Singapore visitor arrivals maintained strong growth of 13.4% YoY in Jan 2012 to reach 1.2m. Visitors from China, the second largest country of origin, spiked up an astounding 53% YoY. For Jan, high-end hotels registered RevPAR increase of ~11.7% while budget hotels saw RevPAR decline ~5.0% due to drop in occupancy. This supports the thesis that many travelers from developing Asia are not budget travelers. We reiterate our preference for high-end hotels, which face more limited supply coming onboard for 2012-2015 than budget hotels. We maintain our BUY rating on CDLHT and S$2.00 fair value.
Visitors arrivals on track.
Visitor arrivals maintained strong growth of 13.4% YoY in Jan 2012 to reach 1.2m. In that month, arrivals from the three largest countries of origin, namely Indonesia, China and Malaysia, saw solid increases. These countries accounted for 40% of all visitor arrivals last year. Notably, arrivals from China spiked up 52.8% YoY to 201.7k in Jan. While some of the increase could be attributed to Chinese New Year falling in Jan instead of Feb this year, we note that the Jan-12 China number is 34.5% higher than the Feb-11 figure.
High-end hotels outperform in RevPAR, occupancy.
According to the STB, average RevPAR for Singapore hotels increased 11.7% YoY to S$209 in Jan. On a RevPAR basis, high-end hotels outperformed budget hotels. The Luxury and Upscale tiers increased by 9.1% and 14.3% respectively while Mid-tier and Economy hotels saw declines of 6.4% and 3.6%. These results support our preference for the high-end hotel sector. The decline in RevPAR for budget hotels comes not from declining average room rates, which actually increased, but from reduced occupancy (down 7 ppt). Many of the visitors from developing countries are not budget travelers.
CDLHT has good positioning.
As mentioned previously, we project that the supply of high-end hotel rooms will increase by 3.0% p.a. for 2012-2015 while budget hotel rooms will increase by 5.6% p.a. We estimate that hotel demand will grow by 6.4% p.a., outstripping total hotel room supply growth of 3.8% p.a. On another related note, CBRE has projected that RevPAR for Singapore hotels will increase by 5%-8% in 2012. Given this, our RevPAR growth projection for CDLHT Singapore’s hotels of 5.5% in 2012 is not aggressive.
Maintain BUY.
We maintain our BUY rating and our S$2.00 fair value estimate based on a RNAV analysis. With the majority of its revenue coming from high-end Singapore hotels, CDLHT will continue to be a beneficiary of the blossoming tourism industry.
Visitor arrivals maintained strong growth of 13.4% YoY in Jan 2012 to reach 1.2m. In that month, arrivals from the three largest countries of origin, namely Indonesia, China and Malaysia, saw solid increases. These countries accounted for 40% of all visitor arrivals last year. Notably, arrivals from China spiked up 52.8% YoY to 201.7k in Jan. While some of the increase could be attributed to Chinese New Year falling in Jan instead of Feb this year, we note that the Jan-12 China number is 34.5% higher than the Feb-11 figure.
High-end hotels outperform in RevPAR, occupancy.
According to the STB, average RevPAR for Singapore hotels increased 11.7% YoY to S$209 in Jan. On a RevPAR basis, high-end hotels outperformed budget hotels. The Luxury and Upscale tiers increased by 9.1% and 14.3% respectively while Mid-tier and Economy hotels saw declines of 6.4% and 3.6%. These results support our preference for the high-end hotel sector. The decline in RevPAR for budget hotels comes not from declining average room rates, which actually increased, but from reduced occupancy (down 7 ppt). Many of the visitors from developing countries are not budget travelers.
CDLHT has good positioning.
As mentioned previously, we project that the supply of high-end hotel rooms will increase by 3.0% p.a. for 2012-2015 while budget hotel rooms will increase by 5.6% p.a. We estimate that hotel demand will grow by 6.4% p.a., outstripping total hotel room supply growth of 3.8% p.a. On another related note, CBRE has projected that RevPAR for Singapore hotels will increase by 5%-8% in 2012. Given this, our RevPAR growth projection for CDLHT Singapore’s hotels of 5.5% in 2012 is not aggressive.
Maintain BUY.
We maintain our BUY rating and our S$2.00 fair value estimate based on a RNAV analysis. With the majority of its revenue coming from high-end Singapore hotels, CDLHT will continue to be a beneficiary of the blossoming tourism industry.
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