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Demand for hotel rooms by leisure travellers here is expected to record mild or flattish growth for the whole of 2017 after revenue per available room (RevPAR) dropped in the first quarter of the year amidst weak tourism figures, reported the Singapore Business Review.
Nevertheless, the RevPAR decline would be softer than initially forecasted as developers have committed to delay the opening of their new hotels, revealed OCBC Investment Research.
“We note that several of the hotels that were previously expected to come on-stream in Q2 2017 have since pushed back their opening till late H2 2017. With a better spaced out supply injection, we expect more evenly spread mid-single digit year-on-year declines in RevPAR for the remaining three quarters of the year.”
However, the research house believes that hotel room demand from companies would likely remain sluggish.
Meanwhile, OCBC said the annual movement in distribution per units (DPUs) of hospitality REITs under its coverage during the first quarter were in line with its expectations.
In particular, the DPU of Ascott Residence Trust (ART) and Far East Hospitality Trust (FEHT) fell by 13.7 percent and 13.9 percent respectively. In comparison, that for CDL Hospitality Trusts (CDLHT) and OUE Hospitality Trust (OUEHT) rose by nine percent and 18.2 percent respectively.
“OUEHT saw greater net profit income (NPI) contributions from Mandarin Gallery and the enlarged Crowne Plaza Changi Airport, while CDLHT’s results was boosted by its New Zealand NPI contributions, which increased by 90 percent year-on-year,” OCBC noted.
“ART’s DPU was impacted by the dilution from its rights issue earlier this year, as well as a one-off net realized exchange gain that contributed to an eight percent decline in distributable income. Stripping out the equity financing and realized exchange gain, Q1 2017 DPU would have increased 4.5 percent year-on-year.”
Meantime, FEHT’s DPU was impacted by a drop of 13.1 percentage points in the occupancy rate of its serviced residences. Nonetheless, it has rebounded since 31 March 2017.
This article was edited by Denise Djong.
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