For Jan to Apr this year, RevPAR for Singapore hotels fell 2.6% YoY to S$218. Furthermore, while visitor arrivals grew 6.4% in 1Q13, gross lettings for 1Q13 increased by only ~2.8% to 2.8m room nights. On a per capita basis, visitor arrivals are converting into fewer room nights. This trend was present in the 2012 figures (gross lettings were flat YoY while visitor arrivals climbed 9.1%). RevPAR for Upscale and Mid-tier Singapore hotels for Apr fell 12.8% YoY and 4.7% to S$229 and S$160 respectively. Note that CDLHT’s Singapore hotels fall in the Midtier/ Upscale categories. Industry sources indicate that Singapore hotel bookings have generally been weak through 2Q13 so far.
Unimpressive 1Q13 for CDLHT
Just to recap, 1Q13 RevPAR for CDLHT's Singapore hotels fell 7.9% YoY to S$191. Management attributed the weak performance to the absence of the biennial Singapore Airshow, and CNY falling in Feb instead of Jan, which disrupted corporate travel. There was also tighter spending on corporate travel.
Reducing FY13 RevPAR growth assumption
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. Concerned with an oversupply situation building up in the hospitality market and generally weak performance of the industry YTD, we are lowering our FY13 RevPAR growth assumption for CDLHT's Singapore hotels from 0% to -5%.
New FV of S$1.79
We update our model for these weaker RevPAR assumptions and a lower LT gross gearing target, which reduces our FV to S$1.79 from S$2.05. We maintain a HOLD rating on CDLHT.
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