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The revenue per available room (RevPAR) of the four hospitality S-REITs we track surged about 50-300% q-o-q in large domestic leisure markets such as Europe, US, and Japan on the back of pent-up demand as travel restrictions ease on rising vaccination rates. With international borders gradually re-opening, we believe hospitality S-REITs will see rosier times ahead.
Valuations remain undemanding for hospitality S-REITs and we expect valuations to normalise as operations ride the uptrend. We project a 30% CAGR in earnings over 2022 and 2023, bringing yields towards 6-7% in the coming years.
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Global hospitality footprint
We like Ascott Residence Trust and CDL Hospitality Trusts for their wider global footprint.
With international travel still at a nascent growth stage, we expect S-REITs exposed to large domestic markets to outperform in the near term.
Serviced residence properties
With travel borders re-opening, corporate demand is returning with most S-REITs receiving more enquiries from project groups.
This could fuel a possible recovery for Far East Hospitality Trust and Frasers Hospitality Trust’s serviced residence properties.
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