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Analysts Upbeat On Hospitality Sector With #SG50 In Mind
Aspire, Hot Picks | 14 January 2015
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By: Raymond Leung
Articles (142) Profile

Analysts' updates on selected hospitality trusts

Last year proved to be a volatile year for Singapore’s tourism and hospitality industry. This was a result of the series of mishaps in the neighbouring countries including the unrest in Thailand and incidents concerning Malaysian air carriers.

Barring any unforeseen circumstances, analysts feel that 2015 should mark a turn-around for the local tourism and hospitality sector. Riding on SG50, we believe that the festive filled year will be attractive for tourist following LonelyPlanet’s rating for Singapore as the number one country to visit in 2015.

Singapore was listed as Lonely Planet's top destination for 2015

In addition, the Singapore Tourism Board (STB) has been actively promoting Singapore as a fly-cruise destination. Coupled with the SG50 activities, tourists could be more enticed to extend their stay in Singapore.

Chinese tourists are expected to hit a high single to double digit growth in percentage as STB launches various promotions to woo them.

The business travel segment is also expected to grow on the back of the recovering economy. As a result, budgets for corporate visitors might increase while a full year of MICE events will surely bring in more business travel arrivals.

However, analysts anticipate that 2015 would not be all smooth sailing for the hospitality and tourism industry. A weaker 1Q15 is expected as softer tourist arrivals due to the weak Indonesian Rupiah and the spillover effect from the crash of the AsiaAir flight.

Coupled together, this will bring in fewer visitors from Indonesia especially with the rising competition for medical tourism which is traditionally popular by Indonesians. A lack of arrivals because of the biennial Singapore Air Show which is not held this year could also affect the occupancy rates of hotels in the quarter.

Overall, analysts remains positive about the industry’s prospects in the year 2015 as the potential upsides outweighs the potential downsides. Analysts from CIMB Research maintained their upbeat predictions on the sector as they expect a two to four percent rise in visitors for the year with the government’s effort to boost tourism.

They picked CDL Hospitality Trust and OUE Hospitality Trust as their preferred proxies to the industry. They cited good value, favourable prospects and higher distributions from recent acquisitions as the main factors for their choice.

Trained in fund management, Raymond is familiar with shares and various investment vehicles.

Please click here for more information about this author.

CDL Hospitality Trusts  1.600 -0.010 -0.62%   
Business: A stapled group comprising CDL Hospitality REIT and CDL Hospitality Business Trust.

Insight: Jan-19, FY19 net property income (NPI) decreased 3... Read More
OUE Hospitality Trust  0.715 -0.005 -0.69%   
Business: A stapled group comprising OUE H-REIT & OUE H-Biz Trust with a portfolio primarily focused in the hospitality &/or hospitality-related purposes.

Insight: Jan-19, FY18 gross revenue dipped 1% with lower re... Read More


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