,Singapore

Hospitality sector face slow recovery in H2: analyst

The rise of staycation and travel bubbles could provide support to the sector.

Whilst the outlook remains challenging overall, Singapore’s hospitality REITs could expect to see slow recovery in the second half of the year as markets slowly reopen, reports OCBC Investment Research.

First half results for three hospitality REITs under OCBC’s coverage—Ascott Residence Trust, Far East Hospitality Trust, and CDL Hospitality Trust—came below expectations. RevPAR in the three REITs plummeted 49%, 43%, and 56%, respectively, in H1 on the back of a weaker-than-expected operating environment and retention of distributable income.

The second half of the year holds promise for the hospitality sector, as more countries exit from lockdowns, and with the reopening of temporarily closed properties, noted OCBC.

Furthermore, the implementation of “travel bubbles” as well as the government’s support on domestic tourism could also provide a boost to the sector.

On July 3, Singapore authorities announced that hotels may apply to reopen for staycation bookings which could provide a boost to hospitality REITs. Demand for staycation is healthy due to pent-up demand from local travellers and ADR remains largely comparable to pre-COVID-19 levels, noted OCBC Investment Research analyst Peng Chu.

However, don’t expect staycation to buoy performance—it remains largely a weekend business and is unlikely to make up for losses in weekday occupancies or compensate for the income shortfall from COVID-19, added Chu.

Amongst REITs covered, OCBC Investment Research identified Ascott Residence Trust as the likely to perform best, on the back of its defensive and geographically diversified portfolio which provides a buffer amidst a still uncertain outlook, coupled with its strong financial position.

Overall, serviced residences (SR) were more resilient compared to hotels due to SR’s longer pre-existing leases and lease extensions from project groups and corporate business, the report said.
 

Join Singapore Business Review community
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

Meanwhile, a record 583 non-landed homes sold for more than $2m each in the first nine months of the year.
The merger will create a flagship pan-Asia logistics and high-tech S-REIT.
It is followed closely by the identification app SingPass.
The index tracks REITs in the APAC region with higher dividend yields and positive environmental attributes.
Both companies will create training programs to support digital entrepreneurship and digital upskilling for Grab partners.
The deal is focused on M1’s network assets. 
This is a part of the Lion City's bid to become a global maritime knowledge and innovation hub.
Risks, however, are present with the financial troubles faced by the real estate sector in China. 
This comes as more Singaporeans turn to gaming in the midst of the pandemic. 
Retail sector has experienced the “most disruptions” with the changing restrictions.
The company was commended for being a global and regional sector leader in five categories.
The CEO designate said he aims to drive development in the company’s business units.   Gary Ho,  who played an instrumental role in the Initial Public Offering (IPO) of Nanofilm Technologies International Limited, has been appointed Chief Executive Officer of the company.
Analysts said strong leasing activity in Q3 played a factor.
Islandwide prime retail rents saw a dip by 0.6% q-o-q. 
Jardine Cycle & Carriage, Keppel Corporation and Frasers Logistics & Commercial showed the most growth.