Despite visitor arrivals climbing 9% in 2012, the total gross lettings for Singapore hotels was stagnant at 10.7m room nights. It is likely that the average length of stay has declined further from the 3.7 days in 2011, e.g. down to 3.45 days, and larger proportions of tourists may be staying in non-hotel accommodations. We understand from talking to industry players that 1Q13 operational figures for Singapore hotels are likely to be lackluster. For 2013-2015, we forecast hotel room demand growth of 5.4% p.a., lower than the projected 5.8% p.a. increase in room supply. We remain NEUTRAL on the hospitality sector. Our top pick is Global Premium Hotels [BUY, FV: S$0.33], which we believe is a longer-term asset value play. GPH is currently trading 32% below its NAV of S$0.39.
Total gross lettings stagnant
While visitor arrival figures for 1Q12 to 3Q12 demonstrated declining rates of YoY growth (+14.7%, +8.3%, +3.1% respectively), 4Q12 staged a rebound with visitor arrivals up 11.0% at 3.7m (preliminary figures). 2012 visitor arrivals totaled 14.4m, up 9.1% and near the high end of STB’s 13.5m-14.5m target. However, the total gross lettings for hotels was stagnant at 10.7m room nights. It is likely that the average length of stay has declined further from the 3.73 days in 2011, e.g. down to 3.45 days, and larger proportions of tourists may be staying in non-hotel accommodations.
IR hotels benefitting the most
2012 average occupancy was flat at 86%, and average room rates rose 5.7% to S$261.2, hence RevPAR for 2012 grew 5.7% to S$225.6. We believe that the industry RevPAR numbers might be skewed by the performance of IR hotels. For 4Q12, Marina Bay Sands registered 10.0% YoY growth in RevPAR to US$362, and Genting Singapore’s RevPAR jumped 42% YoY to S$407 (Genting opened the high-end Equarius Hotel and Spa Villas in 2012). 4Q12 RevPAR for CDLHT’s Singapore hotels was flat YoY at S$205. For FEHT’s Singapore hotels, RevPAR for 27 Aug - 31 Dec 2012 was S$171, only 1.2% higher than 2011 RevPAR of S$169.
Not a pretty picture
We understand from talking to industry players that 1Q13 operational figures for Singapore hotels are likely to be lackluster. For 2013-2015, we forecast hotel room demand growth of 5.4% p.a., lower than the projected 5.8% p.a. increase in room supply.
Maintain NEUTRAL
We remain NEUTRAL on the hospitality sector. Our top pick is Global Premium Hotels [BUY, FV: S$0.33], which we believe is a longer-term asset value play. GPH is currently trading 32% below its NAV of S$0.39. We have HOLD ratings onAscott Residence Trust [FV: S$1.36], CDL Hospitality Trusts [FV: S$1.93], Far East Hospitality Trust [FV: S$1.05] and Genting Singapore [FV: S$1.52].
While visitor arrival figures for 1Q12 to 3Q12 demonstrated declining rates of YoY growth (+14.7%, +8.3%, +3.1% respectively), 4Q12 staged a rebound with visitor arrivals up 11.0% at 3.7m (preliminary figures). 2012 visitor arrivals totaled 14.4m, up 9.1% and near the high end of STB’s 13.5m-14.5m target. However, the total gross lettings for hotels was stagnant at 10.7m room nights. It is likely that the average length of stay has declined further from the 3.73 days in 2011, e.g. down to 3.45 days, and larger proportions of tourists may be staying in non-hotel accommodations.
IR hotels benefitting the most
2012 average occupancy was flat at 86%, and average room rates rose 5.7% to S$261.2, hence RevPAR for 2012 grew 5.7% to S$225.6. We believe that the industry RevPAR numbers might be skewed by the performance of IR hotels. For 4Q12, Marina Bay Sands registered 10.0% YoY growth in RevPAR to US$362, and Genting Singapore’s RevPAR jumped 42% YoY to S$407 (Genting opened the high-end Equarius Hotel and Spa Villas in 2012). 4Q12 RevPAR for CDLHT’s Singapore hotels was flat YoY at S$205. For FEHT’s Singapore hotels, RevPAR for 27 Aug - 31 Dec 2012 was S$171, only 1.2% higher than 2011 RevPAR of S$169.
Not a pretty picture
We understand from talking to industry players that 1Q13 operational figures for Singapore hotels are likely to be lackluster. For 2013-2015, we forecast hotel room demand growth of 5.4% p.a., lower than the projected 5.8% p.a. increase in room supply.
Maintain NEUTRAL
We remain NEUTRAL on the hospitality sector. Our top pick is Global Premium Hotels [BUY, FV: S$0.33], which we believe is a longer-term asset value play. GPH is currently trading 32% below its NAV of S$0.39. We have HOLD ratings onAscott Residence Trust [FV: S$1.36], CDL Hospitality Trusts [FV: S$1.93], Far East Hospitality Trust [FV: S$1.05] and Genting Singapore [FV: S$1.52].
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