Singapore Reopening Plays - Continued Recovery

Singapore visitor arrivals 2019 vs 2022 by month (Data Source: Singapore Tourism Analytics Network)

Reopening stocks are expected to extend its strong recovery momentum into 2023/24, according to latest STB's forecast where tourism activity is on track to recover to pre-pandemic levels by 2024.

Visitor arrivals are expected to double from 2022 to 12-14 million (or c.63-73% of 2019 levels) in 2023, and tourism receipts to improve to S$18-21 billion (or c.65-76% of 2019 levels) in 2023. There will be three main groups of beneficiaries from this strong recovery momentum which are hospitality REITs, retail REITs and airline related stocks.

1) Longer length of stay as well as prioritization towards MICE events (and thus business travelers) should bode well for hospitality REITs like $FAR EAST HOSPITALITY TRUST(Q5T.SI)$  (FEHT) and $CDL HOSPITALITY TRUSTS(J85.SI)$  (CDLHT). The average length of stay increased from 3.36 days in 2019 to 4.81 days during Apr-Dec'22. The return of Japanese tourists will boost the accommodation segment; Japanese spent 34% in total accommodation (vs. average 20%), and ranked 5th in total tourism receipts (ie. S$1.2 billion) in 2019.

2) Retail REITs with centrally located malls (eg. $Lendlease Global Commercial REIT(JYEU.SI)$  - LREIT) will benefit from the return of China tourists, as 49% of tourism receipts were spent on shopping before the pandemic. China tourists contributed around 15% (or S$4.1 billion) of total tourism receipts in 2019. STB expects around 1.1-2.2 million Chinese tourists (or 30-60% of 2019 levels) in 2023.

3) Higher airfares because of strong pent-up demand did not deter travelers from visiting Singapore in 2022, which implies for higher revenues for airlines like $SINGAPORE AIRLINES LTD(C6L.SI)$ (SIA). Other components of tourism receipts, which includes airfare, rose from 29% in 2019 to 33% in 9M'22. Other airline related stocks that may benefit from this strong recovery momentum will be companies such as $SIA ENGINEERING CO LTD(S59.SI)$  (SIAEC) and China Aviation Oil (CAO).

My preferred stocks are CDLHT, LREIT and SIA.