Here’s why there’s trouble on the horizon for Far East Hospitality Trust

·Singapore Business Review
Singapore Business Review
0

Competitive pressures persist as supply grows.

Analysts are cautious on Far East Hospitality Trust’s (FEHT) near-term earnings, as competitive pressures are expected to haunt the company in the coming months.

According to a report by DBS, despite the majority of new hotel supply in Singapore largely concentrated within the Singapore River precinct away from FEHT’s hotels, the 6-7% climb in overall industry room inventory may still put pressure on FEHT’s operations.

“We have pencilled in a 4% y-o-y decline in RevPAR and combined with higher costs of debt, should translate into a 7% decline in FY16F DPU,” DBS reports.

There’s still light at the end of the tunnel for FEHT, however. Primarily, a rebound in demand absorbing the approximate 3,900 new rooms added in 2016 could provide a boost to FEHT’s DPU.



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