Mandarin Orchard's revenue could fall 6% this year

But here's one reason to stay positive about OUEHT.

OUEHT's Mandarin Orchard (MOS) hotel is facing some short-term headwinds due to the 5-6% p.a. growth in new hotel rooms in 2016 and 2017 as well as weak corporate demand. DBS Vickers Securities, however, notes that the supply constrained in the medium term will push recovery for the hotel sector by 2018.

According to the research house, the 5-6% growth in new hotel rooms will likely result in a decline in revenue per available room (RevPAR) for MOS.

But here's one reason to stay positive about OUEHT.

According to the research house, the 5-6% growth in new hotel rooms will likely result in a decline in revenue per available room (RevPAR) for MOS.

But here's one reason to stay positive about OUEHT.

OUEHT's Mandarin Orchard (MOS) hotel is facing some short-term headwinds due to the 5-6% p.a. growth in new hotel rooms in 2016 and 2017 as well as weak corporate demand. DBS Vickers Securities however notes that supply constrained in the medium term will push recovery for the hotel sector in 2018.

According to the research house, the 5-6% growth in new hotel rooms will likely result in a decline in revenue per available room (RevPAR) for MOS.

Nevertheless, with the Singapore government not releasing any new hotel sites for development over the last two years constraining supply in the medium term, and supply only projected to only increase by 0.3% in 2018, DBS Vickers Securities expects a recovery for MOS and the Singapore hospitality market in a couple of years' time.

"After incorporating a delay in the recovery of the Singapore hospitality market to 2018 from 2017 previously and weak October 2016 (RevPAR for overall Singapore market reportedly fell close to 15% y-o-y), we now project RevPAR for MOS to fall 6% and 4% for FY16 and FY17 respectively, partially offset by lower assumed interest rates given recent refinancing and draw down of income support associated with the CPEX (Crown Plaza Changi Airport) acquisition," it said.

The research house cut its FY16-17F DPU by 1-6%.

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