OUE Hospitality Trust to benefit most from higher Asian tourist arrivals

Occupancy rates increased to 90% from 84.9% last month.

Asians already have a favorite place to stay when they flock to Singapore.

A report by OSK-DMG reveals that Asia formed around 74% of OUEHT’s Mandarin Orchard Singapore profile for 1H14, and that arrivals from Asia registered a 16.7% increase in July.

OSK-DMG expects that OUEHT will benefit from a seasonally higher hospitality demand in 2H14, as a check onmthe preliminary hotel statistics published by Singapore Tourism Board (STB) painted an improved hospitality outlook in Jul – RevPAR grew by 5.4% MoM to S$223.4, while average occupancy rate increased to 90% from 84.9% in Jun.

Here’s more from OSK-DMG:

In 2Q14, OUEHT delivered a consistent set of results. NPI and income available for distribution came in at S$25.2m and S$21.1m respectively, which was 1.2% and 2.5% higher than its respective prospectus forecasts.

DPU for the quarter was also 2.5% above its forecast at 1.64 S cents. For 1H14, DPU amounted to 3.32 S cents, meeting 49.5% of our full-year distribution projection. While 2Q RevPAR of S$242 missed its prospectus forecast of S$258, we understand that this was partly due to the accelerated renovation schedule in the quarter to capture the expected uptick in hospitality demand in 2H.

As at Jul, 160 out of a total of 430 guestrooms have completed refurbishments. This would allow OUEHT to leverage on the newly renovated rooms to attract customers seeking a premium accommodation in Orchard Road area, in our view.