OUE HT at risk as tourists vanish and competition intensifies

But Q3 results marginally beat IPO forecasts.

OUE Hospitality Trust’s Q3 results marginally exceeded its IPO prospectus projections. Its gross revenue came in at $28.5m, 0.7% higher than its forecast. Its Q3 DPU of 1.64 S cents was 2.5% above its 1.6 S cents projection.

Though its results were positive, analysts remain cautions on OUE HT’s prospects as the country’s tourism industry continues to slow. According to OCBC, Mandarin Orchard’s Q3 RevPAR of $252 was lower than the S$261 RevPAR attained in 3Q13, attributed to the strong visitor arrivals to Singapore last year.

OSK DMG also warns that the opening of Hotel Jen Orchardgateway might take a bite out of Mandarin Orchard’s market share. “The opening of Hotel Jen is likely to have a direct impact on MOS’ RevPAR in the near term, pressuring MOS to lower its room rates to maintain its current occupancy level. In addition, the ongoing refurbishment of MOS (current: 160/430 rooms), which is scheduled to be completed by end-2015, will continue to impact the hotel’s performance,” stated OSK DMG. 

In spite of external headwinds, OUE HT continues to benefit from a strong balance sheet and resilient income from upscale mall Mandarin Gallery.