CDL Hospitality Trust grapples with declining Indonesian tourist arrivals

Tourists from the country declined by 11.2%.

Indonesian tourists make up a huge chunk of the hotel group’s earnings, and when tourist numbers from the Southeast Asian country begins dipping, it’s definitely a red flag for CDL Hospitality Trust.

According to analysts from UOB Kay Hian, Indonesians comprise approximately 17.8% of the city-state’s total tourist arrivals, putting the huge blow into perspective.

However, UOB Kay Hian says these absent Indonesians have been offset by a spike in Chinese tourist arrivals, which rose by 19.3%.

Chinese tourists comprise 14.3% of Singapore’s total tourist figures, said UOB Kay Hian.

Meanwhile, the near-term holds more upside for CDL Hospitality Trust, as the hospitality sector is set to expand 4% in 2015, said UOB Kay Hian.

Analysts also note that CDL Hospitality Trust should be on the lookout for acquisitions in Japan.

“With debt headroom of S$149.3m assuming gearing limit of 40%, scope exists for overseas expansion. Management remains on the active lookout for acquisitions in preferred target market Japan. However, acquisitions in Singapore, Maldives and Dubai have not been ruled out,” UOB Kay Hian said.