Hotel operators may charge tourists an average S$600 ($390) per room from S$170 now as occupancy rates increase in the next eight years, according to Merrill Lynch & Co. As arrivals climb more than 80 percent to 17.7 million in that period, about 3,300 rooms are expected to be added annually, falling short of the average 4,100 units needed, a team led by analyst Melinda Baxter wrote in a report.

"Revenue per available room will continue to set new benchmarks in the coming years as the forecast demand far exceeds the known and forecast supply," the analysts wrote. "As the supply and demand imbalance continues to worsen, hotel operators will be in an ideal position to raise room rates in line with key gateway cities."

Singapore is adding new attractions, including a Universal Studios theme park and the world's largest Ferris wheel, to tap an increase in global travel. The government expects to double the number of overseas visitors to 17 million annually by 2015 and triple tourism receipts to S$30 billion by then.

The city-state will stage a Formula One race for at least five years, starting in 2008. The race is expected to draw 80,000 spectators each year and generate S$100 million a year in tourism spending, the government said last month.

Visitor record

There are 29,200 hotel rooms in Singapore now, the report said. A record 9.7 million tourists visited Singapore last year, generating S$12.4 billion in receipts, giving a boost to the city's hotels, restaurants and department stores.

The number of visitors may rise 5 percent to 10.2 million in 2007, boosting tourism spending to S$13.6 billion, the government predicts.

Room rates at four- and five-star operators were more than 50 percent lower than those in Hong Kong and 17 percent cheaper than Shanghai at the end of 2006, according to Merrill Lynch.

"As market conditions improve, hotel operators will regain pricing power and room rates will begin to converge with those of regional peers," the report said. Occupancy rates are "expected to be exceptionally high between 2009 and 2011 with the opening of the two integrated resorts."

The government last year awarded two casino licenses to Las Vegas Sands Corp., the world's largest casino company by market value, and Genting Bhd., Asia's biggest operator.

The Las Vegas Sands development will be Asia's biggest single venue for meetings and have 2,500 hotel rooms and a 1.2-million-square-foot convention center, among other facilities.

Hotel construction

The government is selling more land for the construction of hotels. It earmarked 10 plots for sale in the second half of the year for hotel purposes, in addition to four "white sites" that can be used for any development.

The sites can potentially yield 6,500 rooms, it said last week. The room supply from current projects will increase by 9,100 between the second half of 2007 and 2010, it said.