rooms will enter the market between 2025 and 2027, particularly in the upscale to luxury segments, intensifying competition and limiting room rate hikes.

China's position as Singapore's top inbound market, accounting for 19% of total arrivals in 2024, remains critical. However, DBS pointed out total visitor days have recovered to 93% of pre-pandemic levels, with further growth expected to slow in the coming year.

Key tourism catalysts such as the launch of the Disney Cruise Line in December 2025 and Super Nintendo World at Universal Studios Singapore in mid-2025 are expected to boost visitor numbers in the second half of the year.

Amidst rising competition, DBS observed luxury hotels face challenges from downtrading trends among budget-conscious travelers, whilst economy and mid-tier hotels are better positioned to capture demand.

DBS also highlighted opportunities in hotel REITs, which are trading at a 0.7x price-to-book ratio, the lowest in four years.

$CapLand Ascott T (HMN.SG)$ remains a top pick, offering 7.1% forward yields and growth potential through asset enhancement initiatives (AEIs).