Still room for upside for hospitality Reits despite rally

THE rollout of the first vaccine this month heralds the start of a recovery for the hospitality sector, but have hospitality Reits already rallied too far ahead?

Units in Singapore-listed hospitality Reits leapt in November as news of successful vaccines by the likes of Pfizer/BioNTech and Moderna had investors betting that the green shoots were finally emerging for the tourism industry.

The availability of a vaccine will put hospitality Reits on the path to recovery in 2021, but a full recovery in revenue per available room (RevPAR) - an indicator of performance - may only materialise in 2022 or even 2023, some analysts say. It also remains to be seen whether business travel volumes will be adversely affected in the long-term by a shift towards virtual meetings.