Expect weak reports from hospitality REITs as hotel revenues dwindle

RevPAR fell 7% year-on-year.

Hospitality REITs are expected to turn in weak numbers as the reporting season rolls in, fuelled by declines in overall hotel revenues.

According to DBS, revenue per available room (RevPAR) declined 7% in February, triggered by a 5% slip average room rate and a decline of 150 basis points for occupancy.

“Unlike prior periods, all subcategories reported declines in RevPAR with the Mid-Tier hotels
suffering the most (-10%). Beyond 1Q15, while we expect an improvement in tourist arrivals as Singapore gears up for its 50th birthday celebrations and hosts the SEA Games in June, the projected 6% increase in new hotel supply will continued to pressurise RevPAR, which we project will decline 5% in 2015,” stated DBS.