RevPAR is up by only 0.9% in January.
According to OCBC Investment Research, in the first 27 days of Jan 2013, the RevPAR for the Singapore hotels (excluding Studio M Hotel) increased by 0.9% YoY.
It also adds, RevPAR for the Singapore hotels was flat YoY in 4Q12 at S$205; occupancy was up 0.8ppt at 89.4% while average daily rate fell 1.3% YoY to S$229 (excludes Studio M Hotel, which was acquired on 3 May 2011). Management indicated that travellers remained cautious about their expenditure due to the weak global economic climate, and MICE business was affected too.
For FY12, RevPAR excluding Studio M Hotel grew by 3.3% to S$211, a record high. Our assumptions turned out to be fairly accurate; we had assumed 3.2% YoY RevPAR growth for the Singapore hotels.
For 1Q13, management noted that apart from stiffer competition, there will be the absence of the biennial Singapore Airshow and additionally, CNY will fall later this year (Feb instead of Jan), possibly delaying the seasonal pick-up in corporate travel. Weak accommodation demand by corporate and leisure travellers is likely over the next 12 months.
The proposed acquisition of Angsana Velavaru Maldives is expected to be completed around the end of Jan 2013. Gearing post-acquisition will be healthy at ~27.9%. Maintain HOLD. We maintain our fair value of S$1.93 and HOLD rating on CDLHT.
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