Hotel revenue still down 20% from peak despite visitor surge

But recovery is on the way as soft growth is expected for new room supply.

Hotels' revenue per available room (RevPAR) are currently down 20% from their peak in 2012, having been affected by stiff competition from new hotels despite climbing visitor arrivals, OCBC Investment Research said.

However, OCBC Investment Research analyst Deborah Ong thinks that given that much of last year’s supply injection was back-end loaded, RevPARs could accelerate further compared to the pace seen in Q1. Hotel RevPAR growth in Q1 was positive for all the REITs they cover, ranging from +0.8% for CDL Hospitality Trusts’ (CDLHT) Singapore portfolio to +6.9% for OUE Hospitality Trust’s (OUEHT) Mandarin Orchard Singapore.

Also read: Sentosa hotels welcome high room demand amidst US-North Korea summit

Visitor arrival growth has had a healthy start with visitor days growing +1.2% YoY in January, +7.1% in February, and +8.6% in March. "On the other hand, hotel room supply is only expected to increase +2.5% in 2018, +0.8% in 2019, and +0.6% in 2020," Ong said.

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