Hospitality trusts lag other Reits in latest earnings season

Singapore

HOSPITALITY real estate investment trusts did the worst among Singapore Reits in the latest earnings season, analysts interviewed by The Business Times unanimously agreed.

The volatility in their earnings is partly because of the way their revenue is calculated, with a variable rent component that depends very much on the hotel's performance. And hotels are not having an easy time, domestically or internationally, with occupancies and room rates falling as people travel less.

RHB analyst Vijay Natarajan said: "Hospitality Reits which disappointed in the latest quarter include Far East Hospitality Trust, OUE Hospitality Trust (OUEHT) and CDL Hospitality Trusts (CDLHT).

"Even though visitor numbers have gone up 13 per cent year-on-year in the January-May period, occupancies haven't gone up as market expected. The length of stay has shortened, corporate budgets have tightened, and the month of June saw some impact due to the absence of last's year South-east As…