Tourist arrival rebound points to better year for hospitality Reits

THINGS are looking a bit more optimistic this year for Singapore's hospitality real estate investment trusts (Reits) even with additional room supply coming onstream, as a resurgence in visitor arrivals this year could help stave off downward pressure on earnings.

According to preliminary data from the Singapore Tourism Board (STB), visitor arrivals to Singapore have rebounded this year, rising around 14 per cent year-on-year in the first four months to 5.53 million. This has been fuelled in part by a surge in arrivals from key source markets China (up 53 per cent) and Indonesia (up nearly 10 per cent). If growth keeps up at this pace, it suggests that arrivals will surpass the STB's own fairly cautious projections. In March, the tourism board had forecast visitor arrivals would expand by 0-3 per cent to between 15.2 million and 15.7 million this year, citing an uncertain global economy. For the whole of 2016, STB is forecasting 0-2 per cent growth in tourism receipts, at S$22 billion to S$22.4 billion.

In contrast, for 2015, arrivals edged up just 0.9 per cent to 15.2 million due to factors such as a strong Singapore dollar and a gloomy economic outlook. Meanwhile, spending by visitors slumped 6.8 per cent to S$22 billion, weighed down by a drop in business travellers.