To The Moon

On 07 Dec, Singapore DPM Lawrence Wong announced during the 19th Joint Council for Bilateral Cooperation (JCBC) held in Tianjin that China and Singapore are seeking to establish a mutual 30-day visa-free travel arrangement to boost people exchanges between the two countries

According to DPM, the movement of people between Singapore and China has been improving and flights between the two markets have almost recovered to the pre-pandemic level.

I think certain sector especially the international travel and hospitality sector would benefit more from Visa free travel, this is not limited to only Singapore China, as travel has resumed to almost pre-pandemic level. But we need to be aware of how many arrivals actually came with length of stays more than 15, 30 and even more.

The following countries can travel to Singapore for more than 90 days without a visa.

• European Union citizens

• New Zealand

• Norway

• South Korea

• Switzerland

• United States

In this article, I would like to share on how stocks have behaved after Singapore ease the Covid pandemic restriction towards the end of 2021, and how the length of stay are like for the different period.

This should give us a glimpse of how international travel and hospitality stocks should perform with the introduction of the new 30-day visa-free travel arrangement.

Performance of Travel Related When Singapore Ease Restriction

When Singapore resumes its easing of travel restrictions. SIA, SATS and SIA Engineering experienced gains by 7.6%, 3.8% and 3.2%, respectively. These represent international travel-related plays, while ComfortDelGro, a global transport company, jumped by 1.3%.

Genting Singapore led the hospitality industry with a gain of 4.8%, while Ascott Residence Trust, CDL Hospitality Trust and Far East Hospitality Trust, all of which are stapled trusts, grew by 5.9%, 6.3% and 3.2% respectively.

If we look at the length of stays when travel restriction is eased, most of the travellers stay less than 15 days. Only we see average length of stay increased to 18.8 days in January 2023.

So is Visa Travel free really important for the international travel and hospitality stocks? Let us take a look at the length of stay by travellers pre-pandemic.

Source: Singapore Tourism Board

Length Of Stay By Travellers Pre-Pandemic

As we can see from the chart below, the average length of stay is 3.1 before the pandemic in Nov 2019, this might not have change much when we are near the pandemic level by number of international visitor arrivals.

Source: Singapore Tourism Board

If we look like international travel stocks like $SINGAPORE AIRLINES LTD(C6L.SI)$ before the pandemic in Oct 2019, it is at its high of $8.55, with length of stay of more than 15 days contributing only 40,861 to total 1,491,653 in October.

So will the visa free travel help Singapore Airlines to get back to the level pre-pandemic? I think we will need to look at other factors that travellers consider when travelling to Singapore for longer stay than 15 days.

Length Of Stay By Travellers During Pandemic

If we look at the length of stay during pandemic, then we have a different story, in Feb 2020, when we begin to have pandemic hitting Singapore, we can see that out of 778,162, 44,718 travellers actually stay more than 15 days.

The average length of stay is 4. This would mean that under certain circumstances, travellers would stay longer. How about essential travel like business and family matters just at the beginning of the pandemic.

This might shed light of travel that are more than 15 days could be majority coming from business or family related travel.

This would bring us to look at hospitality stocks, where are the travellers staying?

Current Length Of Stay By Travellers

By looking at the period of length of stay by international visitors, from Aug to Oct 2023, we can see that the average length of stay is averaging about 3.5-4, which is near the pre-pandemic level.

And we can see that length of stay more than 15 days is also near the pre-pandemic level, hence, I think we should be looking at how the hospitality stocks are doing over these period.

If we look at the performance of these 3 hospitality stocks, $CapLand Ascott T(HMN.SI)$ $CDL HTrust(J85.SI)$ $Far East HTrust(Q5T.SI)$ , all 3 of them are gaining more than 1.5% of of 14 Dec 2023 trading 1 week after DPM announced the 30 days visa free travel for Singapore and China.

This show that the longer length of stay would benefit the hospitality as travellers would look for residence option like apartment.

There is a discussion of allowing stay at residence for travellers for certain period, this would definitely benefit these hospitality stocks.

Summary

I think the visa travel would benefit more for hospitality stocks rather than for international travel like airlines, because airlines would benefit more on the shorter travel, and volume does help.

For travellers who planned to stay longer, they are looking for better accommodation, and arrangement that promote better living standard would be welcome for these travellers,

Appreciate if you could share your thoughts in the comment section whether you think hospitality stocks would benefit more than international travel-related stocks for visa free travel?

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.