Zika stings CDL hotels in September

RevPAR dropped 7.2% to $168.

CDL Hospitality Trust's Revenue per available room dropped 7.2% YoY to $168 on the back of a 7.5% drop in the average daily rate (ADR) to $186 which was partially offset by a 0.5 ppt increase in average occupany rate (AOR) to 90.7%, OCBC Investment Research analyst Deborah Ong noted.

The analyst explained that CDLHT highlighted a slight slowdown in bookings in September, which they attributed to travel advisories issued against Singapore following the Zika outbreak. As expected, the RevPAR drop of 7.5% was less than the 9.2% decline seen in 2Q16, while Zika’s impact on bookings was limited. Oversupply continues to be a worry, with hotel room supply expected to increase 4.1% in 2016, and a further 6.1% in 2017 according to Horwath HTL.

"Given the uncertainties plaguing the financial and economic environment, we expect continued weakness in corporate demand for Singapore hotels into the first half of 2017. We have pushed back our expectations for a RevPAR recovery till late 2017 or 2018, when the growth in hotel room supply tapers off. After the fine- tuning of our assumptions for FY17 growth in CDLHT’s various geographical markets, our fair value drops slightly from $1.53 to $1.48," Ong stated.

However, she also said while the trading conditions in Singapore continue to be soft, CDLHT still managed to post a 3.4% YoY increase for its 3Q16 DPU of 2.44 cents. 3Q16 gross revenue jumped 10.5% YoY to $45.4m, and NPI correspondingly increased 5.3% YoY to $34.8m. This growth was contributed by the inorganic contribution from UK, an improved performance from New Zealand, and a boost from positive earnings translation for Australia and Japan. Partially offsetting these were lower contributions from Singapore and Maldives.