In a recent note, DBS Research is expecting a meaningful uplift for Singapore’ tourism operational metrics arising from the China-Japan rift. Around 30% of the 1.44 million China-to-Japan trips planned for the rest of the year have been cancelled following Beijing’s advisory to avoid travel to Japan.
Currently, China is Singapore’s largest visitor source that accounts for about 20% of tourist arrivals. DBS believes that the substitution effects will tend to favour short-haul, high-frequency markets like Singapore which has seen new bookings to Singapore rising about 15% in recent days.
With that, DBS likes Far East Hospitality Trust (FEHT), CapitaLand Integrated Commercial Trust (CICT) and Genting Singapore (GENS) as key beneficiaries.
FEHT is well-positioned with a mid-tier and upscale hotel portfolio spanning Orchard Rendezvous Hotel and Oasia Downtown, as well as investments in three Sentosa properties – Village Hotel Sentosa, The Outpost Hotel Sentosa and The Barracks Hotel Sentosa.
On that note, DBS is upbeat on GENS, as the operator of Resorts World Sentosa, including Universal Studios Singapore, the Oceanarium, and on-site hotels that benefit from increased tourist footfall. However, upside may be limited by subdued margins and stiff competition from Marina Bay Sands, especially on the gaming segment.
CICT on the other hand is the landlord of ION Orchard, a prime beneficiary of incremental luxury and discretionary spending. Additional uplift is also expected across its broader retail portfolio, including Plaza Singapura, Bugis+ and Raffles City, which attract high tourist traffic.
