DBS Group Research has maintained its ‘overweight’ rating for Singapore’s hospitality sector, with travel bubbles poised to drive international travel.

Analysts Geraldine Wong and Derek Tan are upbeat on the prospects for hospitality REITs, which they believe will see better performance in the H2FY2021 as the rollout of vaccines globally boosts travel demand and Singapore implements new protocols for international travel.

Singapore will commence the [email protected] business travel bubble facility this month, which  the analysts believe will provide the foundation for future border opening protocols. In addition, the World Economic Forum (WEF) will be held in Singapore in August, may be a further boost to setting Singapore up as a safe hub and may spark more events later in 2021.

Amidst these developments, Wong and Tan anticipate local hotels to benefit from an increase in demand for rooms.


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“Although the travel bubble will likely be kept within the Changi precinct at the start and for the WEF to potentially be held at Marina Bay Sands (MBS), there may be a chance for other hotel operators to be appointed as ”bubble hotels” to cater to these travellers, towards the medium term,” they say. 

Meanwhile, Wong and Tan anticipate that large domestic markets like US and the UK may see a faster rebound in travel thanks to vaccination progress reaching herd immunity thresholds by the end of 2021.

To that end, the analysts believe that Singapore REITs with a diversified portfolio of assets in these markets stand to gain once domestic travel restrictions ease.

“Hotels within large domestic markets are in the early tides of recovery based on our observation where hotels are either still operationally closed or are still ascertaining a breakeven level of room demand,” they say.

“We think that the trend will only be upwards from here given the rock-bottom performance in H2FY2020. With more room inventory now opened as of end-2020, most hotels are in the “ramp-up” stage but ready to welcome guests once domestic travel restrictions are lifted,” they add. 

Their top picks for the sector are Ascott Residence Trust (ART) and CDL Hospitality Trusts (CDLHT) due to their diversified portfolio holdings with substantial exposure to large domestic travel markets. Both stocks are rated “buy” with target prices of $1.20 and $1.35 respectively. 


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Wong and Tan believe that valuations remain attraction at 0.82 times P/NAV despite the recent rounds of devaluation due to recovery prospects being overlooked.

“We anticipate the sector to re-rate strongly once domestic travel demand can be ascertained towards year-end,” they say.

As at 4.08pm, shares in ART are 2 cents or 1.91% higher at $1.07, while shares in CDLHT are trading flat at $1.23.