Feb figures for Singapore visitor arrivals and hotel performance were released yesterday. Visitor arrivals for Jan-Feb 2012 totaled 2.3m, up 13.9% YoY and higher than the upper limit of the 2.5-10.1% growth implied by the STB’s 2012 goal of 13.5-14.5m visitor arrivals. Hotels across all tiers saw significant growth in Revenue per Available Room (RevPAR) for Feb, with increases ranging 19.2-26.4% YoY on the back of increased occupancy and average room rates. Prospects for the tourism sector continue to look bright and the gradual introduction of junkets should have positive spill-over effects on high-end hotels. We maintain our BUY rating on CDLHT and S$2.00 fair value.
Visitor arrivals outpace STB’s 2012 targets
Visitor arrivals for Jan-Feb totaled 2.3m, up 13.9% YoY and higher than the upper limit of the 2.5-10.1% growth implied by the STB’s 2012 target of 13.5-14.5m visitor arrivals for Singapore. To recap, the STB also set a target for S$23-24b in tourism receipts this year, implying a 3.6-8.1% YoY increase. The mid-points of the target growth rates are 5.9% and 6.3% respectively. STB chief Aw Kah Peng has indicated that if the outlook improves in the second half, the performance might be even better than these projections. We believe that our RevPAR growth rate assumption of 5.5% for CDLHT’s Singapore hotels in 2012 is conservative.
Outstanding performance for hotels in Feb
Hotels across all tiers saw significant growth in Revenue per Available Room (RevPAR) for Feb with increases of 19.2-26.4% YoY on the back of increased occupancy (+3-11ppt YoY) and increased average room rates (+7.4-17.5% YoY). As with Jan, high-end hotels outperformed budget hotels, with RevPAR increasing more for Luxury and Upscale hotels as opposed to Mid-tier and Economy hotels. As a testament to their pricing power, high-end hotels also registered greater increases in their average room rates.
Bright prospects for tourism
Exciting developments continue in the tourism sector. The International Cruise Terminal is scheduled to open this quarter and the River Safari will open next quarter. Last month marked the first time junket promoters were granted licenses by the Casino Regulatory Authority. With the hotels at integrated resorts running at near full capacity, the big spenders that are brought here by junket operations should gradually have a positive spill-over effect on high-end hotels.
Maintain BUY
With six high-end hotels in Singapore, CDLHT has good exposure to the growth of the local tourism scene. We maintain our BUY rating on CDLHT and our S$2.00 fair value estimate based on a RNAV analysis.
Visitor arrivals for Jan-Feb totaled 2.3m, up 13.9% YoY and higher than the upper limit of the 2.5-10.1% growth implied by the STB’s 2012 target of 13.5-14.5m visitor arrivals for Singapore. To recap, the STB also set a target for S$23-24b in tourism receipts this year, implying a 3.6-8.1% YoY increase. The mid-points of the target growth rates are 5.9% and 6.3% respectively. STB chief Aw Kah Peng has indicated that if the outlook improves in the second half, the performance might be even better than these projections. We believe that our RevPAR growth rate assumption of 5.5% for CDLHT’s Singapore hotels in 2012 is conservative.
Outstanding performance for hotels in Feb
Hotels across all tiers saw significant growth in Revenue per Available Room (RevPAR) for Feb with increases of 19.2-26.4% YoY on the back of increased occupancy (+3-11ppt YoY) and increased average room rates (+7.4-17.5% YoY). As with Jan, high-end hotels outperformed budget hotels, with RevPAR increasing more for Luxury and Upscale hotels as opposed to Mid-tier and Economy hotels. As a testament to their pricing power, high-end hotels also registered greater increases in their average room rates.
Bright prospects for tourism
Exciting developments continue in the tourism sector. The International Cruise Terminal is scheduled to open this quarter and the River Safari will open next quarter. Last month marked the first time junket promoters were granted licenses by the Casino Regulatory Authority. With the hotels at integrated resorts running at near full capacity, the big spenders that are brought here by junket operations should gradually have a positive spill-over effect on high-end hotels.
Maintain BUY
With six high-end hotels in Singapore, CDLHT has good exposure to the growth of the local tourism scene. We maintain our BUY rating on CDLHT and our S$2.00 fair value estimate based on a RNAV analysis.
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