Hospitality REITs to get a boost from the normalisation of leisure and business travel

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The travel and tourism sector is expected to grow at a 10-year CAGR of 5% to US$15.5t in 2033.

Hospitality REITS, particularly Far East Hospitality Trust , CapitaLand Ascott Trust , and CDL Hospitality Trusts , are poised to benefit from the normalisation of leisure and business travel and the return of Chinese tourists.

In a report, UOB Kay Hian said the hospitality segment “provides an attractive 2024 distribution yield of 6.4% and trades at a low P/NAV of 0.77x.” “Consumers are shifting from material purchases like clothing, jewellery, electronic gadgets and furniture to experiential purchases like travel, restaurant meals and sporting events as happiness from experiences is more lasting,” UOB Kay Hian said.

Hospitality REITs are also likely to benefit from the Singapore government’s series of initiatives to develop new tourism attractions which include the expansion at Marina Bay Sands and Resorts World Sentosa, Mandai Nature Precinct and the Sentosa-Brani Master Plan. “At Resorts World Sentosa, Minion Land and Singapore Oceanarium are scheduled to open in early 2025. Sentosa Island and Pulau Brani will be rejuvenated and redeveloped into five distinct zones under the Sentosa-Brani Master Plan in phases over the next 2-3 decades,” UOB Kay Hian added.

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Hospitality REITs to get a boost from the normalisation of leisure and business travelThe travel and tourism sector is expected to grow at a 10-year CAGR of 5% to US$15.5t in 2033.
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