Brokers' take

Singapore Hospitality | Neutral

OCBC Investment Research, Nov 21

For the hospitality counters we cover, Q3 2016 DPU growth ranged from -2.5 per cent to -7.4 per cent year on year, after adjusting for one-off items and equity financing. Looking ahead to FY2017, with a forecast 6.1 per cent growth in hotel rooms and tepid economic growth outlook, RevPARs (hotel revenue per available room) are expected to continue their decline, in our view, and especially so for hotels that rely on corporate demand. RevPARs are only expected to improve in FY2018 with better supply-demand dynamics. While we expect single-digit RevPAR declines next year, current price levels look very attractive for some of the Reits under our coverage - we are positive on Ascott Residence Trust, CDL Hospitality Trust, OUE Hospitality Trust.