CDL Hospitality Trust to face tighter competition in mid-tier and upscale segments

5.4% projected room demand remains a challenge.

According to CIMB, for 2013-2015, the Economy, Mid-tier and Upscale/Luxury categories will grow +5.9% p.a., +8.5% p.a. and +4.4% p.a. respectively. As a group, the Midtier/Upscale/Luxury segment will grow 5.8% p.a., the same rate that the overall supply will grow.

CIMB adds that this rate is lower than the projected room demand of 5.4% p.a., indicating that competition is likely to intensify in the segments that CDLHT is represented in.

Here's more:

CDLHT’s Singapore hotels are fairly evenly exposed to the Mid-tier and Upscale segments, because their FY12 RevPAR was S$211, close to the mean of S$264 and S$171, which are the RevPAR averages for Singapore Upscale and Mid-tier hotels respectively.

We also note that 1Q13 results are probably going to be weak due to the lack of the biennial Singapore Airshow and the fact that Chinese New Year is in Feb this year instead of Jan (corporate travel picks up after CNY).

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