26 January 2018
CDL HOSPITALITY TRUSTS - Outlook
Total visitor arrivals to Singapore grew 5.8% year-on-year (“yoy”) to 14.5 million for year-to-date (“YTD”) October
2017, mainly due to an increase in arrivals from China and India.
. The Singapore Tourism Board (“STB”) continues
to position Singapore as a leading MICE destination and newly secured flagship events being featured in 2018
include Industrial Transformation Asia Pacific, the Asia Pacific edition of a HANNOVER MESSE event on industrial
technology
, and Money20/20, the Asia Pacific edition of the world’s largest FinTech event3
. In 2018, Singapore is
also the ASEAN chairman, where Singapore will host several meetings and events involving foreign delegates
across the year, including the 32nd and 33rd ASEAN Summit4
.
In 2018, the pace of growth of the Singapore economy is projected to remain firm and global growth to pick up
marginally5
. The macro-economic backdrop is expected to be a supportive demand driver for the Singapore
hospitality market6
.
The net supply for hotel inventory in Singapore is estimated to increase by 7697
rooms in 2018, representing approximately 1.2% of existing room stock. While the supply growth tapers off from 2018, room rates are likely to
remain competitive in the near term as new hotels opened in 2017 seek to build their base. For the first 24 days of January 2018, RevPAR for the Singapore Hotels decreased by 5.5% as compared to the same period last year.
In New Zealand, international visitor arrivals increased 7.0% yoy to a record 2.9 million for YTD October 2017,
reflecting the steady growth momentum in the tourism market.
Tourism demand in Japan continues to be healthy with visitor arrivals increasing 19.3% yoy to 28.7 million for the
year 2017 . However, competition in Tokyo’s economy hotel market arising from increases in new supply and
minpaku (peer-to-peer accommodation) may moderate growth in room rates in the near term10.
In the Maldives, the increase in new rooms supply, which has intensified price competition amongst resorts, coupled
with the decline in visitor arrivals from China, continue to affect trading conditions. Forward demand growth is
supported by increased flight capacity from destinations including Europe, Southeast Asia and the Middle East11.
In the United Kingdom, visitor arrivals increased 5.5% yoy to 33.3 million for YTD October 201712. Total arrivals are
expected to grow 6.2% in 2017 and a further 4.4% in 2018, although Brexit and Sterling pound-related uncertainties
may weigh on overall demand.
The Eurozone continues to record economic growth and the positive economic environment has led to
strengthening business optimism in Germany14. In Munich, total international visitor arrivals increased 12.9% yoy for
YTD October 201715. While there is an increase in new rooms supply in the city in the near term, the strong pipeline
of trade shows over the next two years16 will provide support for the Munich hospitality market.
CDLHT continuously executes its proactive asset management strategy where opportunities are evaluated
periodically to recycle capital for better returns, unlock underlying asset values and enhance its assets.
In Singapore, the renovation of the restaurant in Orchard Hotel, Hua Ting, was completed and it has opened in
December 2017. In order to capture the demand from MICE events in the first four months of 2018, refurbishment
works for the guest rooms in the Orchard wing of the Orchard Hotel, is being rescheduled to May 2018, together
with planned works for a significant portion of the public areas. While the hotel will face some disruption in the short
term, the completed refurbishment exercise will improve overall guest experience and augment the competitiveness
of the asset to be positioned for the recovery in the Singapore hotel sector. CDLHT will continuously explore asset
enhancement opportunities for the Singapore Hotels.
In the Maldives, refurbishment of 28 land villas is being planned in the third quarter of 2018 for Angsana Velavaru.
For CDLHT’s other Maldives resort, Dhevanafushi Maldives Luxury Resort, extensive asset enhancement plans are
being finalised and will culminate in a full re-branding exercise in late 2018. This transition process to a “Raffles”
resort, under the iconic collection of Raffles Hotels and Resorts, will lead to sub-optimal revenue contribution until
the exercise is completed.
In Australia, CDLHT successfully completed the divestment of Mercure Brisbane and Ibis Brisbane in January 2018,
for an attractive exit yield and a premium over the original purchase price and latest independent valuation. The
Managers of CDLHT intend to utilise the proceeds from the divestment mainly to repay existing borrowings, which
will further strengthen CDLHT’s balance sheet. Part of the gains will also be used to make distributions to stapled
securityholders in FY 2018.
