Hospitality REITs at risk from rupiah, ringgit rout

These amount for a fourth of tourism receipts.

A persistent weakness of the Indonesian rupiah and the Malaysian ringgit could derail the growth story of hospitality REITs.

According to CIMB, Indonesia and Malaysia amount for around 28% of total visitor arrivals and around 25% of total tourism receipts.

 “If this happens, demand may not be enough to support the upcoming c.4.0% of total supply in 2015, potentially resulting in weaker hospitality REITs earnings,” stated CIMB.

Downside risks from this sector could come from continual weakness in the Indonesian rupiah and Malaysia Ringgit as these countries account for c.28% of total visitor arrivals and c.25% of total tourism receipts. If this happens, demand may not be enough to support the upcoming c.4.0% of total supply in 2015, potentially resulting in weaker hospitality REITs earnings.