Overall international visitor arrivals to Singapore registered a robust YoY growth of 11.9% to 1.33m for the month of Feb. This adds on to the momentum from Jan’s 12.7% YoY increase. The key driver for Feb’s figures was likely driven by the Singapore Airshow, which takes place on a biennial basis.

Consequently, there were also encouraging data points on the hotels room front, as average occupancy rate in the industry rose 1.9 ppt QoQ and 1.0 ppt YoY to 85.8%, while RevPAR increased 8.5% QoQ and 5.1% YoY to S$219.

Notwithstanding this positive monthly performance, we believe the outlook ahead remains largely cautious, given the uncertain macroeconomic environment and oversupply issue.

Our preferred pick within the hospitality sector is Ascott Residence Trust [BUY; FV: S$1.29], given its more resilient extended-stay business model. We also like CDL Hospitality Trusts [BUY; FV: S$1.38] for its undemanding valuations.

Source: OCBC Research - 12 Apr 2016