With ample debt headroom and a robust balance sheet, CDLHT will continue to actively pursue suitable
acquisitions to diversify and augment its income streams.
2017, mainly due to an increase in arrivals from China and India.
. The Singapore Tourism Board (“STB”) continues
to position Singapore as a leading MICE destination and newly secured flagship events being featured in 2018
include Industrial Transformation Asia Pacific, the Asia Pacific edition of a HANNOVER MESSE event on industrial
technology
, and Money20/20, the Asia Pacific edition of the world’s largest FinTech event3
. In 2018, Singapore is
also the ASEAN chairman, where Singapore will host several meetings and events involving foreign delegates
across the year, including the 32nd and 33rd ASEAN Summit4
.
In 2018, the pace of growth of the Singapore economy is projected to remain firm and global growth to pick up
marginally5
. The macro-economic backdrop is expected to be a supportive demand driver for the Singapore
hospitality market6
.
The net supply for hotel inventory in Singapore is estimated to increase by 7697
rooms in 2018, representing approximately 1.2% of existing room stock. While the supply growth tapers off from 2018, room rates are likely to
remain competitive in the near term as new hotels opened in 2017 seek to build their base. For the first 24 days of January 2018, RevPAR for the Singapore Hotels decreased by 5.5% as compared to the same period last year.
In New Zealand, international visitor arrivals increased 7.0% yoy to a record 2.9 million for YTD October 2017,
reflecting the steady growth momentum in the tourism market.
Tourism demand in Japan continues to be healthy with visitor arrivals increasing 19.3% yoy to 28.7 million for the
year 2017 . However, competition in Tokyo’s economy hotel market arising from increases in new supply and
minpaku (peer-to-peer accommodation) may moderate growth in room rates in the near term10.
In the Maldives, the increase in new rooms supply, which has intensified price competition amongst resorts, coupled
with the decline in visitor arrivals from China, continue to affect trading conditions. Forward demand growth is
supported by increased flight capacity from destinations including Europe, Southeast Asia and the Middle East11.
In the United Kingdom, visitor arrivals increased 5.5% yoy to 33.3 million for YTD October 201712. Total arrivals are
expected to grow 6.2% in 2017 and a further 4.4% in 2018, although Brexit and Sterling pound-related uncertainties
may weigh on overall demand.
The Eurozone continues to record economic growth and the positive economic environment has led to
strengthening business optimism in Germany14. In Munich, total international visitor arrivals increased 12.9% yoy for
YTD October 201715. While there is an increase in new rooms supply in the city in the near term, the strong pipeline
of trade shows over the next two years16 will provide support for the Munich hospitality market.
CDLHT continuously executes its proactive asset management strategy where opportunities are evaluated
periodically to recycle capital for better returns, unlock underlying asset values and enhance its assets.
In Singapore, the renovation of the restaurant in Orchard Hotel, Hua Ting, was completed and it has opened in
December 2017. In order to capture the demand from MICE events in the first four months of 2018, refurbishment
works for the guest rooms in the Orchard wing of the Orchard Hotel, is being rescheduled to May 2018, together
with planned works for a significant portion of the public areas. While the hotel will face some disruption in the short
term, the completed refurbishment exercise will improve overall guest experience and augment the competitiveness
of the asset to be positioned for the recovery in the Singapore hotel sector. CDLHT will continuously explore asset
enhancement opportunities for the Singapore Hotels.
In the Maldives, refurbishment of 28 land villas is being planned in the third quarter of 2018 for Angsana Velavaru.
For CDLHT’s other Maldives resort, Dhevanafushi Maldives Luxury Resort, extensive asset enhancement plans are
being finalised and will culminate in a full re-branding exercise in late 2018. This transition process to a “Raffles”
resort, under the iconic collection of Raffles Hotels and Resorts, will lead to sub-optimal revenue contribution until
the exercise is completed.
In Australia, CDLHT successfully completed the divestment of Mercure Brisbane and Ibis Brisbane in January 2018,
for an attractive exit yield and a premium over the original purchase price and latest independent valuation. The
Managers of CDLHT intend to utilise the proceeds from the divestment mainly to repay existing borrowings, which
will further strengthen CDLHT’s balance sheet. Part of the gains will also be used to make distributions to stapled
securityholders in FY 2018.
With ample debt headroom and a robust balance sheet, CDLHT will continue to actively pursue suitable
acquisitions to diversify and augment its income streams.
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