CGS International Securities
Date of Report: September 17, 2025

Singapore Hospitality REITs: Sector Update, Stock Analysis & 2025 Outlook

Strong Summer Drives Singapore’s Hospitality REITs: Sector Trends & Investment Opportunities

Singapore’s hospitality REIT sector continues to attract investor attention, with robust summer travel demand, growing international visitor arrivals (IVA), and resilient performance across hotel segments. This comprehensive analysis covers sector developments, performance metrics, and a deep dive into highlighted REITs: CapitaLand Ascott Trust (CLAS), CDL Hospitality Trust (CDREIT), and Far East Hospitality Trust (FEHT).

Sector Overview: International Visitor Arrivals & Hotel Metrics

– IVA in July and August 2025 rose 4.9% and 4.6% year-on-year, reaching 1.68m and 1.61m, respectively. – Cumulative IVA for 2025 year-to-date hit 11.6m, accounting for 63–68% of the Singapore Tourism Board’s (STB) forecasted 17m–18.5m for the full year. – The average monthly IVA for 8M25 climbed to 1.45m, outpacing the 2024 average of 1.38m. – Hotel revenue per available room (RevPAR) in July increased 4% year-on-year to S\$251, buoyed by a 2% rise in average daily rate (ADR) and occupancy hitting 91.5%. – 7M25 average monthly RevPAR rose to S\$216, up from S\$210 in 6M25 but still below S\$222 in 7M24, reflecting a 2.9% year-on-year decline. – Strength in travel demand during peak months helped slow RevPAR’s year-on-year decline, which was down 4.1% in 6M25.

Sector Challenges: Supply Growth & Event Delays

• Hotel industry performance faces headwinds from increased room supply, delayed debut of Disney Cruise Line (postponed from Dec 2025 to Mar 2026), and later-than-usual Formula One race (Oct 2025).
• Luxury and mid-tier hotels have shown resilience, with luxury segment RevPAR declining only 0.7% year-on-year, offset by higher ADR (+1.2%) despite lower occupancy (-1.9% pt).
• Mid-tier and economy hotels saw notable increases in room stock since January 2024 (+3% and +6%), while upscale hotel stock fell 4%.
• Downside risks remain from a weak macroeconomic outlook and potential slowdown in global travel demand.

Financial Table: Highlighted Hospitality REITs Valuation Metrics

Company Deep Dive & Investment Thesis

CapitaLand Ascott Trust (CLAS): The Sector Favourite

• CLAS stands out for its stable distribution per unit (DPU) profile and its proactive approach to portfolio reconstitution, unlocking value for investors.
• Its diversified footprint helps maintain robust RevPAR, with properties under management contracts and minimum guaranteed income (MCMGI) posting a 3% year-on-year increase in 2Q25.
• CLAS currently trades at an attractive FY25F projected yield of 6.6%.
• CGS International maintains an “Add” rating, with a target price of S\$1.13 and a market price of S\$0.92.
• CLAS is a sector pick for investors seeking yield and stability.

CDL Hospitality Trust (CDREIT): Awaiting Turnaround

• CDREIT’s muted 1H25 performance and sector uncertainties have led to a “Hold” rating by CGS International.
• The recovery for core Singapore hotels is likely delayed until FY26F.
• Potential catalysts include UK interest rate reductions or a pick-up in travel demand.
• CDREIT trades at a steep 42% discount to book value, offering upside if sector conditions improve.
• Target price set at S\$0.75 with a market price of S\$0.82; projected FY25F yield is 5.15%.

Far East Hospitality Trust (FEHT): Benefiting from Down-Trading

• FEHT is favoured for its mid-tier hotel exposure, which benefits from down-trading trends and lower average cost of debt, reducing interest expenses.
• Potential for acquisitions in Japan and from the sponsor’s pipeline in Singapore adds to growth prospects.
• Trading at a projected FY25F yield of 6.2%, with a target price of S\$0.74 and market price of S\$0.605.
• CGS International assigns an “Add” rating.

Hotel Segment Performance: Luxury to Economy

• Luxury hotels: RevPAR down 0.7% year-on-year; ADR up 1.2% but occupancy fell 1.9 percentage points.
• Upscale hotels: RevPAR down 4.7%, with ADR dropping 3.8% and occupancy down 1 percentage point.
• Mid-tier hotels: RevPAR fell 3%, ADR down 3.5% but occupancy up 0.4 percentage points.
• Economy hotels: RevPAR down 6.2%, ADR down 5.2%, occupancy down 1 percentage point.
• Mid-tier and economy segments saw the largest increase in room stock since Jan 2024 (+3% and +6%).
• Upscale segment experienced a 4% decrease in room stock.

Sector Catalysts & Risks

• Positive: A resurgence in corporate and group travel could further boost RevPAR sector-wide.
• Negative: A global economic slowdown remains a key risk, potentially further impacting travel demand and RevPAR growth.

Peer Comparison: Hospitality REITs vs. Other SREITs

Conclusion: Investment Positioning for Singapore Hospitality REITs

The Singapore hospitality REIT sector remains overweight, with CLAS as the top pick for stable yield and portfolio growth. FEHT is positioned to benefit from current consumer trends and cost efficiencies, while CDREIT offers value for investors willing to wait for sector recovery. The industry’s strong summer travel, healthy IVA figures, and strategic asset management provide a foundation for yield-seeking investors. However, risks from increased hotel supply and external event delays require careful stock selection and ongoing monitoring.

Analyst Contacts

• LI Jialin — [email protected]
• LOCK Mun Yee — [email protected]

Broker Recommendation Framework

• Add: Expected total return >10% over the next 12 months.
• Hold: Expected total return 0–10% over the next 12 months.
• Reduce: Expected total return <0% over the next 12 months.

Stay tuned for further updates as the sector navigates supply growth, global travel trends, and upcoming catalysts set to shape hospitality REIT performance for 2025 and beyond.