Supply glut and sinking tourism are main concerns.
CDL Hospitality Trust (CDLHT)’s weak FY15 performance is only the start of its problems, according to a report by RHB.
It will largely have to deal with several challenges in 2016, the first of which is the more-than-expected supply of hotel rooms in 2015 to 2016.
Secondly, the sharp drop in tourism in the region will likely hurt CDHL significantly. Room rates are expected to drop lower compared to two years ago despite biennial events like the Singapore Airshow. Already, revenue per available room has tumbled 7% YoY as a result of new hotel supply and uncertain macroeconomic growth.
Lastly, CDLHT’s portfolio are not relatively new and face near-term competition from upcoming mid-scale to high-end hotels in the CBD.
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