In a sign of more difficult quarters ahead for Singapore-listed hospitality REITs and trusts, the republic reported a 6.8% decline in tourism receipts despite visitor arrivals growing by a modest 0.9% for 2015.

Total tourism receipt for the year came in at SGD22 billion, the Singapore Tourism Board (STB) said in a statement on 29 January.

“The fall in tourism receipts was largely due to a decline in business travellers and meetings, incentives, conventions and exhibition (BTMICE) visitors visitor arrivals and spending”, said the STB. “This mixed performance came on the back of various headwinds such as an uncertain global economic outlook and weak currencies in some of Singapore's top source markets in 2015”, it added.

Countries that led the decline in tourism receipts were Indonesia (-21%), Australia (-10%) and Malaysia (-26%). “These markets had faced economic challenges and seen their currencies depreciated against the Singapore dollar. Consequently, there were fewer visitor arrivals and less spending from these markets”, said the STB.

For 2016, the government expects tourism receipts to be in the range of SGD22.0 to SGD22.4 billion, representing a growth of between 0%– 2%.

“Global economic growth may be hampered by the slower growth momentum of the Chinese and US economies as well as uncertainties such as ongoing reforms in China and the impact of the normalisation of the US monetary conditions”, it added.

Analysis

The forecast of zero to 2% in growth for tourism receipts will not bode well for Singapore-listed hospitality REITs and business trusts, especially so for those without a geographically diversified portfolio. The situation is expected to persist well into 2017 and will depend largely on how currencies of regional countries perform.