The potential impact isn’t so massive after all.
The emergence of Airbnb had analysts reeling about the drastic effect it will have on traditional hotels’ earnings, but their fears might not come to fruition after all.
According to an analyst report by UOB Kay Hian, while hospitality REITs acknowledge the potential ascendancy of Airbnb, there home-sharing sites cater primarily towards leisure trips while corporate business typically makes up 50-60% of their clientele, lowering their susceptibility to the sharing economy.
“We note that current guidelines in Singapore prohibit HDB homeowners from subletting rooms for short-term stays, while private residences are meant for a term period of six months or more,” the report said.
Meanwhile, analysts said what hospitality REITs should be worried about are sobering tourist arrivals.
“We note that despite declining Indonesian and Malaysian tourist arrivals (9.7% and 5.0% yoy respectively in 2015), we were heartened by the resurgence in Chinese visitors (up 22.3% yoy in 2015). 2015 closed with an uptick of 1% in overall tourist arrivals,” UOB Kay Hian said.
However, analysts say tourism is cheering up in 2016, underpinned by healthy Chinese numbers, as well as events like the biennial Singapore Airshow on the calendar, which should mitigate the expected 6.4% expansion in hotel room supply this year.
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