CDL Hospitality Trust's Copthorne Waterfront Hotel, Singapore. (Photo: REITsWeek)CDL Hospitality Trust's Copthorne Waterfront Hotel, Singapore. (Photo: REITsWeek)

Singapore-listed stapled security CDL Hospitality Trust (CDLHT) (SGX:J85) announced on 28 October that it will be paying out a distribution per stapled security (DPS) of 2.61 Singapore cents for its 3Q 2014, a drop of 1.1% when compared to the 2.64 Singapore cents paid out in the corresponding period of 2013.

However gross revenue and net property income (NPI) for the period grew by 11.9% and 2.4% to SGD40.1 million and SGD33.8 million respectively. CDLHT attributed the revenue growth primarily to contribution from Jumeirah Dhevanahfushi, the Maldives hotel acquired in December 2013, which brought in SGD4.7 million for the quarter.

Gross revenue for CDLHT's Singapore properties also saw a growth of SGD0.3 million to SGD26.6 million for 3Q2014 and would have been higher if not for the asset enhancement works being done on Claymore Link since December 2013.

But despite achieving a higher occupancy figure and RevPar of 92% and SGD192 for its Singapore hotels during the quarter respectivelt, its average daily rate fell by about 4% due to weaker visitor arrivals into the country coupled with an increase in the supply of hotel rooms.

CDLHT expects the drop in visitor arrivals to stabilise in the coming months. "Based on the latest Singapore Tourism Board (STB) data, the year-on-year decline in Chinese arrivals has stabilised at 27.4% and 28.2% for July and August as compared to the 47.1% decline recorded in the second quarter", said Vincent Yeo, CEO for CDLHT' s manager.

Yeo cautioned that its Singapore hotels’ average daily rates for the coming quarters is expected to remain competitive given that industry room inventory will add another 447 rooms by the end of 2014. Following that, an estimated 3,229 rooms are expected to open in 2015, further increasing hotel room supply by 5.7% against 2014.

“The new room supply is likely to perpetuate the competitive environment as the market seeks to absorb the additional rooms amidst caution in the corporate and leisure travel markets. Room rates will remain competitive as new hotels seek to build their business base”, said CDLHT.

Its properties in Australia are also expected to feel the effects of the country’s slowing economy and lower activity levels in the mining sector while CDLHT’s Maldives hotel could meet headwinds in the form of reduction in Chinese luxury spending and ongoing sanctions against Russia.

Yeo hinted that growth ahead will come from possible acquisitions of new properties into CDLHT. "We will continue to seek acquisition opportunities to enhance our returns to unitholders. Our healthy gearing and ample debt headroom put us in good stead to capitalise on any acquisition opportunities in the hospitality sector”, said Yeo.

Units of CDLHT are currently listed on the Singapore Exchange at SGD1.68.

CDLHT has cautioned that room rates for Singapore is expected to remain competitive through 2015.
CDLHT has cautioned that room rates for Singapore is expected to remain competitive through 2015.

By Ridzwan Rahmat

Ridzwan has been analysing REITs and business trusts since 2008, and personally manages a portfolio comprising mainly of SGX-listed REITs. He founded REITsWeek in 2013.